This page is a guide to the different types of health insurance plans and coverage that are available today.
Having health insurance policies help to protect an individual, a family or a group, from medical costs. These health care expenses can be very high and hardly affordable for us.
Are you a self-employed, a small/large business owner or an employee?
To find the best health insurance plan for you, you have to know what is health insurance and to understand the health insurance options that medical insurance companies offer to you.
The different health insurance choices vary not only in how much you pay out-of-pocket but also how satisfied you are with the health care services.
On this page you will see:
What Is Health Insurance? Definition.
Health insurance is a type of insurance coverage against the risks of occurring medical costs.
Your health insurance pays the costs for medical and surgical expenses in case you need them.
How does it work?
In simple words, you chose a health insurance plan and pay a monthly premium to the health insurance company.
In return, if you receive health care the insurance company pay all (or some) of the costs, depending on the details of the plan.
Depending on your health insurance type, either you pay expenses out-of-pocket and are then reimbursed, or your insurance company pays directly to your health care provider (health care provider may be your doctor, hospital, a laboratory and etc.)
Why Do I Need Health Insurance?
As we mentioned above, the purpose of health insurance is to help you pay for medical care in case you need it.
It provides a financial protection to you and your family if an unexpected illness and injury happen. As you know, there are illnesses and injuries that are really expensive to recover from them.
Health insurance has also one important benefit – you are more likely to get preventive care if you have it.
The future is always unpredictable and unfortunately you can not predict what your medical expenses would be in a case of illness.
Yes, in some times you may have low costs but also there is a possibility for very high expenses in other times.
Different Types of Health Insurance
Your decision to purchase health care is more complicated than purchasing many other goods.
Health insurance policy can be expensive. You may not know in advance what exactly services you will need and how much they will cost.
These and other characteristics of health care decreases your ability to make financial plans and increases your exposure to financial risk.
On the market today, are available an extensive range of different types of health insurance than can help you reduce your financial risks.
Let’s see what are the main health insurance types and options and how they can be useful for you.
Health Insurance Options Depending On How You get Them:
As a consumer, you may obtain health insurance from your employer (or other group) or individually from
another source. Depending on that there are two main types of health insurance:
- Group Insurance
If you get health insurance through your employer or organization to which you belong, it means you have a group insurance.
Practically, this means your costs for these premiums will be lower than they would be if you pay the entire premium alone.
In this case, it is easy to obtain a health insurance, because the employees enroll in a plan through the employer without interacting with representatives of the medical insurance company.
Some employer plans offer additional medical benefits such as vision and dental benefits. So, you can compare plans to find this one that fits you need.
If you are a member of a particular group (such as a professional organization for example), you may be able to get group coverage through that organization.
If you leave your place of employment, you may lose your health insurance.
If you do not want to accept group insurance, you can purchase a health insurance policy from another source.
- Individual Health Insurance
We talk about individual health insurance when you purchase your own health insurance directly from an insurance company.
There are many reasons to do that.
For example: you do not have access to a group insurance (if your employer does not offer health insurance or you are self-employed) or you just want to buy your individual plan that suits better your needs.
It is obvious that, when you buy individual health insurance, you have to pay the entire premium rather than sharing the cost with your employer.
Types Of Health Insurance By Covered Individuals
When we assume the covered individuals, there are 3 main types of health insurance:
- Health insurance plan that covers one person – this is a self-only coverage where you are the only person insured.
- Family coverage– when the insurance cover your family members
- Other groupings – here are many options such as self-insurance plus one and etc.
Types of Health Insurance By Networks
Before you can use health care, you have to decide from which providers to receive it.
And here generally, you have two main options: to use nonnetwork based (indemnity) health care or network-based (managed care).
What is a health care network?
It is a group of providers (such as doctors, hospitals and etc.) that provide health care under specified terms to those people who are enrolled in a particular insurance plan.
- Indemnity Insurance
You can choose any doctor and you can change doctors at any time!
With an indemnity insurance, your plan only pays part of your medical costs.
Generally, your out-of-pocket costs are higher for particular services than with managed care plans.
Your indemnity insurance plan mostly has higher premiums because of the flexibility of provider choice and the relative inability for the insurance company to control costs.
An important point here is that indemnity policies generally have an out-of-pocket maximum.
In other words, once your expenses reach a particular amount in a calendar year, the fee for covered benefits should be paid in full by your insurance plan.
- Managed Care
Managed care is a health care provided by a network of medical profecionals such as doctors, hospitals, and other providers.
More than half of the Americans who have health insurance use a managed care plan.
One of the main reasons for that are lower costs in comparison with indemnity insurance.
This is because the network providers accept lower prices because of their large number of potential patients that increases as the providers join the network.
You have to know that you are able to have lower out-of-pocket costs for health care, as long as you see doctors and other medical professionalists that are part of the network.
In addition to that managed care plans cover a wide range of health services.
There are three main types of managed care plans:
1.Health maintenance organizations (HMOs)
In the United States, a health maintenance organization (HMO) is a medical insurance group that provides health services with providers under contract.
That type of medical insurance plan limits coverage to care from doctors who work for the HMO. Practically, It won’t cover out-of-network care except in an emergency.
If you belong to an HMO, usually you receive all of your health care from network providers.
