One of the major changes that came with the Affordable Care Act (ACA) was the Health Insurance Marketplace. This online marketplace offers different health insurance plans to choose from, depending on the applicant’s specific medical care needs, health coverage preferences and budget.
One of the major changes that came with the Affordable Care Act (ACA) was the Health Insurance Marketplace. This online marketplace offers different health insurance plans to choose from, depending on the applicant’s specific medical care needs, preferred coverage level and overall budget.
In order to make an informed and educated decision when shopping for a health insurance plan, you’ll want to take into consideration the following health insurance information, which can prove useful when it comes to health insurance plans comparison:
- The 4 “metal” categories of health insurance plans are Bronze, Silver, Gold, and Platinum. These show how an enrollee’s health care costs are split between the enrollee and the specific plan. Generally, these categories are not indicative of the quality of healthcare but rather the “quality” of the plan itself.
- Your total healthcare costs, such as premiums (the “price” of the plan) and out-of-pocket costs such as deductibles (payment for covered services before your plan starts to pay), copayment, coinsurance, and out-of-pocket maximum.
- The different health care provider network types and health insurance coverage types, such as HMO plans, PPO plans, POS plans, EPO plans, and HDHP plans; you may find any of them in each “metal” category.
Let’s take a closer look at the 5 main types of health insurance plans and how they work, to help you choose the right health insurance plan for you.
1. Health Maintenance Organization (HMO) Plans
This type of health insurance plan allows enrollees to benefit from quality health care services provided by physicians and other healthcare professionals and healthcare facilities that contract with or work for a federally qualified Health Maintenance Organization (HMO) only.
An HMO is an entity that essentially serves to connect patients and health care providers within the network through a primary care physician (PCP). HMO enrollees are not allowed to receive specialized health care in the absence of a referral from the PCP of their choice.
Signed into law by former President Richard Nixon, the federal HMO Act aimed at providing financial assistance in the development and expansion of HMOs, while establishing the minimum requirements for HMOs to become federally qualified.
An alternative to fee-for-service (FFS) healthcare, a federally qualified HMO provides their subscribers with a wide range of basic health care services on an as-needed basis., in return for a fixed annual or monthly premium paid in advance. HMO providers also offer supplemental health services such as vision care, dental care, mental health services, physical therapy, etc. for an extra cost.
HMOs are able to offer little or no deductibles and lower premiums than other health insurance coverage types because the physicians and other healthcare providers that enter into a contract with an HMO are paid an agreed-upon fee to provide their services. However, an HMO insurance plan limits health coverage to health care (including preventive care) provided by professionals within the HMO’s network.
If an HMO subscriber needs emergency care and/or dialysis, an HMO health insurance plan will also cover these out-of-network services. HMOs have annual open enrollment periods and applicants for enrollment may be required to live or work in its network area to be eligible for HMO coverage.
2. Preferred Provider Organization (PPO) Plans
PPO enrollees can choose to receive medical care from any provider within a PPO’s network (known as a “preferred provider”) at a reduced rate, but they can also turn to the health care services provided by out-of-network medical facilities, physicians, and others health care providers for an additional cost.
One of the differences between HMO and PPO, the most popular managed care plans, is that an HMO plan usually requires referrals from a primary care physician (the assigned provider), while a PPO plan requires no referrals to see medical specialists. PPO insurance plans are among the most comprehensive health insurance coverage types.
Also in terms of HMO vs. PPO, PPO plans usually have higher premiums than HMO plans because the greater accessibility, flexibility, freedom, and convenience offered to PPO subscribers translate to higher premiums, especially for PPO plans with lower deductibles and copayments. Alternatively, PPO plans with lower premiums come with higher out-of-pocket costs.
If you’re considering a PPO health insurance plan and choose to go to a PPO hospital to benefit from quality health care for less, you should keep in mind that PPO benefits are not guaranteed for all health care services provided in a PPO hospital (e.g. the contract may not cover radiographs and lab work from independent providers).
3. Exclusive Provider Organization (EPO) Plans
An EPO plan is another managed care plan that allows subscribers to get health coverage for in-network medical care only. If an EPO subscriber needs emergency medical care, an EPO insurance plan will also cover out-of-network emergency care.
These Health Insurance Marketplace plans are considered a combination of HMO and PPO plans because they may not necessarily require a referral from a primary care provider to see medical specialists such as ophthalmologists, dermatologists, ENT, etc) who are under contract to an EPO.
In terms of HMO vs. EPO, it’s worth noting that most EPO health insurance plans’ provider networks are larger than HMO plans’ networks, offering EPO subscribers more options, but premiums for EPO insurance are typically higher than premiums for HMO insurance.
An EPO plan covers a wide range of services including inpatient and outpatient hospital services, preventive care, home health services and more, provided by professionals within the plan’s network.
4. Point-Of-Service (POS) Plans
These Marketplace plans are less popular but share similarities with both HMO health insurance plans and PPO insurance plans. POS subscribers can benefit from medical services provided by healthcare facilities, physicians, and other healthcare providers in a Point-of-Service plan’s network as well as from out-of-network medical care.
A POS insurance plan essentially works like an HMO insurance plan with respect to getting referrals from a primary care physician (PCP) in order to receive specialized medical care that is covered by the plan.
The difference between HMO and POS plans is that POS plans also provide out-of-network health insurance coverage, but the flexibility and freedom to choose an out-of-network specialist comes with an extra cost.
POS enrollees pay higher premiums than those offered by HMOs (up to 50% more) but up to 50% lower premiums than those for PPOs. Unlike PPO plans and like HMO plans, POS plans have little or no deductibles as well as low copayment when using in-network providers.
5. High Deductible Health Plans (HDHP)
This health insurance coverage plan is defined by the IRS as any plan with a higher deductible than a traditional health insurance plan. For 2020, this deductible is at least $1,400 ( for an individual) and $2,800 (for a family).
With an HDHP insurance plan in place, the total out-of-pocket health care costs or out-of-pocket maximum cannot exceed $7,050 for an individual and $14,100 for a family when HDHP subscribers receive in-network health care services (for out-of-network care, these limits do not apply).
An HDHP can have no deductible for preventative care (i.e. these services can be covered for free even if the deductible hasn’t been met, as per the Obamacare requirements). Moreover, HDHP insurance can be paired with a health savings account (HSA), which allows you to pay for current medical expenses as well as save for future expenses on a tax-free basis.
Depositing pre-tax money in your HSA saves you about 30%. HSAs are nevertheless subject to several limitations and rules. If you are covered under an HDHP, but not any other non-HDHP health insurance plan, and you are not eligible for Medicare, and you are not dependent on another individual’s tax return, then you can open a Health Savings Account.