Commercial Insurance
Commercial health insurance refers to health coverage sold by private insurance companies, as opposed to government programs like Medicare or Medicaid. It covers approximately 200 million Americans and comes in two primary forms: employer-sponsored plans and individual market plans.
Employer-Sponsored Insurance (ESI)
ESI is the largest source of health coverage in the U.S., covering approximately 155 million people:
Fully-Insured Plans
- The employer purchases a group policy from an insurance company
- The insurer assumes the financial risk for claims
- Premiums are set and collected by the insurer
- Regulated by state insurance departments
Self-Funded Plans
- The employer retains the financial risk for employee claims
- A TPA or ASO provider administers the plan
- Stop-loss insurance protects against catastrophic costs
- Regulated primarily under federal ERISA law (pre-empts most state insurance regulation)
- ~65% of covered workers are in self-funded plans
Individual / ACA Marketplace Plans
Approximately 16 million people purchase individual coverage through the ACA marketplace:
Metal Tiers
Plans are categorized by actuarial value (the percentage of average costs the plan covers):
| Tier | Actuarial Value | Premium | Out-of-Pocket Costs |
|---|---|---|---|
| Bronze | 60% | Lowest | Highest |
| Silver | 70% | Moderate | Moderate |
| Gold | 80% | Higher | Lower |
| Platinum | 90% | Highest | Lowest |
Catastrophic plans (below Bronze) are available to individuals under 30 or those with hardship exemptions.
Premium Subsidies
- Premium Tax Credits (APTCs) — Available for households earning 100–400% of the Federal Poverty Level (FPL), with enhanced subsidies available in recent years
- Cost-Sharing Reductions (CSRs) — Available for Silver plan enrollees earning 100–250% FPL
Small Group vs. Large Group
| Feature | Small Group (1-50 employees) | Large Group (51+ employees) |
|---|---|---|
| ACA market reforms | Full EHB requirements apply | Limited ACA requirements |
| Rating restrictions | Community rating (limited age/tobacco variation) | Experience-rated (based on claims history) |
| Available through | SHOP marketplace or direct | Direct from insurers or self-funded |
COBRA
The Consolidated Omnibus Budget Reconciliation Act allows employees who lose group coverage (due to job loss, reduced hours, etc.) to continue their employer's plan for 18–36 months by paying the full premium (employer + employee share) plus a 2% administrative fee.
Key Market Statistics
- Employer-sponsored coverage: ~155 million
- ACA marketplace enrollment: ~16 million
- Individual off-exchange: ~6 million
- Average annual ESI premium (family): ~$24,000
- Average employer contribution: ~73% of premium
- Average annual deductible (single): ~$1,750
