There are several main categories of health insurance plans, each with unique features and considerations. Understanding the options helps you find the right type of medical coverage for your healthcare needs and budget. This overview covers the key characteristics of common plan types available today.
Health Maintenance Organization (HMO)
Health Maintenance Organizations represent a managed care approach to health insurance. Here are some key things to know about HMO plans:
- Limited provider network – You select a primary care physician (PCP) from the HMO’s network to coordinate care. Referrals are required for specialists. Out-of-network care is only covered in emergencies.
- Lower premiums – Monthly costs for HMO coverage tend to be cheaper compared to PPO or POS plans. However, provider choice is more limited.
- Preventive care covered – Services like routine checkups and immunizations are covered with no out-of-pocket costs before you meet the deductible.
- Copays common – HMOs often rely on defined copay amounts for doctor visits, prescriptions, and other common services once the deductible is met. This gives cost predictability.
- Pre-authorization required – Certain services, like surgery or expensive tests, require approval from the HMO first to be covered. This ensures medical necessity.
- No out-of-network coverage – Seeing doctors or utilizing facilities outside the HMO network typically results in you paying 100% of those charges, except for emergency care.
HMOs promote coordinated care management and aim to reduce unnecessary utilization. But the trade-off is less provider choice compared to other plan types.
Also, Check this as well Health Insurance Deductibles Explained
Preferred Provider Organization (PPO)
Preferred provider organizations represent a type of health plan with more provider flexibility:
- Large provider network – PPOs contract with a broader range of doctors, specialists, hospitals, and facilities compared to HMOs.
- Out-of-network care allowed – You can see providers outside the preferred network, but your share of costs will be higher.
- No referrals for specialists – You can see in-network specialists without a referral from a primary care doctor, giving you more autonomy.
- Annual deductible – Most PPO plans have a deductible you pay first before copays and coinsurance kick in for additional covered care.
- Copays and coinsurance – Typical cost sharing includes copays for office visits and prescriptions as well as coinsurance percentages for services after meeting the deductible.
- More expensive premiums – The added flexibility of PPO plans comes with higher monthly premium costs on average compared to HMOs with tighter provider control.
PPOs offer wider access to providers but less care management oversight compared to managed care models. This results in higher upfront premium expenses for consumers.
Point of Service (POS) Plan
Point of service plans blend HMO and PPO elements:
- PCP coordination – You designation a primary care doctor from the in-network providers to manage and refer your care, like an HMO model.
- In and out-of-network coverage – POS plans cover both in-network and out-of-network providers similar to a PPO, but benefits are usually better in-network.
- No referrals for in-network – You can see specialists in the network without referrals, giving you some flexibility compared to traditional HMOs.
- Pre-authorization required – Just like HMOs, services like hospitalization on POS plans often require pre-approval to be covered fully.
- Copays and coinsurance – Cost sharing typically involves copayments for office visits and prescriptions in addition to coinsurance percentages for other services after the deductible.
- Moderate premium costs – Premiums fall in between HMO and PPO prices since POS plans blend these two model types.
With the PCP designation and pre-authorization rules, POS plans aim to guide utilization like an HMO while also offering some out-of-network flexibility of a PPO plan. This balances access and affordability.
High Deductible Health Plan (HDHP)
High deductible health plans feature higher annual deductibles but premium savings:
- Large network – HDHPs typically utilize broad PPO-style networks to ensure adequate provider access given the limited benefits until meeting the deductible.
- High deductibles – The IRS defines a high deductible plan for 2023 as having a minimum $1,500 deductible for an individual and $3,000 for a family. Deductibles can go up to $7,000 or more.
- Compatible with HSAs – Most HDHPs are designed to allow pairing with a tax-advantaged health savings account to offset the high deductible costs.
- Generous coverage after deductible – Benefits like coinsurance rates are similar to traditional insurance once you meet the deductible, but your upfront costs are greater.
- Lower premiums – The monthly premium cost for a HDHP is typically much lower than for plans with lower deductibles and more first dollar coverage.
- Preventive care covered – HDHPs still provide full coverage with no cost sharing for preventive services like immunizations and checkups before the deductible.
HDHPs provide catastrophic protection with reduced premiums in exchange for taking on more risk upfront with large deductibles. HSAs help bridge that gap in coverage.
Catastrophic Health Insurance Plan
Catastrophic health plans provide basic coverage in worst case scenarios:
- Only available to certain enrollees – Eligibility for catastrophic plans is limited based on age, financial means, and affordability exemptions from the individual mandate.
- Very high deductibles – Deductibles are set at the annual limit for high deductible health plans, which for 2023 is $9,100 for an individual and $18,200 for families.
- Low monthly premiums – Premium costs are very affordable since catastrophic plans have extremely limited coverage and benefits until reaching the deductible.
- Covers 3 primary care visits – Some limited coverage is given before the deductible for three primary care office visits per year.
- Preventive care covered – Like other ACA plans, preventive services are fully covered without having to meet the deductible first.
