Getting to Know the Types of Health Insurance Plans
An intro to health insurance plans and how they work
Written by: Aaron Garcia
There are many health insurance plans with differences in what they cover, which doctors you can see, and how much you’ll pay for your services.
Most insurance is private, which means you or your employer purchases it from a company. Public health insurance is government insurance programs like Medicare and Medicaid.
Some plans (HMO and POS) usually require you to have a Primary Care Physician; PPO and EPO plans often do not.
If you or a loved one is shopping for health insurance, it’s essential to understand the types of plans available and the differences between them. But before that, do you know the difference between public and private insurance? What about individual and group plans? Here’s a primer to weigh your options.
1. Public or Private Insurance Programs
- Within the programs, you have plan options.
2. Individual Plan or Group Plan
- You have the option to select your type of plan.
3. Types of Plans (HMO, PPO, etc.)
- The type of plan you choose defines how you use your benefits.
Find a local Medicare plan that fits your needs
Public health insurance is government-sponsored insurance programs like Medicare and Medicaid. It’s separate from your social security. On the other hand, a private insurance plan is administered by a private health insurance company.
A few examples of private insurance are:
- Employer-sponsored group plans: If your employer offers insurance, the policy is part of a private group plan, and likely administered through an insurance company.
- Medicare Advantage: The government regulates Medicare Advantage, but a private insurance company provides your policy. The insurance company must follow federal guidelines that protect Medicare Advantage policyholders.
Health insurance provided to employees by an employer is called group coverage. Health insurance you purchase on your own, not through an employer, is called individual coverage.
An individual plan is a health insurance policy that you select and purchase. You can buy an individual policy in marketplaces or exchanges. Unlike a group plan with defined benefits, an individual plan provides you the freedom to select more or fewer benefits. However, you are responsible for the entire cost of your policy unless you qualify for certain subsidies.
A group plan can cover you and your family. They’re usually provided by your employer, who pays a part of your monthly premiumA premium is a fee you pay to your insurance company for health plan coverage. This is usually a monthly cost.. In a group plan, your employer selects the medical benefit options, and you can choose to use employer coverage or not. If you decide not to use employer coverage, you can choose and purchase an individual plan.
Are you eligible for cost-saving Medicare subsidies?
Health Maintenance Organization (HMO)
An HMO is a health plan that includes a Primary Care Physician (PCP) and lower copayments and premiums. Your PCP will manage most of your care and refer you to specialists.
Right for you? HMOs establish a regular provider relationship between you and your PCP. If this sounds like the relationship you prefer, an HMO may be a good fit.
Preferred Provider Organization (PPO)
With a PPO, you don’t need a PCP for referrals. You can also see out-of-network doctors, but you’ll pay more for out-of-network care.
Right for you? Consider a PPO if you want the flexibility to see doctors outside of your network and don’t need a PCP.
Exclusive Provider Organization (EPO)
EPOs offer networks of doctors you can see without a referral. Some EPO customers may have a PCP, but EPOs do not allow you to see out-of-network doctors unless it’s an emergency.
Right for you? Customers with a lot of local doctors looking for lower monthly premiums may want to look at an EPO.
High Deductible Health Plan (HDHP)
An HDHP is a plan that lowers a policyholder’s monthly premium by charging a higher deductible. These customers will pay more out-of-pocket costs until they hit their deductible. Many customers also enroll in a Health Savings Account to help pay for these costs.
Right for you? HDHP plans are often popular with younger customers that don’t expect to have any medical issues.
Point of Service (POS)
POS plans often require a primary care physician but still allow you to receive out-of-network services. In-network care usually comes with copayments as with an HMO, but you’ll pay more for out-of-network visits like a PPO.
Right for you? POS customers enjoy a PCP as their primary contact and the freedom to go out of network for service.
Fee for Service (FFS)
You can see any provider with an FFS plan, but the price for services is not negotiated and likely more expensive. You can expect higher costs with this type of flexibility.
Right for you? FFS customers often don’t mind paying more for the chance to see any doctor they want. This plan can be great for travelers.
These plans offer high deductibles with low monthly premiums for customers under 30. If you’re healthy and don’t see the doctor often, a catastrophic plan may be the right balance of value and coverage.
You have options. The Affordable Care Act (ACA) started programs to help Americans afford health insurance. You may qualify for Cost-Sharing Reductions and a Premium Tax Credit to help bring down your costs. You may also be eligible for Medicaid and Children’s Health Insurance Program (CHIP), which eliminates or reduces insurance costs for low-income individuals and families.