Assessing The Different Types Of Health Insurance Plans

Source: Courtney Hale / Getty

If you’ve been fortunate enough to enjoy mostly good health and/or have someone else pay for your health insurance, you might have never given much thought to the many types of health insurance plans out there. However, as you get older, or as health conditions pop up, all of those seemingly mysterious terms like HMO and PPO suddenly have a lot more meaning in your life. Not all types of health insurance are made equal. Some cost much more than others, but the benefits associated with them far outweigh the higher price. Others might be affordable but not offer much flexibility or control, and for those with good health on a tight budget, those are appropriate for now.

At different times and phases in your life, you might need different types of health insurance. Understanding each kind can help ensure you have access to the care you need, and at a cost that works with your financial planning. Here is a breakdown of the different types of health insurance, so you can make an informed decision about your healthcare.

Health Maintenance Organization (HMO)

Source: Beau Lark / Getty

An HMO is going to be one of the most affordable health insurance pans. It is going to have low monthly premiums, low deductibles and fixed copays. So what could possibly be the catch? In order to enjoy the low cost of this plan, you’ll need to stick within its network of local doctors and hospitals.

Additionally, once you are assigned a primary care physician (PCP), they will need to give you referrals any time you’d like to see a specialist.

Pros: Low premiums, deductibles and copays.

Cons: Less choice when it comes to providers. You’ll need PCP referral for specialists.

Who is it good for? An HMO might be the right plan for someone who is in good health, facing little or no chronic issues that require frequent visits to specialists, and someone who is trying to save money.

Point of Service (POS)

Source: LaylaBird / Getty

A POS plan is also an affordable plan. Like an HMO, it will require referrals from your PCP for specialists. However, it does allow for you to see out-of-network doctors. These will cost more than in-network providers, but you will still enjoy some coverage for out-of-network providers on a POS. As a result, the premiums are slightly higher than those of an HMO.

Pros: Allows you to see out-of-network providers. Relatively low premiums.

Cons: PCP referrals are required for specialists.

Who is it good for? A POS might be the right plan for someone who is managing a health condition, but travels frequently. This plan will enable them to see doctors when necessary who are out of network.

Preferred Provider Organization (PPO)

Source: Hispanolistic / Getty

A PPO is considered to be the plan that offers the most freedom. You do not need a referral from your PCP to see a specialist, and you can enjoy coverage for out-of-network doctors – but in-network doctors will be the most affordable. There is also typically a much larger network of providers and hospitals in a PPO compared to other plans.

Pros: No PCP referrals required for specialists. Large network of providers.

Cons: High premiums.

Who is it good for? A PPO might be the best plan for someone dealing with health issues who needs to see doctors frequently, and sometimes urgently. It is also a smart plan for those whose preferred doctor is out of network.

Exclusive Provider Organization (EPO)

Source: PeopleImages / Getty

An EPO is sort of an interesting hybrid of an HMO and a PPO. It will usually require you to stick with in-network provider (besides emergency visits), but that network will usually be larger than that of an HMO. PCP referrals might be required to see a specialist, but they might not be.

The premiums are relatively affordable – they’re often higher than that of an HMO but less than that of a PPO. Deductibles will be higher than an HMO.

Pros: Large network of providers. PCP referrals might not be required.

Cons: Deductibles are slighter higher than that of HMO.

Who is it good for? An EPO is a smart plan for people who regularly need to see a specialist and who travel often. These individuals need access to a large national network of providers and need the freedom to see specialists without PCP referrals.

High Deductible Health Plan (HDHP)

Source: Goads Agency / Getty

An HDHP offers low premiums but high deductibles. So your monthly cost will be affordable, however, you will need to meet a high deductible before co-insurance kicks in. An HDHP can be a PPO, HMO or EPO. The HDHP format refers to how the pricing is structured. Often, salaried employees can ask their company to open a health savings account for them, to help cover their HDHP deductibles. Here, they can invest pre-tax dollars, and save for their deductibles.

Pros: Low monthly cost.

Cons: High deductible.

Who is it good for? An HDHP can be the right plan for someone who is managing a serious health issue that requires frequent doctor’s visits. These individuals will typically meet the high deductible quickly, and receive the benefits of coinsurance early in the year, while benefiting from low monthly costs.