Catastrophic policies act as a financial safety net against worst case medical scenarios for members who meet special eligibility requirements. They provide minimal coverage for daily healthcare expenses.
Employer-Sponsored Group Health Plan
Employer-provided group health plans cover employees through work:
- Subsidized premiums – Employers typically cover a large share of monthly health insurance premium expenses for their employees to make costs more affordable.
- Range of plan options – Larger employers often give workers a choice between plan types, such as PPO and HMO offerings, with different costs and benefits.
- Dependent coverage – Group health extends to cover spouses/partners and dependent children in most cases.
- Guaranteed issue – Group plans provide guaranteed coverage without medical underwriting or exclusions for pre-existing conditions.
- COBRA eligibility – Leaving your job gives the option to temporarily continue group benefits through COBRA by paying full premiums.
- Often has perks – Some employers offer extra health-related perks like gym discounts or free preventive care services as part of the benefits package.
Getting coverage through work lets employees access health insurance with attractive premiums and benefits they may not find elsewhere.
Individual and Family Plans
Individual and family plans are purchased directly from insurers by consumers:
- No employer subsidies – You pay the entire premium cost yourself without employer contributions on individual policies.
- Financial assistance available – Those with qualifying lower incomes can get premium tax credits and cost sharing reductions on individual market plans purchased through Healthcare.gov.
- Open enrollment periods – Consumers can shop and buy individual plans each year during open enrollment from November 1 to December 15 for coverage effective January 1.
- Guaranteed issue – Thanks to the Affordable Care Act, individual health plans cannot deny coverage or exclude pre-existing conditions. Some age and tobacco use rating restrictions still apply in most states.
- Range of offerings – Choices include HMO, PPO, POS and high deductible plans from insurers in your state’s marketplace. Not all insurers or plan types may be available in your county.
- Temporary policies – Short term limited duration health insurance provides temporary stop-gap coverage but lacks many ACA plan protections.
Shopping for individual and family policies takes more effort to find affordable options without employer subsidies, but financial help and guaranteed issue improve access.
Medicare Advantage represents private plan alternatives to original Medicare:
- Eligibility for seniors – You must be enrolled in Medicare Parts A and B and keep paying Part B premiums to join Medicare Advantage plans.
- Part C – Medicare Advantage is also called Medicare Part C. These plans administer all of your Medicare benefits.
- Often has drug coverage – Many Medicare Advantage plans integrate Part D prescription drug benefits but some do not, so check plan details.
- Out-of-pocket limits – Medicare Advantage plans have annual limits on your costs for medical services, which original Medicare does not.
- Premiums vary – Some Medicare Advantage plans charge no monthly premium while others have premiums of $50 or more per month on top of your Part B premium.
- Network restrictions – Care is only fully covered through in-network providers except for emergencies. Seeing out-of-network doctors results in higher personal costs.
Compare costs, drug coverage, and provider networks when considering Medicare Advantage plans vs. original Medicare and standalone Part D plans.
Medicaid provides health coverage for eligible low-income Americans:
- Must meet income thresholds – Medicaid eligibility is based on having income up to a certain percentage of the Federal Poverty Level. Thresholds depend on factors like age and pregnancy status.
- Jointly funded – Medicaid is jointly funded by state and federal governments. States administer the program.
- Covers children – In addition to covering low-income adults, Medicaid provides health insurance for qualifying children in need.
- Covers maternity care – Pregnant women with income below Medicaid eligibility limits qualify for coverage that includes prenatal care, delivery, and some postpartum services.
- Long term care coverage – Medicaid pays for long term care services including nursing home care for seniors who exhaust their personal finances.
- CHIP – The Children’s Health Insurance Program (CHIP) provides Medicaid-level benefits for uninsured children not eligible for Medicaid.
Medicaid gives lower earners access to healthcare, children needed coverage, and seniors help with long term care costs.
Key things to know about dental insurance plans:
- Often separate coverage – Many major medical insurance plans only cover basic dental care like cleanings if at all. More comprehensive dental coverage is usually sold as a separate policy.
- Preventive focus – Dental insurance often fully covers preventive services like oral exams, cleanings, and x-rays with low or no copays. Basic and major services have greater cost sharing.
- Annual maximum benefit – Most dental plans limit annual reimbursements to between $1,000 to $2,000 per year. You pay any additional dental costs beyond the yearly maximum out of pocket.
- Waiting periods – Some dental treatments may have waiting period timeframes before coverage kicks in, like 6-12 months for major work. This prevents abuse if dental insurance is only kept for short periods.
- Orthodontia riders – Orthodontia work can be added through optional riders for an additional premium cost, but often features lifetime maximum payout limits.
To get thorough dental coverage, carefully compare plan maximums, networks, waiting periods, and major dental work benefits like root canals.
Key things to know about vision insurance plans:
- Often separate coverage – Routine vision coverage is commonly sold as an add-on policy separate from major medical insurance. Some employer plans bundle vision benefits.
- Wellness benefits – Vision plans fully cover annual eye health exams and standard glasses or contact lenses at low out-of-pocket costs to the member.
