Having the right health insurance for you and your family is extremely important. In order to help you find the plan that fits your needs, you need to know your different options. Here are 6 Types of Health Insurance Plans you should be familiar with. Knowing these plans types will prepare you for evaluating options available in the new Health Insurance Marketplaces coming in October 2013.
6 Types of Health Insurance Plans
Preferred Provider Organization (PPO)
Health Maintenance Organization (HMO)
Health Savings Account (HSA)
Point of Service (POS)
Exclusive Provider Organization (EPO)
Indemnity Plans
#1 Preferred Provider Organization (PPO) Health Insurance Plans
A PPO plan is a Preferred Provider Organization. With a PPO plan, you are encouraged to use a network of preferred doctors and hospitals. These providers are contracted to provide service to plan members at a negotiated or discounted rate. You generally are not required to designate a Primary Care physician but will have the choice to see any doctors or specialists within the plans network.
You generally have an annual deductible that you would be required to pay before the insurance company begins covering your medical bills. You may also have a co-payment for certain services or a co-insurance where you are responsible for a percentage of the total charges of your medical expenses.
With a PPO, services rendered outside of the network may result in a higher out-of-pocket cost.
A PPO may be a good option for you and your family if you:
Need flexibility when choosing physicians and other providers
Want the burden of obtaining a referral to see a specialist
Like the balance of greater provider choice versus lower premiums
#2 Health Maintenance Organization (HMO) Health Insurance Plans
An HMO is a Health Maintenance Organization. With an HMO plan, you generally have a lower out-of-pocket expense but also have less flexibility in the choice of physicians or hospitals than other plans. An HMO may require you to choose a primary care physician (PCP). With a PCP, they will take care of most of your health care needs. Generally to see a specialist, you will need to obtain a referral from your PCP.
With an HMO, you generally will have coverage for a broader range of preventative services than you would have through a different plan. You may or may not be required to pay a deductible before your coverage starts. Generally you will have a minimal co-payment. There are generally no claim forms to file on an HMO. The main thing you will want to keep in mind is that with most HMO plans you have no coverage if you go outside of your network without proper authorizations from your Primary Care Physician (PCP) or in cases of certain emergency situations.
An HMO may be a good option for you and your family if you:
Prefer lower premiums
Like the trade off of in-network services
Desire good preventive services such as coverage for checkups and immunizations
#3 Health Savings Account (HSA) Health Insurance Plans
An HSA is a Health Savings Account. It is not actually a health plan. An HSA is a tax-favored savings account that is used in conjunction with an HSA-compatible high deductible health plan to pay for qualifying medical expenses.
An HSA-compatible health plan may help you save money. Generally the monthly premium is less expensive than the monthly premium for a lower-deductible plan. The contributions to an HSA may be made pre-tax, up to certain limits set by the IRS. Unused funds in an HSA account role over year to year and accrue interest, tax free. Funds may be used for other life events as well but may incur penalties and interest to be paid.
An HSA may be a good option for you and your family if you:
Want to have greater control over when, how, what and how much for care
Seek the balance of higher deductibles versus greater control
Would like to save money tax free for current and future medical expenses
#4 Point of Service (POS) Health Insurance Plans
A POS is a Point of Service Plan. POS plans combine features of an HMO and a PPO plan. Just like an HMO, POS plans may require you to choose a Primary Care Physician (PCP) from the plan's network providers. Generally services rendered by the PCP are not subject to the plans deductible.
If you utilize covered services that are rendered or referred by your PCP you may receive the higher level of coverage. If you utilize services by a non-network provider, you may be subject to a deductible and lower level of coverage. You may also have to pay up-front and submit a claim for reimbursement.
A POS may be a good option for you and your family if you:
Need flexibility when choosing physicians and other providers
Desire primary care physicians to coordinate care
Like the balance of greater provider choice versus lower premiums
#5 Exclusive Provider Organization (EPOs) Health Insurance Plans
An EPO is an Exclusive Provider Organization. EPO plans are similar to HMO plans because they have a network of physicians their members are required to use except in the case of emergency. Members will have a Primary Care Physician (PCP) who will provide referrals to in-network specialists. EPO members are responsible for small co-payments and may require a deductible.
An EPO may be a good option for you and your family if you:
Like the balance of less provider choice in exchange for lower rates
Can find the right services with a smaller panel of providers
Can afford potentially higher costs for unplanned events
#6 Indemnity Health Insurance Plans
Indemnity health plans are known as Fee-for-Service plans because of pre-determined amounts or percentages of costs paid to the member for covered services. The member may be responsible for deductibles and co-insurance amounts.
In most cases the member will pay first out of pocket and then file a claim to be reimbursed for the covered amount.
An Indemnity Plan may be a good option for you and your family if you:
Seek high levels of flexibility and choice for doctors and hospitals
Are fine with the balance of higher rates in exchange for more service control
Can accept the burden of potentially increased administrative activity for referral and claims paperwork
