Shopping for health insurance can be a very arduous task, especially if you are looking for individual coverage. Even if you get insurance through your employer, you may still have to sort through a number of options before making a final decision. Understanding the various types of health insurance and how they differ is important if you want to make the right decision.
One of the most common types of plan is the HMO, or health maintenance organization. These offer lower costs for the policy holder in exchange for restricting their choice of providers. When you belong to an HMO, you can generally only see doctors who are members of the HMO’s network. If you see anyone out of the network, you would have to pay the full cost out of your own pocket.
However, when you see an in-network provider, you usually only have to pay a small co-pay. The HMO will cover all of the rest of the cost of care. In addition, the monthly premiums for such a policy are generally lower than with other alternatives.
A common alternative to the HMO is the PPO, or preferred provider organization. While these are structured similarly to HMOs, with a network of providers, patients are able to see doctors who are not part of this network and still receive coverage. When doing so, however, they have to pay a larger percentage of the cost of care.
In addition, when seeing a doctor who does belong to the plan’s network, your policy will probably not cover 100 percent of the cost. For example, you might have to pay 10 to 20 percent of the cost, depending on the type of care, when seeing an in-network doctor. When venturing out of the network, you might have to pay anywhere from 30 to 50 percent. Premiums are also frequently higher than with an HMO.
A hybrid type of policy is the point-of-service plan, or POS. These combine features of both HMOs and PPOs. You will designate a primary care physician, or PCP, as with an HMO. When you see your primary doctor, or a specialist to whom you have been referred, your policy will pick up most or all of the cost. As with a PPO, you can go out of network for care and your plan will provide some coverage.
Another type of coverage is the health savings account, or HSA. With these, you have a portion of your salary deposited into a special account to be used for medical expenses. In addition, you have an insurance policy with a high deductible. The cost of any medical care will be paid for out of the savings account until you reach your deductible. After that point, the insurance will pay for most of your medical expenses.
As you can see, there are many types of health insurance, though not all may be available to you. Before making a decision, you will need to weigh the pros and cons carefully to determine which approach is right for you and your family.