Before we delve deeper into the details of what to look for when choosing a health insurance plan, here are some important terms you should understand:
- Premium: The premium is the amount you have to pay for your insurance (normally every month), regardless of whether you use healthcare services or not. In 2015, monthly premiums averaged $384, without federal subsidies. Actual premiums range from zero to more than $500, depending on what plan you choose and whether you qualify for subsidies.
- Deductible: This is the amount you have to pay out of pocket for health services until the health insurer starts covering your costs. The IRS, as of 2015, defines a high-deductible health plan as one with a deductible exceeding $1,300.
- In-Network: The term used to refer to healthcare providers who have a contract with your insurance company.
- Out-of-Network: The term used to refer to those providers who do not have a contract with your insurance company.
The four most common types of health plans are:
- Preferred Provider Organization (PPO)
- Exclusive Provider Organization (EPO)
- Health Maintenance Organization (HMO)
- Point of Service (POS)
1. Preferred Provider Organization (PPO)
PPOs allow people to obtain healthcare services from two sources: in- as well as out-of-network. You’ll save money by using in-network providers, since your insurer will pay a higher percentage of your costs. But you will still get some out-of-network coverage if you use an out-of-network provider.
Here are some things that you should know about PPOs:
- PPOs generally tend to have higher premiums and lower deductibles than other plan types.
- You do not need a referral in order to see a specialist.
- PPOs will allow you to visit your preferred doctor regardless of the network. You’ll have to pay a higher percentage of your covered medical expenses out of pocket, but your plan will cover out-of-network care.
2. Exclusive Provider Organization (EPO)
Do not get confused by the term “exclusive” here. EPOs only cover services you receive from in-network providers. If you go out-of-network, expect to pay 100 percent of the total cost out of pocket. Some other points regarding EPOs:
- EPOs normally have higher deductibles and lower premium payments than other health plan types.
- You need no referral to see a specialist.
- EPOs require pre-authorization for out-of-network care visits. If your insurer has a long list of in-network doctors, then you may never have to go out of network. However, if the size of your insurer’s network is smaller, you’ll want to consider whether you might be required to use out of network services and the additional cost that could entail.
3. Health Maintenance Organization (HMO)
Like EPOs, an HMO uses a network of providers. However, an HMO works on a capitation basis. Unlike other health plans, your monthly premium covers all necessary health services. To control costs and ensure members stay healthy, an HMO requires you to select a primary care provider, who will be in charge of your care, even referring you to specialists. In certain cases, an ob/gyn can qualify as a primary care provider, which is something female insurance buyers might want to look for.
Some things to consider about HMOs:
- Even though HMOs have lower premiums and deductibles, their networks of doctors are extremely limited. Head out of network and you will have zero coverage, except in emergencies.
- “Health-maintenance” should actually be read as “low-maintenance.” Other types of plans cover varying percentages of your covered charges, but HMOs keep it simple, requiring you to pay a set price for almost any service.
4. Point of Service (POS)
A point of service plan has features from each of the plans previously discussed. Here’s what you get with a POS plan:
- You can choose to go either in or out of network; however, you will still have to elect a primary care provider. This provider will be regarded as your “point of service,” meaning that all your health services will have to run through him or her.
- When heading out of network, you should expect to pay most of the cost on your own (it can be up to 80 percent on certain plans). There is, however, one exception: if your primary care provider selects an out-of-network provider, then the plan will cover the majority of expenses.
I’m Not Employed Full-Time Now What?
If you are not employed or if your employer does not provide healthcare insurance, an independent insurance broker can help you. Independent insurance brokers have access to plans through the healthcare exchanges, at no additional cost to you.
Healthcare exchanges offer four different tiers to choose from: Bronze, Silver, Gold and Platinum. Each tier has an increasing level of coverage as well as cost. There is also a fifth tier called catastrophic coverage — but that’s available only for people under the age of 30 and those who meet specific hardship exemptions.
In addition to providing plans through the healthcare exchanges, an independent insurance broker can help you find plans not accessed through the exchanges. Unlike a “captive” agent, who works for only one company, an independent insurance broker can help you evaluate plans from many different insurers to find the one that works best for you.