Health Insurance

Intro to Types of Health Insurance Plans

Hey Guys,

Today I’m going to teach you about the basic types of health insurance plans available on the market and their key differences. So even when you are thinking about the key health insurance equation (remember this??) you should also be thinking about which health insurance plan structure works best for you.

More Benefits + Larger Network= Cost Sharing (1)

Let’s start with the basics…

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So let’s review these key types of health insurance plans I mentioned plus a few additional types:

HMO (Health Maintenance Organization):

  • Requires you to designate a Primary Care Provider (PCP) and that PCP must refer you to see specialists. Without a referral, the insurance company will not cover any of the medical services you received and you will have to pay for it all out-of-pocket. (Note- women can typically go see their Ob-Gyn without a PCP referral and the services will be covered but confirm with your insurance in the Summary of Coverage and Benefits).  Recall from the “Who is your PCP” blog post that even if you aren’t in an HMO product that requires you to designate and see a PCP, you should do this anyway for your own health outcomes and care coordination.
  • A narrow network of doctors that you can see. If you go outside the network you will have to pay out-of-pocket for the medical services you received. Note that this concept actually extends beyond just the doctors too so be really careful when you receive any medical services. This can also include anything from ambulances and hospitals to home health providers and durable medical equipment providers (things like wheelchairs, oxygen equipment, breast pumps, etc.)
  • Less expensive. The cost-sharing component is typically much lower in an HMO but be careful because if you end up going out-of-network by accident your costs could be exponentially larger. There is oftentimes no deductible and low premiums.

PPO (Preferred Provider Organization):

  • Allows you to see any specialists without a PCP referral.
  • Tiers of networks- if you see a doctor who is in-network the insurance company will pay a higher percentage of the costs than by seeing a doctor who is out-of-network. The network of doctors in a PPO is typically larger than an HMO.
  • More expensive. Because this is broadening your network and allowing you to choose which providers you want to see without a recommendation of medical necessity from a doctor (PCP) you will have to pay more for these benefits. This typically includes a deductible, higher premiums, and higher cost-sharing for going out-of-network.

POS (Point of Service):

  • Requires you to designate a Primary Care Provider (PCP) but you typically don’t need a referral from the PCP to see specialists.
  • Tiers of networks- if you see a doctor who is in-network the insurance company will pay a higher percentage of the costs than by seeing a doctor who is out-of-network. If you see an out-of-network doctor you typically need to file the claim yourself.
  • More expensive. Because this is broadening your network and allowing you to choose which providers you want to see without a recommendation of medical necessity from a doctor (PCP) you will have to pay more for these benefits.

EPO (Exclusive Provider Organization):

  • Allows you to see any specialists without a PCP referral.
  • A narrow network of doctors that you can see. If you go outside the network you will have to pay out-of-pocket for the medical services you received.
  • Mid-tier expensive since you can see any in-network doctors without a PCP referral.

CDHP (Consumer Driven Health Plan), also called HDHP (High Deductible Health Plan):

  • The layout of networks and PCP selection etc. will vary plan to plan.
  • Incredibly high deductible of at least $1,300 for an individual or $2,600 for a family and typically lower premiums.
  • Whether this is expensive or not for you and your family will depend on how many medical services you use and the structure of the plan.
  • Many come with an HSA- Health Savings Account– that allows you or your employer to put pre-tax money into the HSA and use the funds tax-free for qualifying medical expenses.

Here is a summary of each of these types of plans so you can easily compare:

Health Insurance Types

Check out my blog next week where I will discuss CDHP’s in more detail. The CDHP is becoming more popular among employers as they are trying to balance both offering their employees health insurance while also reducing their spending on health care so I want to make sure we discuss in more detail.

See you next week and in the meantime…

Cheers to Health and Happiness!

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Ps- This week on social media I will be posting the definitions of key terms we have been reviewing throughout the blog. Be sure to check it out and test yourself to see if you remember the definitions!

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