How to interpret health insurance plans

Definition

Most insurance companies offer different types of medical plans. And when comparing plans, it can sometimes feel like alphabet soup. What is the difference between a health maintenance organization (HMO), a preferred provider organization (PPO), a point of service (POS) English) and an exclusive provider organization (EPO)? Do they offer the same coverage?

This guide to health plans can help you better understand each plan. This will make it easier for you to choose the right plan for you and your family.

Types of health insurance plans

Depending on how you get your health insurance, you may have a range of plan options to choose from.

Health Maintenance Organizations (HMOs)

These plans offer a network of health care providers and low monthly premiums. Providers have a contract with the health plan. This means that they charge a flat fee for their services. You will choose a primary care doctor. This person will manage your care and refer you to specialists. If you use doctors, hospitals, or other providers in the plan’s network, you will pay less out of pocket. If you use providers outside the network, you will have to pay more.

Exclusive Provider Organizations (EPOs). 

These are plans that offer provider networks and low monthly premiums. You must use doctors, hospitals, and other providers on the network list to keep your out-of-pocket costs low. If you go to out-of-network providers, your costs will be much higher. With an EPO, you do not need a primary care physician to manage your care or provide a referral.

Preferred Provider Organization (PPO). 

PPOs offer a network of providers, as well as the option to see providers that are not part of this network for a slightly higher cost. You do not need a primary care doctor to manage your care. Premiums will be higher in this plan compared to an HMO, but you’ll have a little more freedom to see in-network providers and out-of-network providers without a referral.

Point of Service (POS) plans. 

POS plans are similar to PPO plans. Both offer both in-network and out-of-network benefits. You can visit any provider within the network without a referral. But if you need a referral to see out-of-network providers. You can save money on monthly premiums with this type of plan compared to a PPO.

High Deductible Health Plans (HDHPs).

This type of plan offers a low monthly premium and a high annual deductible. An HDHP can be one of the plan types listed above with a high deductible. A deductible is a fixed amount of money that you have to pay before your insurance begins to pay. For 2020, an HDHP has a deductible of $1,400 per person and $2,800 per family annually or more. People with these plans often get medical savings or medical reimbursement accounts. This helps you save money on your deductible and other out-of-pocket costs. It can also help you save money on taxes.

Fee-for-service (FFS) plans are not common today. These plans offer the freedom to see a doctor or hospital of your choice. The plan pays a fixed amount for each service, and you pay the rest. You do not need to be referred. Sometimes you pay for a service upfront, file a claim, and the plan pays you back. This is an expensive health insurance plan when it does not include a network or a PPO option.

Catastrophic plans offer benefits for basic services and serious illness or injury. They protect you from the cost of an accident or serious illness. These plans do not have good coverage for people with health problems that need regular care or tests. You can only buy a catastrophic plan if you are under 30 or can show that you cannot afford health coverage. The monthly premiums are low, but the deductibles for these plans are very high. As an individual, your deductible can be close to $6,000. You must pay the high deductible before your insurance begins to pay.

Which one is right for me?

When choosing a plan, think about your medical needs and preferences. In addition to plan type, be sure to compare benefits, out-of-pocket costs, and provider network to find the best.

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