Dealing with health issues can bring on some significant lifestyle challenges, but adding medical bills on top of that is enough to increase your anxiety. Health insurance is one of the smartest and most straightforward ways of saving money for dealing with health-related dilemmas. It serves as a financial shield and eliminates the stress regarding handling funds during intense health problems.
Furthermore, with ever-increasing medical costs and rising rates of accidents and lifestyle illnesses, every person should be covered by a health insurance plan to avoid high medical costs. If you are looking for health insurance, you might be overwhelmed with the types of plans available out there. Since there are so many types of health plans, finding one that suits your needs is important. The more familiar you are with the plans available, the better equipped you will be to select one that aligns with your needs and budget. You must evaluate the options available before signing up for a specific plan to reap the full benefits of your coverage.
Health insurance coverage in and of itself is a vast topic with products aplenty, and it’s easy to lose yourself in all technical aspects of it. This article reviews some of the most common types of available health insurance plans.
Health Maintenance Organizations (HMOs)
HMO allows you to gain healthcare services from an approved network of providers. It is typically a plan that limits coverage to care from doctors within the HMO network and, therefore, will not cover out-of-the-network care – except, of course, in the case of an emergency. HMOs require you to live within their service area for eligibility.
Pros:
- More affordable than premiums
- Fewer plans with deductibles
- Better coordinated care
- No additional fees for care
- Less amount of paperwork when compared to other plans
Cons:
- Limited options with a smaller selection of providers
- Usually location-specified, so if you need to see a provider out of the network, the plan will only cover a portion of the bill
- Requires a referral from the primary care physician to see a specialist
- You could lose your preferred doctor if they leave your HMO
Preferred Provider Organizations (PPO)
These plans offer a vast network of participating providers, so you can access a great selection of hospitals and healthcare professionals. You can choose providers out of the plan’s network, but this will involve out-of-pocket expenses. A primary care provider will not be required, so a referral is not needed if you wish to consult a specialist.
Pros:
- More flexibility in terms of choosing doctors and specialists
- Since no doctor is overseeing your overall care, referrals are not required
- A wide array of services that go beyond basic checkups and preventative care.
- The coverage protects you when you’re away from home or traveling.
Cons:
- PPO premiums are costly
- Likely to have an annual deductible
- Involve additional costs like coinsurance charges
- More paperwork is required, particularly when you go out of your PPO network
- You are responsible for coordinating your care because you don’t have a primary care provider who does it for you
Exclusive Provider Organizations (EPO)
EPOs provide a network of participating providers that you can choose from. Most plans typically do not cover out-of-the-network care except during an emergency. Therefore, if you visit a provider or facility out of the network, the service cost will have to be covered by yourself. Essentially, EPOs are a combination of HMOs and PPOs. While they do have exclusive networks like HMOs (albeit on a larger scale), they are less expensive than PPOs. The key difference between an EPO and HMO is that you will not have to choose a primary care provider, so you won’t need a referral to see a specialist.
Pros:
- Mid-level premium costs
- Primary care provider is not required to coordinate your health care needs
Access to specialty care
Cons:
- Network limitation, where you will be responsible for the costs of all out-of-network services, except during an emergency
- Additional deductibles and coinsurance charges may apply
Point-of-Service (POS) Plan
This plan combines the features of an HMO and a PPO plan. Similar to HMO, POS requires you to choose a primary care provider from the plan’s network providers. It’s smaller than a PPO plan, though, and the costs are also lower. Nevertheless, you can select specialists like with a PPO plan, should you need one. You can see a doctor within the plan’s network or outside of it. In the latter case, the costs will be higher, and claims will have to be filed by yourself.
Pros:
- Lower costs than with a PPO plan
- Offers greater flexibility than an HMO
- No deductible if you choose to remain in-network
- Freedom to choose any healthcare provider you wish
Cons:
- Potential for higher costs if you decide to see a doctor out of the network
- May have to pay a deductible for out-of-network care
- Requirement of getting a referral from your primary care provider to see a specialist
High Deductible Health Plan (HDHP)
This health insurance plan lowers the policyholder’s monthly premium by charging a higher deductible. It also entails more out-of-pocket costs until the deductible is met. This plan is ideal for those who generally only need preventative care.
Pros:
- Lower monthly premiums
- Some of those who qualify for this health plan may be paired with a Health Savings Account. The funds can therefore be used to pay for eligible medical costs. Plus, the money deposited is tax-free.
Cons:
- Higher deductible
- Expensive out-of-pocket medical costs in the event of requiring non-preventative medical care
Indemnity Plans
Also known as fee-for-service plans, indemnity plans are an add-on to primary medical coverage. They provide protection in case of a specific illness or injury covered by the policy and help cover out-of-pocket costs during the year.
Pros:
- Ability to select a health service provider or physician of choice without any network limitations or geographic restrictions
- Not necessary to gain a referral to consult a specialist
- No requirement to choose a preferred provider network
Cons:
- More expensive than HMO or PPO plans
- More paperwork required
- It might not offer coverage for preventive care, annual wellness checkups, or other services that are typically covered in HMO and PPO plans
Bottom Line
There is no denying that health insurance is crucial for financial security. That is why you need to take the time to understand the different types of plans to ensure that you purchase the most inclusive and beneficial health insurance policy that aligns with your lifestyle and demands. So take your time researching, don’t make hasty decisions, and apply for the most appropriate health insurance plan!
