The first time I ever chose a health insurance plan for myself, I had two considerations in mind. I wanted to find the least expensive option and make sure that they worked with my doctor. The plan I ended up choosing only met my requirement of being the least expensive and onward I went from there.
Much has changed in the years since I chose my first plan. On a daily basis, we get asked by our clients the question this post addresses today.
For all of the talk about Healthcare, it seems no one ever explains what and how healthcare plans actually work. Most employers use an insurance broker, but they rarely speak to each employee and explain the differences in the plans offered.
We wrote this post to explain the differences in the five most popular healthcare plans, what the basics of health insurance are and how it works.
Types of Health Plans
HMO - A Health Maintenance Organization (HMO) is a health insurance plan where you have to choose a Primary Care Provider (PCP). An HMO has a network of doctors and you can choose who you would like to have as your PCP. An HMO requires that your Primary Care Provider (PCP) supply referrals to any other providers (specialists).
An HMO typically helps you save money and reduces the cost associated with healthcare.
EPO - An Exclusive Provider Organization (EPO) works similar to an HMO, but doesn’t require referrals. You also do not have to choose a Primary Care Provider (PCP). The networks for EPO plans are typically smaller than other plans available.
An EPO is a less expensive option for a healthcare plan and offers more flexibility than an HMO.
PPO - A Preferred Provider Organization (PPO) gives you the flexibility of being able to use any provider in or out of the network of your healthcare provider. You don’t have to choose a Primary Care Provider (PCP).
A PPO is an excellent option, if you utilize doctors that don’t accept your insurance or that don’t take insurance at all.
POS - A Point of Service (POS) plan gives you the same flexibility of a PPO, because you can use a provider in or out of your network. However, POS plans do require a referral from your Primary Care Provider (PCP) to see a specialist.
A POS is an excellent choice, if you want out of network coverage and don’t mind getting a referral from your PCP, if you need to see a specialist.
HDHP - A High Deductible Health Plan (HDHP) is an insurance plan that allows for lower monthly premiums in exchange for higher deductibles. Excluding routine visits to your doctor, all other health related costs would be your responsibility, in whole, until your deductible is met.
An HDHP plan makes sense, if you are looking to spend very little for coverage or you are expecting to have large, out-of-pocket expenses, as the deductible is already pre-set.
Key Health Insurance Terms
Deductible - a specified amount of money that must be paid by an insured before the insurance company will begin paying claims.
Co-Insurance - is your share of the costs of a healthcare service.
Co-Pay - fixed amount that you pay for a healthcare service, typically when you receive the service.
Premium - the cost of your health insurance plan that you pay monthly to the Health Care provider.
Cost Sharing - your share of the costs covered by your insurance that you pay out of your pocket.
Out-of-Pocket Maximum (OOPM) - is the most that you pay during a policy period (usually a calendar year), before your health insurance or plan starts to pay 100% for covered health benefits. This limit should include deductibles, coinsurance, and copayments.
Preventive Care - this is routine health care, including screenings, check-ups and patient counseling to prevent illnesses, disease or other health problems.
Every Health Care Provider operates with networks of doctors, hospitals and other healthcare facilities.
In Network - this means that your doctor, hospital and/or healthcare facility is in the network of your Health Care Provider. When you use an In-Network provider, your cost for care is reduced.
Out of Network - this means that your doctor, hospital and/or healthcare facility is not in the network of your Health Care Provider. When you use an Out of Network provider, your cost is higher for care. If you are in an HMO or EPO and use an Out of Network provider then, you are responsible for the entire expense.
Health insurance is vital to have and to ensure that you have the right plan is essential to preserving your sanity and financial stability. We advise that you do your research and that you keep the following in mind, when you choose a plan.
Network - It’s best to make sure that your current doctors, hospital/s and/or healthcare facilities are in the network of the Healthcare provider you will be joining. All insurance companies have tools to look up who is participating in their network.
Deductible - Make sure that you are aware of any deductible in your plan. Generally speaking, the more expensive a health plan is, the smaller the deductible. The opposite is also true- the less expensive the plan, the higher the deductible.
Take into consideration any medical services you will already use and consider those to ensure that the plan you pick works with your budget and needs.
Hopefully, this primer on the various types of healthcare plans and common terms will eliminate some of the confusion for you and your employees. As always, we are ready to help when you’re ready to simplify your healthcare options and reduce costs.