Now that you are convinced saving money on insurance is possible and having insurance is necessary to live, so, what’s next? In the U.S. today, there are hundreds of insurance plans, which means your stress levels just went up. However, if you have not purchased insurance and are still researching information, then review this article to get started!
The Basic Types of Insurance Plans
Whether you are looking for individual, family, or for your organization, these are the types of plans you might want to consider first:
- Health Maintenance Organization (HMO)
- Health Savings Account (HSA)
- Preferred Provider Organization (PPO)
- Indemnity Plans
Health Maintenance Organization (HMO)
It is important to understand that HMO has a lower cost for its members, offers wellness and preventative care for the patient, only covers in-network physicians and facilities (Smith, 2021). Employees who have this type of insurance plan will need to have a primary care physician and the option for referral to an HMO specialist (2021).
Works for You . . .
- if you want to Lower deductible & lower premium
- if you lower out of pocket costs for prescriptions
- if you have primary care physicians to advocate your needs and set up referrals (2021)
Does Not Work . . .
- if you are unwilling to be flexible with your physicians and health care facilities provided in this plan
- if you cannot get access to non-emergency visits outside of the network
- if you need to see a specialist, but are not willing to see one that is provided inside the network
Health Savings Account (HSA)
Keep in mind that this type of coverage plan is not just any kind of bank account. An HSA is a special bank account that allows account holders to save money. An example of this is pre-tax that is only used for prospect medical expenses. Furthermore, these insurance plans are actually PPOs created specifically for using a HSA. Also, health reimbursement arrangements (HRA) can be used along with HSAs. A HRA is an employer-funded health benefit used to reimburse employees out-of-pocket medical expenses and health insurance premiums (PeopleKeep, Inc., n.d.).
Works for You . . .
- if you have high deductible health plan (HDHP)
- if you cover out-of-pocket expenses
- if you want to manage spending and saving in the account
- if you make tax free payments to the account that will roll over each year
Does Not Work . . .
- if you have a deductible cost that will be paid out-of-pocket
- if you want to take out the money from the savings account since this will cost you a penalty
Preferred Provider Organization (PPO)
By far the most common plan, employees covered by it have a network of physicians and health care facilities that they can choose from. However, these doctors and hospitals are only offered in the network provided by the PPO.
Works for You . . .
- If you want to freedom to choose a physician and health care facility inside of your insurance company’s network
- if you want another option to have an out-of-network covered
- if you want to see a specialists without a referral
Does Not Work . . .
- if you do not want to pay higher monthly premiums
- if you do not want a deductible cost that has to be paid out-of-pocket before the insurance pays (deductibles can range from $1,700-$4,000) (2021)
Indemnity Plans
This insurance plan has the most flexibility when it comes to picking a physician and health care facility. Furthermore, the insurance company will pay a set portion for the total amount (Smith, 2021). Also, the insured might have to pay services up front and then get a reimbursement, or apply for one from the insurance company. These plans are considered supplemental coverage and do not qualify as minimum essential coverage under the Affordable Care Act (2021).
Works for You . . .
- if you like the idea of not having to commit to one physician or health care facility
- if you love flexibility
- if you want to see a specialist without a doctor’s referral
Does not Work . . .
- for you since these plans are the most expensive depending on your age, where you live, and the benefits you want
Summary
Before you decide to purchase health insurance, it is imperative to know your resources. With that being said, this article simply reviews just a few plans. There is a broader spectrum of insurance plans out there based on your needs. Therefore, talking with an insurance agent or broker will help you identify the best plan that works for you. Once you decide to research more options, check out our article Understanding Insurance Coverage for more information on the building blocks that make up an insurance plan.
References
PeopleKeep, Inc. (n.d.). What is a health reimbursement arrangement? Retrieved September 24, 2021, from https://www.peoplekeep.com/health-reimbursement-arrangement-hra
Smith, G. (2021, March 22). Four common types of health insurance plans. PeopleKeep, Inc. https://www.peoplekeep.com/blog/four-common-types-of-health-insurance-plans
