What you need to know about health insurance plans
There are many different types of health insurance, and each plan will have some things you will like and some things that you won't like. There is no one “best” plan, only the best plan for you and your family. The plan that’s right for a young single person may not be best for a young family with small children. And a plan that works for that family may not be right for a middle-aged couple with teenage children.
Cost isn’t the only thing to consider when you buy health insurance. You should also consider what benefits are covered, how they are covered, and where they are covered. Although the Affordable Care Act has standardized a minmum coverage package, there are huge differences in the way these benefits are covered, as well as other differences. There is also a wide range of additional benefits that may be offered, and these vary greatly across different plans. You should compare plans carefully for both the cost and the coverages offered.
The Affordable Care Act eliminated many types of plans that were available before January 1, 2014. This was done by standardizing the list of essential health benefits that all plans must offer, as well as through many other provisions of the law that basically made important parts of these other plans illegal or now prevents them from being considered as a "qualified health plan." Each of the types of plans below are offered for each of the "metal levels" of the new health insurance plans, as discussed elsewhere on this site.
What Different Kinds of Health Insurance Plans are Available?
Health Maintenance Organization (HMO) and Exclusive Provider Organization (EPO) Plans
Also referred to as a "managed care plan", HMOs and EPOs generally provide comprehensive health services with an emphasis on preventive care to their members and financial incentives for patients to use the providers who contract with the plan.
HMO plans limit coverage to providers within a designated network. (A network is a list of doctors, hospitals, and other health care providers that offer medical care to members of a specific health plan.) EPOs are even more restrictive, generally requiring you to use the medical professionals and facilities of a single health services provider unless they specifically refer you to an outside facility. In either case, if you visit a doctor or facility that isn’t in the plan’s network, you may have to cover most or all of the costs for services provided - generally you will pay the bill.
Most HMOs and EPOs require you to select a primary care doctor from within their network who helps coordinate your general health and from who you must obtain a referral to see other doctors, specialists, and other care providers. This doctor is commonly referred to as the "gatekeeper", the person through whom you must go to obtain any other services available. Many people do not like these types of plans because of this requirement.
Preferred Provider Organization (PPO) and Point of Service (POS) Plans
PPO or POS plans give you a choice of getting care in or outside of a provider network. The choice to use out-of-network providers and facilities is yours, but you’ll have to pay more if you do. The reason for this is that the plan has made arrangements with doctors and hospitals and other providers of care to accept pre-determined fees from the insurer for their services. When you go out-of-network, the plan still only pays the provider the pre-set rate, and you are responsible for paying the difference between what the plan pays and what the out-of-network provider charges.
There is a difference between PPO and POS plans when it comes to using out-of-network providers. Generally, if you have a PPO plan, you can visit any doctor without a referral, a feature that many people prefer. If you have a POS plan on the other hand, you can still visit any in-network provider without a referral, but you’ll need one to visit a provider out-of-network.
A catastrophic health insurance plan covers essential health benefits as defined by the Affordable Care Act, but has a very high deductible. Catastrophic plans work as a safety net in case you have an accident or serious illness and usually do not cover services such as prescription drugs or shots.
Premiums for catastrophic plans may be lower than traditional health plans, but the higher deductibles and lack of copays for many common services make this plan a good choice only if you are young and in great health. If you or a member of your family suffers from a chronic disease or condition, like diabetes, or just generally seems to get sick or injured more than the average person, then the cost higher deductibles and lack of set copays will very quickly exceed any savings you get from the lower premiums.
There is one other factor that limits whether or not a catastrophic plan will work for you. The Affordable Care Act will only consider this type of plan as a "qualified health plan" if you are under the age of 30. Everyone else must purchase one of the other available types of plans or face fines for no buying health insurance.
Medical (or Health) Savings Accounts
A Medical Savings Account combines a high deductible health plan that provides coverage for major losses and a savings account to accumulate funds for other qualified routine medical expenses. The medical savings account is designed to put consumer in control of a portion of the money that is spent on their behalf. The premium for the health plan and your contributions to the savings accounts are tax deductible. Cash withdrawals from the savings account are not taxable if used to pay for medical expenses. Think of a MSA as an IRA exclusively for offsetting medical expenses. Money not spent stays in the MSA and accrues interest on a tax-free basis. MSA’s are usually set up through insurance companies and banks.
This coverage supplements the coverage provided to senior citizens by Medicare. Medicare requires deductibles and co-payments for many types of treatment. If your income is below a certain level these expenses may be paid by Medicaid. If your income is above this level you will have to pay the deductibles and co-payments out of your own pocket. Medicare supplements cover most of these out-of-pocket expenses.
Short Term Medical Insurance
Short Term Medical Insurance is Temporary Insurance, available in terms of 30 days to 6 months, to cover gaps in your health insurance, such as when you are:
- Between Jobs;
- Temporarily Unemployed;
- Waiting to Become Eligible for Group Benefits;
- A Temporary or Seasonal Employee;
- A New High School or College Graduate
NOTE: Short Term Medical Insurance usually contains various exclusions and limitations on coverages. Before deciding to purchase this type of temporary insurance, visit our Short Term Medical Insurance page for more information.
You may wish to have access to health care in other countries, including the US, in the event you become serious ill while traveling. If you are a US citizen traveling or living abroad, US private health insurance will not meet your needs. Geographical exclusions and provider limitations will restrict or even eliminate the coverage available to you while you are outside the US. If you are a non-US citizen you may need an international medical insurance policy to provide coverage while you are outside your home country. Visit International Travel Medical Insurance for more information.