Common Health Insurance Plans: Types & Their Benefits
Health insurance is a critical aspect of financial planning. And it is important to understand the different plan types available. This article will outline the most common health insurance plans, their benefits, and how each type works.
Health Maintenance Organizations (HMOs)
First up: Health Maintenance Organizations, AKA HMO plans, offer comprehensive coverage for preventive care services, including wellness visits and immunizations, as well as basic medical services such as office visits and minor procedures.
Generally speaking, HMOs require policyholders to choose a primary care physician (PCP) within the network of providers who will coordinate all healthcare services. Coverage can be limited if you go outside of your network.
- Lower monthly premiums compared to other plan types
- Comprehensive coverage for preventive care services
- Typically no deductible or copayment is required
Preferred Provider Organizations (PPO)
Next up: Preferred Provider Organizations (PPOs) are a type of health insurance plan that offers more flexibility than HMOs. PPO plans allow policyholders to receive services from any doctor within the network without the need to choose a primary care physician.
Plans may also offer coverage if your healthcare provider is outside the network. However, you will likely pay higher out-of-pocket costs.
Benefits of PPO
- More flexible than HMO plans
- Do not need to select a PCP
- Out-of-network coverage available
- Higher monthly premiums compared to HMOs
Point of Service (POS) Plans
Next up: Point of Service (POS) plans to combine the features of PPO and HMO health insurance plans. POS plans require policyholders to select a PCP. However, they also allow you to visit any specialist within the network by obtaining a referral from your primary care physician. Coverage may be limited if you choose to go outside of your healthcare provider’s network.
- Combines features from both HMO and PPO plans
- Lower copayment for in-network services
- Out-of-network coverage is available
High Deductible Health Plans (HDHP)
High Deductible Health Plans (HDHPs) are a type of health insurance plan with lower premiums and higher deductibles. HDHPs usually carry a deductible that is typically more than $1,000 per year but can be as high as $6,850 for an individual and $13,700 for family coverage in 2020.
Nonetheless, the benefits do not typically kick in until the policyholder has paid out of pocket up to the deductible amount.
- Lower monthly premiums compared to other plans
- Can use funds from a Health Savings Account (HSA) to pay for medical expenses
- May qualify for subsidized coverage through Affordable Care Act subsidies
Next up: Catastrophic coverage is a type of health insurance plan typically offered to those under the age of 30 or who qualify for a hardship exemption.
This type of plan typically carries a high deductible and offers limited benefits such as preventive care services but will provide coverage in case of an emergency.
- Lowest monthly premiums compared to other plans
- Coverage in the event of an unexpected medical situation
- Covers preventive care services
Thus, understanding the different types of health insurance plans available will help you select one that best suits your needs. Be sure to carefully consider your options before making any decisions, and make sure to consult with an expert if needed. With the right information and guidance, you can make an informed decision regarding your healthcare needs.
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