Health insurance plans can be broadly divided into two main types: Managed care plans And Service plans for a fee.
Managed care plans Emphasize preventive care and coordination of care within a network of health care providers. They usually have lower premiums than fee-for-service plans, but they can also limit your choice of doctors and hospitals.
Here are the most common types of managed care plans:
- Health maintenance organization (HMO): With an HMO, you must choose a primary care physician (PCP) to coordinate all of your care. You can only see specialists in the HMO network if your PCP refers you.
- Preferred Provider Organization (PPO): With a PPO, you have more flexibility in choosing doctors and hospitals, both in-network and out-of-network. However, out-of-network care will usually cost you more.
- Point of Service (POS) Plan: A POS plan is a hybrid of an HMO and a PPO. You have more flexibility than an HMO, but less than a PPO. You usually need to choose a PCP, but you can also see specialists without a referral.
- Exclusive Provider Organization (EPO): An EPO is similar to an HMO, but it usually has a larger network of doctors and hospitals. You must remain in-network to receive covered benefits.
- Service plans for a fee Give you more freedom to choose your doctors and hospitals, but they typically have higher premiums than managed care plans. You are also responsible for paying a large portion of your care costs.
Here are the most common types of fee-for-service plans:
- Traditional Compensation Plan: With a traditional reimbursement plan, you are reimbursed for a percentage of the covered charges for your care. There is no network of doctors or hospitals, so you can go to any provider.
- High Deductible Health Plan (HDHP): An HDHP has a high deductible, which is the amount you have to pay out of pocket before the insurance company starts paying for your care. However, HDHPs generally have lower premiums than traditional indemnity plans. You can also combine an HDHP with a Health Savings Account (HSA), which is a tax-advantaged account that you can use to pay for qualified medical expenses.
The best type of health insurance plan for you will depend on your individual needs and circumstances. Consider your budget, your health needs, and your preferred level of flexibility when choosing a plan.
