types of health insurance companies

Navigating the world of health insurance can be complex, especially with the variety of plans available. Understanding the differences between the types of health insurance companies can help you make an informed decision that best suits your healthcare needs. Some of the most common types of health insurance plans include Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), Exclusive Provider Organizations (EPOs), Point-of-Service (POS) Plans, High-Deductible Health Plans (HDHPs) linked to Health Savings Accounts (HSAs), and Catastrophic Health Insurance Plans. Large national brands such as Aetna, Blue Cross Blue Shield, Cigna, Humana, Kaiser, and United often offer one or more of these plans.

Key Takeaways

Health Maintenance Organizations (HMOs) require members to use a network of doctors and hospitals and often need a primary care physician’s referral to see specialists.
Preferred Provider Organizations (PPOs) offer more flexibility in choosing healthcare providers and do not usually require referrals for specialists.
Exclusive Provider Organizations (EPOs) combine features of HMOs and PPOs but typically do not cover out-of-network care except in emergencies.
Point-of-Service (POS) Plans require referrals from a primary care physician but offer more freedom to see out-of-network providers than HMOs.
High-Deductible Health Plans (HDHPs) often have lower premiums and can be paired with Health Savings Accounts (HSAs) to save for medical expenses tax-free.

Health Maintenance Organizations (HMOs)

How HMOs Work

HMOs give you a local network of participating doctors, hospitals, and other healthcare professionals and facilities that you are required to choose from. These types of health insurance plans also require you to choose a Primary Care Provider (PCP) from the network. Your PCP is your home base for medical care. They get to know you and help coordinate all your care. They will also need to provide you with a referral to see in-network specialists. An HMO delivers all health services through a network of healthcare providers and facilities.

Advantages of HMOs

The least freedom to choose your health care providers
The least amount of paperwork compared to other plans
A primary care doctor to manage your care and refer you to specialists when you need one so the care is covered by the health plan; most HMOs will require a referral before you can see a specialist.

Limitations of HMOs

The costs for an HMO plan—copays and coinsurance—are typically lower than other types of health plans, as long as you stay in-network. However, you have the least freedom to choose your healthcare providers. To learn the specifics about a brand’s particular health plan, look at its summary of benefits.

Preferred Provider Organizations (PPOs)

How PPOs Work

PPOs typically offer you a large network of participating providers, giving you a lot of doctors, hospitals, and other healthcare professionals and facilities to choose from. You may also choose to see providers from outside of the plan’s network, but you will pay more out-of-pocket. Choosing a Primary Care Provider (PCP) is not required with these types of health plans, and you can see specialists without a referral.

Advantages of PPOs

A moderate amount of freedom to choose your health care providers—more than an HMO.
No need to get a referral from a primary care doctor to see a specialist.
Little to no paperwork if you see an in-network doctor.

Limitations of PPOs

Higher out-of-pocket costs if you see out-of-network doctors vs. in-network providers.
More paperwork than with other plans if you see out-of-network providers.
If you use an out-of-network provider, you’ll have to pay the provider and then file a claim to get the PPO plan to pay you back.

PPO plans can save you money on out-of-pocket costs in comparison to plans that let you use any provider.

Exclusive Provider Organizations (EPOs)

Exclusive Provider Organizations (EPOs) offer you a network of participating providers to choose from. Most EPO plans do not include coverage for out-of-network care except in the case of an emergency. This means that if you visit a provider or facility outside the plan’s local network, you will likely have to pay the full cost of services yourself.

A moderate amount of freedom to choose your health care providers—more than an HMO.
No need for a referral from a primary care doctor to see a specialist.
Lower premium than a PPO offered by the same insurer.
Little to no paperwork is involved if you see an in-network doctor.
No coverage for out-of-network providers; if you see a provider that is not in your plan’s network—other than in an emergency—you will have to pay the full cost yourself.
Limited choice of providers compared to PPOs.

EPOs can be a good option if you are comfortable with the network of providers and do not need out-of-network coverage.

Point-of-Service (POS) Plans

How POS Plans Work

A Point-of-Service plan, or POS, is a health plan that combines features of HMO and PPO plans. The provider network is typically smaller than a PPO plan, and the costs for in-network care are typically lower, like an HMO. POS plans also require you to choose a Primary Care Provider (PCP) from within the plan’s network of doctors and other primary care professionals. Your PCP is your home base for care and advice. They get to know you and your health needs and can help coordinate all your care.

Advantages of POS Plans

More freedom to choose your healthcare providers than you would in an HMO.
Lower costs for in-network care.
A primary care doctor who coordinates your care and refers you to specialists.

Limitations of POS Plans

Smaller provider network compared to PPO plans.
Requirement to choose a Primary Care Provider (PCP).
Higher costs and more paperwork if you see out-of-network providers.

POS plans offer a balanced approach, blending the cost-saving features of HMOs with the flexibility of PPOs.

