Which Type of Health Insurance is Best for Me?
Knowing the different types of health insurance, complete with their unique features and benefits, will help you evaluate your options and guide you when registering for a plan. The type of health insurance you choose will determine the cost and quality of medical care that you receive.
Let’s take a closer look at the different types of health insurance and their advantages and disadvantages to help you choose what’s best for you.
1. Preferred Provider Organization (PPO)
A preferred provider organization is one of the most common managed care health insurance options. This type of insurance offers you the ability to receive medical care from a preferred network of health providers without a referral. With a PPO, you get to choose your healthcare provider from the insurance company’s network. However, you can also avail yourself of the services of out-of-network providers, but at higher costs.
Flexibility. A PPO allows you to visit any physician, both in-network and out-of-network. This gives you the flexibility of getting the quality of services you need if they are not available within the insurance company’s network. You don’t have to choose a primary care provider (PCP) and, therefore, don’t require referrals when seeking services from specialists. This takes a lot of the time and hassle out of your medical care.
Wide Coverage. Since PPOs allow for both in-network and out-of-network healthcare, you get a wide array of medical providers to choose from. PPO health insurance also covers many different medical procedures from check-up and prescription medicine to outpatient surgery. Some plans even cover alternative treatments like therapeutic massage and acupuncture.
High Costs. PPOs are ideal for you if you are comfortable paying more to enjoy the flexibility not offered by other types of health insurance. Co-payments of about $10 to $20 are common but can stack up quite quickly, and you may not enjoy coverage before meeting the annual deductible requirement. Also, out-of-network services cost more, and you will frequently end up paying a larger percentage of the bill.
Filing for claims. While you may not need to file your claim when using in-network providers, the opposite is true for out-of-network medical care. You will be solely responsible for all the paperwork in filing your claims, which can be a complex affair.
2. Health Maintenance Organization (HMO)
A health maintenance organization requires members to only use a specific network of providers. You have to choose a primary care physician (PCP) and obtain a referral from your PCP before seeing a specialist. Usually, you will only be covered for the services you get from in-network providers unless you are authorized to use outside services.
Less Costly. Since you are only restricted to a specific network of health providers, you incur low out-of-pocket costs as well as premiums. This is because health care providers contract with insurance companies to provide medical services at low rates, and some plans don’t even have deductibles.
No Paperwork. The healthcare providers handle your claims, lifting the burden off of your shoulders.
Requires Referral. With an HMO insurance, you will need to obtain a referral from your PCP before you can see a specialist or physician. This wastes time when you know that you need the services of a specialist and still have to jump through hoops to get there.
Highly Restrictive. HMO health insurance doesn’t cover out-of-network medical services, limiting you to the physicians within the network. If you decide to get treatment outside the network, you will be responsible for all the costs. You should get approval for any treatment outside the network, and, in case of emergencies, you need to notify your provider so you can obtain follow-up care from in-network facilities.
3. Point of Service (POS)
Point of service health insurance combines the features of both HMO and PPO plans. As with a PPO, you have the option of going out of network, but you will have to incur higher deductibles. You also have to choose a primary care physician and obtain referrals like you would with HMO insurance.
Cheaper than PPOs. For in-network medical care, there are no deductibles, and the co-payments are low (between $10 and $20). This means that out-of-pocket costs are significantly reduced. While the cost breakdown is just like other types of health insurance, POS will cost you less than a PPO.
Flexible Coverage. POS has no local restrictions when it comes to coverage benefits, and you can use it while traveling. You also have the option of going out-of-network, albeit at a higher cost, which gives you wide access to health providers.
Referrals Required. Just like an HMO, you will need a referral from your PCP before seeing specialists, which can be time-consuming. Without a referral, you may either be partially covered by your insurance or not at all.
Paperwork. You should be prepared to personally file your claims for out-of-network treatment. This means you have to pay upfront, then handle all the paperwork and procedures that come with seeking reimbursement.
4. Exclusive Provider Organization (EPO)
Exclusive provider organizations have a network of healthcare providers that members are supposed to stick to. Treatment outside of the network is not covered by the insurance plan, and you don’t need a referral to see a specialist. It is more of a PPO without the out-of-network option. It may be subject to deductibles and small co-payments from members.
Reduced Costs. Insurance companies can negotiate for lower healthcare costs as they are sure that members will only visit the given medical care providers. Also, EPOs pay for services provided and are not based on monthly payment schedules.
No Referrals. You don’t need to obtain referrals from your PCP in order to visit any specialist within the network. This gives you the freedom that isn’t available with HMO insurance.
Small Network. Unlike HMOs and PPOs, EPOs have a smaller network of healthcare providers in given locations. This leaves you with fewer options when it comes to where you can get medical care.
No Out-of-Network Services. EPOs are not suitable for people who may require ongoing services from specialists outside the network. You will have to incur the costs personally as it restricts members to in-network physicians.
5. Indemnity Health Insurance
Indemnity health insurance is also known as a fee-for-service plan. It doesn’t have a network of healthcare providers, and members are reimbursed a percentage of their medical costs for covered services. Indemnity health insurance focuses on treatments, and you are responsible for deductibles and co-insurance payments.
Freedom. You are not limited to a given network of healthcare providers, and you can choose whatever medical facility or physician you prefer. There are also no PCPs involved and therefore nor referrals. This type of insurance gives you a lot of control over your healthcare.
Lots of Paperwork. In most cases, you will first pay for medical services then file for claims in order to be reimbursed, which can be a headache.
High Cost. There is usually no agreement between insurance companies and healthcare providers to offer services at given rates. This may lead to higher costs, which may fall to you if they surpass the limits considered customary and reasonable by the insurance.
The good news is that there are lots of choices, and the bad news is—you guessed it—there are lots of choices. As you embark on this decision, make a list of your healthcare priorities. What matters most to you? Physician choice? Convenience? Low cost? There are benefits and drawbacks to most every plan, so decide what you can and can’t do without, and make your decision accordingly.
Insurance serves as a guarantee to ensure that whatever happens to you, bills, hospitalization, and any other privileges can ease the burden that you are feeling. Find the type of insurance that will help you best. Any of these insurances provide advantages but there are also some consequences for choosing one.