There are many different types of health insurance plans available, and they’re all a little different based on the company you’re buying the coverage from. In the United States, health insurance plans fall into several general types regardless of the specifics offered by individual companies. These plans differ in many respects, such as price, freedom to choose which doctors you see, what’s covered and so on. We’ll take a look at these in turn.
The first and most common type of health insurance is the HMO, short for Health Maintenance Organization. This is the most basic and least expensive health insurance coverage available. The primary reason for the affordability of HMO plans are due to the lack of freedom or choice. HMO plans usually restrict the doctors you can see, and if you need to see a specialist, you need to consult your Primary Care Physician, or PCP, first. While there are “open access” HMO plans, these are usually more expensive than traditional HMO plans. The upside is that the premiums and copay amounts for these plans are generally the least expensive of all of the health insurance plans you’ll find.
The next type of health insurance plan we’ll look at is a PPO, or Preferred Provider Organization plan. PPO plans differ from HMO plans in several ways, most notable of those being more choice and freedom. While HMO plans make you go through a PCP, or “gatekeeper” to see a specialist, a PPO plan has no such restrictions, allowing you to see nearly any provider you wish without going through a gatekeeper. The downside is that PPO plans are more expensive than HMO plans, so there’s a price to pay for more freedom of choice.
The third option we’ll talk about are POS, or Point of Service, plans. These plans strive to combine the best portions of an HMO — low cost, focus on preventative care, etc — and a PPO — the freedom to seek specialists without the use of a gatekeeper — into one plan that keeps costs low for the patient. The result is a plan usually in between the cost of an HMO and PPO, with some more freedom from an HMO, but also some downsides. Your provider must be in-network, unlike a PPO, and you also have to turn in the paperwork to the insurance company yourself if you see an out-of-network specialist, which can be inconvenient. Overall though, the POS could be a good option for you if you want a monetary savings along with more freedom of choice.
The final plan we will look at are Health Savings Accounts, or HSA’s. HSA’s are “tax-advantaged” medical savings accounts that allow customers to put their own money into an account that not only rolls over from one year to the next, but are also not subject to federal income tax at the time of the deposit. These are usually coupled with high-deductible health insurance plans. The funds in these accounts can be used at any time by the patient to pay for qualifying medical expenses. The appeal of these plans is that the money is in control of the individual who owns the accounts, giving them a lot more freedom and flexibility.
As you can see, the variation between health insurance plans is significant. The main two sticking points to look at, however, are freedom versus price. Keeping this in mind will help you figure out which health insurance plans are best for you.