- Materials coverage – Lenses and frames are covered up to a stated reimbursement limit, with members paying costs above allowance. Options like progressives lenses may have higher personal costs.
- Lasik discounts – Many plans negotiate discounts on Lasik surgery with network providers. Still an elective out-of-pocket cost for members but at reduced pricing.
- Exam copays – Nominal copays like $10 or $15 are common for annual eye exams to check vision and eye health.
Routine vision insurance makes needed wellness eye care affordable. Compare network, cost sharing, and eyewear allowances when selecting policies.
Short Term Health Insurance
Short term health plans offer temporary coverage:
- Up to 36 months allowed – Originally designed as gap coverage for between jobs, regulations now allow short term plans to be kept for up to 36 months in many states.
- Underwriting required – Short term health insurance plans medically underwrite applicants, deny based on pre-existing conditions, and assess premiums based on health status.
- Limited benefits – Benefits tend to exclude some services like maternity care and limit dollar amounts paid annually and over the entire term of the plan.
- Preventive care not covered – Unlike ACA plans, preventive services usually are not included and deductibles apply.
- Low monthly cost – Premiums are lower compared to ACA-compliant major medical coverage since short term plans come with less coverage.
Short term health insurance provides temporary coverage but lacks many Affordable Care Act consumer protections that come with comprehensive major medical insurance.
Supplemental health insurance helps pay for costs not covered under your primary medical plan:
- Combines with primary insurance – Supplemental plans serve as an add-on to other policies like Medicare or employer group health coverage.
- Covers cost gaps – It assists with deductibles, copays, coinsurance amounts, and non-covered services or treatments where your main policy falls short.
- Often niche focus – Many supplemental plans focus on specific concerns like cancer, critical illness, hospital indemnity, or accident medical costs.
- Premiums vary – Cost is usually modest but depends on your age, health, and the level of benefits provided. Those in poorer health pay more.
- Typically voluntary – Most supplemental plans are optional additions elected individually by consumers, unlike primary coverage provided automatically by an employer.
Supplemental coverage enhances existing insurance with financial assistance for health expenses that regular policies don’t adequately address.
Basic vs. Comprehensive Health Insurance
There is an important distinction between basic and comprehensive health coverage in terms of services included:
- Basic plans – Basic health plans like short term or catastrophic policies cover mainly just major medical events like hospitalization or surgery. They provide minimal coverage for routine or preventive care.
- Comprehensive plans – Comprehensive major medical insurance covers the gamut of medical services from preventive visits to prescription drugs to hospital stays. These include plans compliant with Affordable Care Act standards.
- Preventive care differences – Comprehensive plans fully cover preventive services while basic plans do not. Maintaining wellness and catching issues early is a key advantage of comprehensive insurance.
- Condition exclusions – Unlike comprehensive policies, basic health plans can exclude coverage for pre-existing medical conditions or health history. This reduces costs but limits benefits.
- Out-of-pocket costs – Comprehensive plans cap annual totals members pay for covered care, while basic plans often lack out-of-pocket limits resulting in greater cost exposure.
Always understand exactly how much routine, major, and specialty healthcare a particular insurance policy covers. Comprehensive plans provide the most robust coverage and financial protections.
Common Health Insurance Policy Add-Ons
In addition to major medical coverage, health plans often give options to add supplemental coverage through policy riders for additional premium costs:
- Dental rider – Adds comprehensive dental insurance for services like cleanings, fillings, root canals, dentures and orthodontia.
- Vision rider – Covers routine eye exams and glasses or contacts through a bundled vision insurance policy.
- Accident rider – Provides extra accident medical expense benefits like hospital stays above the policy limits on your major medical plan.
- Critical illness rider – Pays lump sum cash benefits if diagnosed with major illnesses like cancer, heart attack, or stroke to help cover costs.
- Hospital indemnity rider – Gives cash payments for each day of inpatient hospitalization to help cover incidentals like transportation, meals, and lodging.
- Wellness rider – Provides reimbursements for gym memberships, weight loss programs, and other health-related activities that promote wellness.
Optional supplemental riders allow members to design coverage tailored to their specific healthcare and financial needs. They come at an additional premium cost for added benefits.
Things to Look for When Comparing Health Insurance Plans
Here are key considerations when reviewing and comparing available health insurance options:
- Premium cost – The monthly or annual premium is what you pay upfront for coverage. Make sure this fits within your budget.
- Plan type – Evaluate factors like provider choice flexibility, referral requirements, and care coordination differences between HMOs, PPOs, POS plans, and HDHPs.
- Deductible amount – Pay attention to how much you’ll pay out-of-pocket before coverage kicks in and the deductible is met.
- Copays and coinsurance – Understand the copay amounts for services like doctor visits and prescriptions. Also look at the coinsurance percentage you pay for hospitalizations and other costs.
- Annual out-of-pocket limit – This cap provides cost protection from catastrophic expenses. The lower the limit, the more expenses get covered by insurance.