High-Deductible Health Plans (HDHPs)

How HDHPs Work

A high-deductible health plan (HDHP) is a type of health insurance plan that offers lower premiums in exchange for higher out-of-pocket costs. The deductible is at least $1,400 for an individual or $2,800 for a family, but not more than $7,050 for an individual and $14,100 for a family in 2022. Preventive care is free even if you haven’t met the deductible.

Advantages of HDHPs

Lower premiums compared to other plans.
Access to a health savings account (HSA) to help pay for your care; the money you put in an HSA is not taxed and can be used tax-free on eligible medical expenses.

Limitations of HDHPs

Higher out-of-pocket costs than many types of plans.
You must pay all your costs up to your deductible when you go for medical care, other than preventive care.

You will want to keep track of your medical expenses to show you have met the deductible.

Health Savings Accounts (HSAs)

How HSAs Work

A Health Savings Account (HSA) is a savings account for health expenses that earns interest and allows you to deposit and make withdrawals without paying taxes. To be eligible for an HSA, you must be enrolled in a High-Deductible Health Plan (HDHP). Many bronze plans may qualify as HDHPs depending on the deductible.

Advantages of HSAs

Tax Benefits: Contributions to an HSA are tax-deductible, and withdrawals for eligible medical expenses are tax-free.
Flexibility: You can use the funds to pay for a wide range of eligible medical expenses.
Savings Growth: The money in your HSA can earn interest or be invested, potentially growing over time.

Limitations of HSAs

Eligibility: Only individuals enrolled in an HDHP can open an HSA.
Contribution Limits: The maximum you can contribute to an HSA in 2022 is $3,650 for individuals and $7,300 for families. You can contribute an additional $1,000 if you are 55 or older.
Paperwork: Keep all your receipts so you can withdraw money from your HSA and know when you’ve met your deductible.

An HSA offers a unique way to save for medical expenses, but it requires careful management to maximize its benefits.

Catastrophic Health Insurance Plans

How Catastrophic Plans Work

Catastrophic health plans offer coverage in emergencies with low monthly premiums. These plans are designed for people under 30 and those who qualify for financial aid. They pay after you have reached a very high deductible ($8,700 in 2022). Catastrophic plans must also cover the first three primary care visits and preventive care for free, even if you have not yet met your deductible.

Advantages of Catastrophic Plans

Lower premium
3 primary care visits before the deductible applies
Free preventive care, even if you haven’t met the deductible

Limitations of Catastrophic Plans

High deductible
Limited to people under 30 or those who qualify for financial aid
May not cover all medical expenses

Catastrophic health insurance coverage is ideal for those who want to pay lower premiums and are primarily concerned with emergency situations.

Conclusion:

Navigating the landscape of health insurance companies can be complex, but understanding the different types of plans available can help you make an informed decision. Whether you’re considering a Health Maintenance Organization (HMO), Preferred Provider Organization (PPO), Exclusive Provider Organization (EPO), Point-of-Service (POS) plan, or a High-Deductible Health Plan (HDHP) linked to a Health Savings Account (HSA), each offers unique benefits and trade-offs. Large national brands like Aetna, Blue Cross Blue Shield, Cigna, Humana, Kaiser, and United provide a variety of these plans, catering to both individual and group needs. By assessing your specific healthcare requirements and financial situation, you can choose a plan that best suits your needs. Remember, the right health insurance plan not only provides financial protection but also peace of mind.

Frequently Asked Questions:

1. What are the main types of health insurance plans?

The main types of health insurance plans include Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), Exclusive Provider Organizations (EPOs), Point-of-Service (POS) Plans, High-Deductible Health Plans (HDHPs), Health Savings Accounts (HSAs), and Catastrophic Health Insurance Plans.

2. How do Health Maintenance Organizations (HMOs) work?

HMOs require members to choose a primary care physician (PCP) and get referrals from the PCP to see specialists. They offer lower premiums and out-of-pocket costs but limit coverage to care from doctors within the HMO network.

3. What are the advantages of Preferred Provider Organizations (PPOs)?

PPOs offer greater flexibility in choosing healthcare providers and do not require referrals to see specialists. They also provide coverage for both in-network and out-of-network care, although out-of-network care may come with higher costs.

4. What is a High-Deductible Health Plan (HDHP)?

A High-Deductible Health Plan (HDHP) features higher deductibles and lower premiums compared to other health plans. These plans are often paired with Health Savings Accounts (HSAs) to help pay for qualified medical expenses with pre-tax dollars.

5. Can individuals purchase their own health insurance?

Yes, individuals can purchase their own health insurance policies from the Health Insurance Marketplace or state exchanges. Many of the same group carriers available for employer-sponsored plans also offer individual health insurance plans.

6. What are the limitations of Catastrophic Health Insurance Plans?

Catastrophic Health Insurance Plans typically have very high deductibles and are designed to cover worst-case scenarios. They provide essential health benefits but are generally only available to people under 30 or those who qualify for a hardship exemption.