Coverage 101: Your Guide to Different Types of Health Insurance

Coverage 101: Your Guide to Different Types of Health Insurance

Just 39% of Americans could afford to cover a $1,000 emergency expense. That’s a serious problem that leaves many Americans unprepared for a true medical emergency. After all, the average out-of-pocket cost for a simple sprain or strain ranges from $4 to $24,110 before insurance. In other words, Health insurance is so much more than just a Band-Aid—it’s peace of mind knowing that you’ll be able to get health treatment when you need it most. But first, you have to know the different types of health insurance plans available to you and what each one has to offer.

Types of Health Insurance Plans

There are five types of health insurance plan:

  1. Health Maintenance Organization (HMO)
  2. Preferred Provider Organization (PPO)
  3. Exclusive Provider Organization (EPO)
  4. Point-of-Service Plan (POS)
  5. Catastrophic Plan

You’ll see each type of plan offered by private providers classified as either bronze, silver, gold, or platinum. Bronze plans offer the least coverage, while platinum plans offer the most. However, each type of plan offers slightly different benefits for the money, and the right fit for your parents or friends may not be the right fit for you. Here’s a breakdown of what each plan type has to offer.

Health Maintenance Organization (HMO)

A health maintenance organization (HMO) plan will usually cover most of your expenses after your co-pay and you meet your deductible. The defining feature of such plans is that HMOs limit coverage to doctors who work within the HMO network. In other words, you have to get your healthcare from in-network providers.

The only exceptions are:

  • Emergencies
  • Out-of-area urgent care
  • Out-of-area dialysis

In addition, many HMOs require you to live in the network’s service area to be eligible for coverage. But as long as you’re in the coverage area and in-network, HMOs will cover most standard services (with some variations between plans).

Preferred Provider Organization (PPO)

A preferred provider organization (PPO) plan is a type of HMO with a bit more flexibility. Like an HMO, a PPO plan contracts with medical providers to create a network of participating providers. It then provides you with a list of participating providers as “preferred providers”.

While an HMO won’t cover out-of-network care, a PPO might still cover part of the car. It gives you the preferred provider list because it prefers you to get care from those providers, and in exchange, you’ll pay less for healthcare there. You can use out-of-network doctors, hospitals, and other providers, but you’ll pay an additional cost. It’s important to check with your provider before seeking out-of-network care so you know what the bill will be.

Exclusive Provider Organization (EPO)

An exclusive provider organization (EPO) plan works on a similar premise. Like HMOs and PPOs, they give you a list of in-network providers. These plans are often offered for a lower premium than you would pay for a PPO from the same insurer.

EPO plans are both less flexible than PPOs and more flexible than HMOs. These plans do not provide any coverage for out-of-network care except in the case of medical emergencies. On the other hand, you get a lot more freedom within the EPO network to choose your providers, and unlike an HMO, EPOs don’t require a referral for specialist visits.

Point-of-Service Plan (POS)

A point-of-service (POS) plan is a type of managed health insurance plan. Like the others on this list, it gives you different benefits depending on whether you get in-network or out-of-network care. Think of POS plans as a hybrid of HMO and PPO plans.

Like an HMO, the cost for in-network care is lower, and like a PPO, you have more freedom to choose your providers within the network. However, the provider network is smaller than a PPO. Like an HMO, you need to select a primary care physician, who writes referrals for specialist visits. Like a PPO, you can see out-of-network doctors, but your share of the costs will be higher.

On the plus side, there’s no deductible if you use in-network providers. If you go out of network, you may have a deductible, and you may have to pay the full cost yourself. The good news is that if you have an emergency, you don’t need approval to seek care from out-of-network providers.

Catastrophic Plan

A catastrophic plan is health insurance stripped down to the tacks. Catastrophic plans are only available to insurance seekers under 30 or those with a hardship exemption and they only cover three primary care visits per year before the deductible is met. You do get free preventative care, even if you haven’t met the deductible.

As the name implies, this option is intended to provide health coverage in the event of a catastrophe. The out-of-pocket costs for deductibles, copayments, and coinsurance are generally higher, and can usually only be met in the event of a catastrophe (i.e. a surprise visit to the emergency room).

Choosing the Right Type of Health Insurance Plan

different types of health insurance

Choosing the right type of health insurance plan requires thinking about what you need and how you’ll use your insurance.

If you don’t visit the doctor often and are in good health, a plan with a higher deductible and lower premium is a good way to save money. On the other hand, if you visit the doctor often and expect that you’ll need more than preventative care, opt for a plan with lower deductibles and coinsurance so that insurance will start covering your costs faster.

Also, pay attention to the types of coverage each plan offers beyond just deductibles and copayments. If you need regular prescription medication, for example, pay attention to how the plan covers prescriptions and what types of doctor visits qualify for the deductible.

Find the Right Health Insurance Plan for Your Needs

Finding the right health insurance plan is the difference between keeping your family healthy and struggling to make ends meet. And no family should have to shy away from necessary healthcare because they’re worried about the bills.

We make it easy for individuals and families to find health insurance plans that suit their medical needs—whatever that means for you. We offer plans from some of the best providers in the country, with tiers and coverage to suit all your needs.

Let’s get you on track for a healthier tomorrow. Compare health insurance quotes today to find the perfect plan for you.