As a consumer, you pick a primary care provider. He or she will be responsible for coordinating all of your care.
A primary care provider may be family practice doctors, pediatricians, internists, obstetricians-gynecologists, and etc.
With HMO insurance, you typically pay lower premiums to compensate for the restrictions on provider choice and to incorporate the insurer’s ability to control costs.
In simple words, HMOs offer you predictable cost-sharing and administrative simplicity.
2.Preferred provider organizations (PPOs)
PPOs plans offer more flexibility than HMOs in choosing care providers. It means that you have a wider choice of providers than HMOs.
When it comes to premiums, they may be similar to or slightly higher than in traditional HMOs. Out-of-pocket costs also are generally higher and more complicated.
PPOs allow participants to venture out of the provider network. You do not need a referral to see a specialist, but you may need to do some paperwork (such as fill out forms, send bills in for payment, and etc).
When you go out of the plan’s network for care, PPOs works like fee-for-service and take from you coinsurance. In other words, straying from the PPO network means that you may pay a greater share of the costs.
Be aware of that in-network and out-of-network coverage and options differ from plan to plan.
3.Point-of-Service Plans (POS)
Point-of-Service Plans (POS) combines the characteristics of the two most popular types of health insurance plans, HMO and PPO.
When you go out of the network, you have to pay most of the cost.
However here is one exception: when your primary care provider has made a referral to the out-of-network provider. In this case, the medical plan has to pick up the tab.
Actually, POS plans are not so common; most policyholders have either HMO or PPO plans.
Nowadays healthcare services and options are constantly changing and the coverage plans are really hard to categorize and distinguish.
If we look deeper, we will see that the differences between HMOs, PPOs, POSs and other types of health insurance and coverage are not so clear.
But on the other hand, understanding the main points and characteristics of various plan types will be helpful to choose the best one for you.
How to Choose the Best Health Insurance Plan For Your Needs?
Choosing the best health insurance plan may not be the most pleasant thing to do, but may has an important role in your overall financial situation.
As we mentioned above, the purpose of health insurance is to protect you from potentially high costs of medical care.
Having a good understanding of your options can save you loads of money, time and different types of heartache.
Health insurance may be tricky and complicated, so you should carefully compare costs and coverage. Your best choice depends on a number of factors (some of them we discussed above).
Let’s see what are the most important factors you have to pay attention when you compare the different plans and options:
- Compare the main types of health insurance plans (HMOs, PPOs, POS plans).
- Access to health care providers such as doctors, hospitals and etc.
- Out-of-pocket costs
For many people, one of the leading factors is the size of the premium.
Should you choose a low monthly premium?
If you are a young person and you’re healthy, you probably want to pay as little as possible for health premiums. However, you still need secure and a comprehensive coverage in case of an accident or sudden illness.
What about if you or one of your family members have health conditions?
If you have a chronic condition, you may opt for more expensive plans because you know you use more services and want an access to broader networks with more doctors and specialists.
It is a very personal choice to decide how much money to give for health insurance. At least it depends also on your incomes.
Just when you compare premiums, be aware of the fact that the less you pay for monthly premium, the more out of pocket you will pay before the plan kicks in. And also, a cheaper plan may also limit your selection of doctors.
Comparison of the main types of health insurance plans (HMOs, PPOs, POS plans).
Another important factor is the comparison of the main types of health insurance plans (HMOs, PPOs, POS plans).
Do not forget also that some plans such as HMO or POS require referrals.
You must be referred by a primary care physician before visiting a specialist. Because of this requirement, some people prefer other types of health insurance plans.
POS and HMO plans may be good choices for you if you are OK your primary doctor selecting specialists for you. Also, with POS and HMO plans, there’s less you have to do, since your doctor’s staff handles visits and records.
However if you do select a POS plan and go out of its network, it is recommended to get the referral from your doctor in order to reduce your out-of-pocket costs.
If your main purpose is to lower costs, maybe you should consider an in-network doctor because insurers contract lower rates with in-network providers.
Compare out-of-pocket costs
When you are about to choose a health insurance plan, it is very important how costs are shared.
Out-of-pocket costs include deductibles, coinsurance, and copayments and also all costs for services that aren’t covered.
Please, keep in mind that any plan should clearly explain how much you’ll have to pay out of pocket for the medical services.
Generally, the lower premium means that your out-of-pocket costs would be higher.
In addition to that, it is important to know that there is a limitation for the total you may spend out of pocket in a year. This maximum should be also listed in your plan information.
Cost-sharing options vary from plan to plan, so research each offer carefully.
Benefits and Coverage
Before finally to choose your health insurance type and plan, look deeply at summary benefits to see which plans cover a wider range of services.
Some of the plans may have better emergency coverage, other may have better physical therapy and/or mental health care and etc.
Which medical care services you need? Answer this question before choosing your option. Your choice will be based on your / your family current health situation.
Health insurance plans vary, both in cost and in coverage.
The above guide provides a general information and explanation of the main types of health insurance plans and options.
Before making your final decision wich health insurance plan to choose, you should check carefully the plan brochure and read the policy to get specific information.
It is crucial to compare plans carefully to find the one that suits best your health care needs.
Feel free to contact each plan provider to ask them for more information and questions if something is unclear to you.