Types of Health Insurance Plans
There are several types of health insurance plans that individuals and families can choose to enroll in outside of the employer-offered health plans.
Most of these plans are purchased through the applicant’s state health insurance marketplace, where information and enrollment procedures for the most common plans can be found.
Each different health insurance plan offers various options for health care providers, different payment structures and coverage limitations. Becoming familiar with what each of the most common plans offers is the best way to find plans that fit your family’s needs. Read on to learn the basics about the six health care programs that you are most likely to come across when shopping for your next health insurance plan: Health Maintenance Organization (HMO), Preferred Provider Organization (PPO), Exclusive Provider Organization (EPO), Point of Service Plan (POS), High-Deductible Health Plan with or without a Health Savings Account (HDHP/HSA) and Fee for Service (FFS) programs.
Health Insurance Marketplace Coverage Levels
While the details of each health insurance plan mentioned above vary significantly, all plans found in the state marketplace are qualified by their level of coverage for the enrollee. To help individuals choose the right health insurance plan, they are classified as catastrophic, bronze, silver, gold and platinum.
The most important differentiating factor between these metal levels is the share of costs carried by the enrolled person. In general, programs with high monthly premium costs have lower deductibles and plans with lower monthly costs have higher deductibles. Most other details will still differ significantly between programs within each class of plans.
These marketplace health care plan classes reflect the following categorizations:
- Platinum Health Insurance Plans cover 90 percent of your medical costs on average while you pay 10 percent.
- Gold Health Insurance Plans cover an average of 80 percent of your medical costs while you pay 20 percent.
- Silver Health Insurance Plans cover 70 percent on average of your medical costs while you pay 30 percent.
- Bronze Health Insurance Plans cover 60 percent of your medical costs on average while you pay 40 percent.
- Catastrophic Health Insurance Plans cover less than 60 percent of your total average cost of care in addition to providing full coverage for the first three primary care visits and other preventive care options. In most cases, enrollees in Catastrophic Health Plans must be 30 years old or younger to qualify.
Health Insurance Plans Through the State Health Care Marketplace
There are several large companies that manage the health insurance plans available in state health care marketplaces around the country that you may already be familiar with. Big name brands like Humana, Cigna, Aetna, Blue Cross Blue Shield, United and Kaiser offer various types of HMO, PPO, EPO, POS, HDHP/HSA and FFS programs. Read on for more details about each of these six popular health insurance plan types.
Health Maintenance Organization (HMO)
HMOs provide all health services through an established network of health care providers and facilities. Therefore, HMOs generally provide the least freedom to choose providers. Patients with HMO coverage must see their primary care provider to receive a specialist referral for most medical issues. Fewer choices, however, result in more affordable health care, less paperwork that must be filed by the enrollee and less time spent trying to weigh the pros and cons of different doctors or hospitals, since your primary care doctor will choose your specialist for you.
Due to the strict requirements of most HMOS, receiving non-emergency care from a doctor outside of the HMO network must be totally covered by the enrollee not the insurance company. In an emergency situation, HMO participants will be charged in-network rates at the treating hospital, but any non-participating doctors may individually bill the enrollee for his or her services.
The costs of an HMO can vary significantly but generally include a monthly premium, as well as a deductible and an out-of-pocket maximum, which must be met before 100 percent of medical services are covered by the program. Thanks to the structure of HMOS, enrollees do not need to complete claim forms to receive coverage for medical care.
Preferred Provider Organization (PPO)
PPOs provide enrollees with a bit more freedom to choose providers than do HMOs. Enrollees in PPOs do not need a referral from their primary care doctor in order to see a specialist, nor must they pay 100 percent of fees when seeing an out-of-network doctor. Instead, PPOs offer to pay a set percentage of the cost of services received from out-of-network providers that is higher than the percentage it will pay for services received from in-network doctors.
Due to this differentiation, enrollees in PPOs may have to face more paperwork when using out-of-network providers then when visiting in-network medical providers. In most cases, visits to an in-network health care provider will be automatically covered by the PPO, while visits to out-of-network doctors will require the enrollee to pay for the visit upfront and file a claim to his or her insurance provider for reimbursement after the fact. A monthly premium and varying levels of deductibles must be paid by most participants in PPOs.
Exclusive Provider Organization (EPO)
EPOs are similar to PPOs in that they offer participants more freedom to choose providers than HMOs by allowing them to see specialists without a referral from their primary care physician. Unlike with a PPO, however, participants in EPOs will receive no coverage for seeing out-of-network doctors in any situation other than an emergency.
In most cases, EPOs are offered by the same insurance companies that offer PPOs but at a lower premium because of the lack of coverage for out-of-network medical providers. Many participants in the EPO program choose this option primarily to be able to see specialists directly without adding unnecessary appointments with the primary care physician while still being able to maintain low monthly premiums. All EPOs provide enrollees with different options for monthly premium and visit deductibles amounts. Like HMOs, there is little to no paperwork to complete for payment or reimbursement when visiting in-network EPO physicians.
Point of Service Plan (POS)
POSs offer more freedom to choose health care providers than standard HMOs along with lower average costs than the typical PPO or EPO. POSs allow enrollees to choose from medical providers both in and out of a network.
As with PPOs, visiting out-of-network providers costs enrollees more than seeing an in-network provider but is partially covered. As with HMOs, enrollees in POSs have a primary care physician who is meant to coordinate the enrollee’s various health care needs. Participants in PPOs who choose to visit an out-of-network provider will be asked to pay for the associated fees at the time of service and to file for reimbursement from the PPO provider afterwards. Enrollees will have a set monthly premium and various deductible amounts varying by plan type and medical service. Visiting an in-network provider usually requires little to no paperwork
High-Deductible Health Plan With or Without a Health Savings Account (HDHP/HSA)
HDHPs were created to offer basic health coverage at low costs to individuals from low-risk groups, similar to Catastrophic plans. Most HDHPs provide enrollees with the structure and benefits of an HMO, PPO, EPO or POS but with significantly higher deductibles. As a health care plan meant to offer a safety net in the case of an unexpected health issue, HDHPs have higher out-of-pocket costs than most other health care plans, starting at $1,300 for individuals and $2,600 for families. Like other plans, however, once an enrollee meets the deductible ceiling, 100 percent of all future costs are covered by the program. Additionally preventative care visits are always covered.
HSAs can help enrollees pay for HDHPs by serving as a tax-free savings account dedicated to potential future medical costs with, a maximum allowed deposit amount of $3,450 for individuals and $6,900 for families (as of 2018). HSAs are not usually required to have an HDHP, but an HDHP is required to have an HSA. Many bronze-level health care plans may be considered HDHPs, depending on their deductibles.
Fee for Service (FFS)
FFS health plans are not as popular today as they used to be in the past, but some insurance providers still provide them as an option. Under the FFS plan, participants have the most freedom possible to choose their desired medical provider or hospital. FFS enrollees can see any doctor or visit any hospital of their choice while paying a set amount based on each service received.
FFS participants do not need referrals from their primary care physician to see specialists, and there is usually no differentiation between in-network and out-of-network doctors or facilities. In most cases, FFS enrollees pay for the medical service upfront and file a claim for reimbursement to their health care provider later on. FES programs are often very expensive if they do not include a network or PPO option and are less popular most likely for this reason.