You can choose from various types of health insurance. Learn more about the different types below.
Health Maintenance Organization (HMO)
HMOs offer a list of participating doctors from a specified list. These types of health insurance plans also require you to choose a primary care provider (PCP) from the network. You must coordinate all your care through your PCP and must refer you to any in-network specialists. HMO plans typically cost less than other types of health plans (as long as you stay in the specified network).
Exclusive Provider Organization (EPO)
EPOs also offer a list of participating providers but do not include out-of-network care except in the case of an emergency. In other words, if you choose a provider or facility outside the plan’s local network, you pay the full cost of services yourself.
If you want to see a specialist in your network, you don’t need a referral from a PCP.
Preferred Provider Organization (PPO)
PPOs typically offer you a large network of participating providers. You may also choose to see providers from outside of the plan’s network, but you will pay more in out-of-pocket costs.
You don’t have to choose a PCP and can choose specialists without a referral.
Point of Service Plan (POS)
Point of service plans combine parts of HMO and PPO plans. You don’t get quite as large of a network as a PPO plan and the costs for in-network care cost less, just like an HMO. You must choose a primary care provider (PCP) from within the plan network of primary care professionals and must get a referral.
What Are the Key Features of Health Insurance Policies?
Take a look at some key features of health insurance policies so you can make the right decision for you and your family’s needs.
Premium
You pay a premium to a health insurance company to have an active insurance plan. Most people pay a premium every month, but you also might pay once a quarter or once a year.
If you get health insurance through work, your employer probably covers a share of your monthly premium.
Deductible
You pay a specific amount each year, or a deductible, before your insurance company pays its share. For example, let’s say you have a $1,000 deductible. This means your insurance company might not chip in any money until you pay $1,000 for health care during the year.
Copayment
The copayment (copay) represents the amount you owe each time you receive medical care. You may pay various amounts for your regular physician and more when you go to a specialist.
Normally, you can’t use your copays to reach your deductible.
Coinsurance
Coinsurance represents the percentage you’ll pay for medical expenses. Let’s say you meet your deductible early in the year. From then on, your coinsurance would cost you 20%.
Out-of-Pocket Maximum
The out-of-pocket maximum totals the most you’ll pay each year toward costs, including your deductible, copay and coinsurance. For the 2021 plan year, the out-of-pocket limit for a Marketplace plan can’t be more than $8,550 for an individual and $17,100 for a family.
Let’s say you’ve gone all year without any medical expenses and suddenly have to go to the hospital. Let’s also say your plan specifies that you pay 30% of hospital bills (your coinsurance) and your insurance company pays 70%. If your 30% share of your bill is greater than $8,550, you still won’t have to pay more than that because you will have met your yearly out-of-pocket maximum.
How Do You Know Whether You Need a Different Health Insurance Plan?
How do you know if you need a different insurance plan?
1. Your deductible is higher than the amount in your savings account.
Almost all major medical plans have high annual deductibles that are now $1,000 or more and include over $6,500 in out-of-pocket expense limits.
However, many Americans can’t cover that amount of money. A study showed that four in 10 Americans wouldn’t have enough money in savings to cover an unexpected $1,000 medical event.
You may need to shop around for the lowest deductible you can find and make sure that you can pay your premium every month.
2. You want access to a wide choice of providers.
Let’s say you live in a state that doesn’t offer you access to coverage out of state. For example, let’s say you live in Iowa but develop a serious medical condition and want to get treated at the Mayo Clinic in Minnesota.
Many HMO plans only offer local physician network coverage, but a PPO often offers a larger network of out-of-state providers. However, you likely will need to pay a larger copay or coinsurance amount for out-of-network coverage.
3. You want to pay less for health insurance.
Take a look at a few ways you can pay less for health insurance:
- Stop smoking.
- Increase your deductible.
- Change your coinsurance ratio.
- Get a high-deductible health plan with an HSA (Health Savings Account).
- Choose an in-network doctor.
- Change group health insurance plans.
- Encourage your employer to choose a cheaper health insurance plan.
This material is for informational purposes only and should not be construed as financial, legal, or tax advice. You should consult your own financial, legal, and tax advisors before engaging in any transaction. Information, including hypothetical projections of finances, may not take into account taxes, commissions, or other factors which may significantly affect potential outcomes. This material should not be considered an offer or recommendation to buy or sell a security. While information and sources are believed to be accurate, UNest does not guarantee the accuracy or completeness of any information or source provided herein and is under no obligation to update this information.
