Health Insurance - Types
Health insurance is a form of insurance coverage that provides financial protection against medical expenses. It is a contract between an individual or group of individuals and an insurance company that covers some or all of the costs of healthcare services, such as doctor's visits, hospital stays, and prescription drugs. Health insurance plans vary substantially in the medical services they cover. Individuals or employers pay regular premiums to the insurance company in exchange for coverage. Health insurance helps reduce the financial burden of medical costs by paying for a portion or all of the expenses incurred. There are many types of health insurance policies, including employer-sponsored plans, individual plans, and government programs such as Medicare, Medicaid, and the Children's Health Insurance Program. Health insurance is essential for protecting individuals and families from the financial risks associated with medical emergencies and illnesses. It helps ensure that people can access necessary health care without incurring significant out-of-pocket costs.
People over the age of 65 and those with disabilities, End-Stage Renal Disease, or ALS qualify to receive federally subsidized care through Medicare. Families whose incomes are near the poverty level are eligible for subsidized Medicaid coverage.
Medicare, Medicaid, and the Children's Health Insurance Program (CHIP) are federal health insurance plans that extend coverage to older, disabled, and low-income people.
Most managed care plans–such as health maintenance organizations (HMOs) and point-of-service plans (POS)–require patients to choose a primary care physician who oversees the patient's care, makes recommendations about treatment, and provides referrals for medical specialists.
Preferred provider organizations (PPOs), by contrast, don't require referrals. However, they do set lower rates for using in-network practitioners and services.
Insurance plans have deductibles and co-pays, but these out-of-pocket expenses are now capped by federal law.
The deductible is the amount you payout of pocket every year before the insurer begins to meet the costs. This is now capped by federal law.
Co-pays are set fees that subscribers must pay for specific services such as doctor visits and prescription drugs even after the deductible is met.
Coinsurance is the percentage of health care costs that the insured must pay even after they've met the deductible (but only until they reach the out-of-pocket maximum for the year).
A little over half of the U.S. population has health insurance coverage as an employment benefit, with premiums partially covered by the employer. The employer cost is tax deductible to the payer, and the benefits to the employee are tax-free (with certain exceptions for S corporation employees).
Types of Health Coverage
There are many types of health coverage such as PPOs, EPOs and HMOs which are described and compared below:
Preferred Provider Organizations (PPOs)
Which doctors, hospitals and other providers can I use?
You can see "preferred" providers or "out-of-network" providers:
- A PPO has a network (or group) of preferred providers. You pay less if you go to these providers. Preferred providers are also called in-network providers.
- With a PPO, you can go to a doctor or hospital that is not on the preferred provider list. This is called going out-of-network. However, you pay more to go out-of-network. The PPO pays less or nothing at all.
- When you are shopping for insurance, be sure to ask what hospitals, doctors, and other provicjers are "preferred" or "in-network".
What are my costs if I have a PPO?
- Cost can vary. It depends on the providers you go to. If you stay in the PPO's preferred provider network, your costs are less.
- If you choose to go to a provider outside the PPO network, you pay much more. Before you see an out-of-network provider, check with your PPO to find out what is and what is not covered.
Exclusive Provider Organization (EPOs)
Which doctors, hospitals and other providers can I use?
You must use providers in the EPO network.
- Generally, you do not have to use a primary care doctor.
- Most of the time, you do not need to get referrals to see specialists who are in-network.
- EPOs can have many limits on the doctors or hospitals you can use. With an EPO, you can use the doctors and hospitals within the EPO's network. However, you cannot go outside the network for covered care.
- If you do go out-of-network, your EPO will not pay for any services. The only exception is if you have an emergency or urgent care situation.
What are my costs if I have a EPO?
Cost can vary. It depends on the providers you see. If you stay in the EPO's preferred provider network, your costs are less because you will be reimbursed for the health care you get. Like PPOs, you pay a percentage of every medical bill up to a certain level. If you decide to see a doctor outside the EPO network, you must pay the full medical bill. Health Maintenance Organizations (HMOs)
Health Maintenance Organizations (HMOs)
Which doctors, hospitals and other providers can I use?
You must use providers in the HMO network.
- Usually, you must have a primary care doctor. This doctor provides your basic care and makes referrals to specialists.
- If you see a provider outside of your HMO's network, they will not pay for those services (except in the case of emergency and urgent care).
- The doctors and other providers may be employees of the HMO or they may have contracts with the HMO.
- To join an HMO, you must live in the area the HMO services. Outside this area you can only get emergency or urgent care.
What are my costs if I have an HMO?
Usually you pay a flat co-pay each time you see a doctor or fill a prescription. You may also pay a co-insurance for some services. Co-insurance is a part or percentage of the cost, such as 20%.
Categories PPO EPO HMO
Network You pay less to see providers in your plan's network. These are called preferred providers. You get covered care from the doctors, hospitals, and other providers in your plan's network. You get care from the doctors, labs, and other providers in your plan's network.
Out-of-Network You can go out-of-network, but you pay more. You can go out of network, but you will pay the full out of pocket costs for the service. The only exception is if you have an emergency or need urgent care. You cannot see providers out-of-network except in an emergency or if your plan gives you pre-approval.
Primary Care Doctor You may not be required to have a primary care doctor. You may not have to use a primary care doctor. You must have a primary care doctor. This is the doctor you must usually see first when you need care.
Referrals You may be able to get many health services without a referral. You do not need to get referrals to see specialists if they are in the EPO's network. You need referrals to see specialists or get lab tests.
Pre-Approvals You may be able to get many health services without pre-approval. You will need pre-approval from your health plan before you can get any services. You will need pre-approval from your health plan before you can get many health services.
Costs You may have a yearly deductible.
You may also have deductibles for hospital care and prescription drugs.
Care in the network costs a lot less than care outside the network.You are likely to have higher out-of-pocket expenses.
You are less likely to have a yearly deductible.
You usually pay a co-pay or flat fee for most services.You are less likely to have a yearly deductible.
You usually pay a co-pay or flat fee for most services.
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