Each type of insurance has a different philosophy about which doctors you can visit, how much you pay each visit, and how much you will spend out-of-pocket each year. Take a minute (well, a few) to review the types of coverage and what they generally cover, which doctors you can see, what premiums you will pay, and how much paperwork you will need to fill out to claim your benefits.
Health Maintenance Organization (HMO)
This type of coverage provides services through a network of healthcare providers usually at specific facilities. The primary care doctor (general practice doctor that you first visit and will manage your care) will evaluate you and send you to a specialist, if needed. You will need the referral from the doctor to see the specialist. This type of coverage has the least amount of paperwork, but it limits the doctors you can visit. If you visit a doctor outside their network, you may need to pay that doctor out-of-pocket. This type of coverage often has the highest premiums, but the lowest deductibles and copayments.
Preferred Provider Organization (PPO)
This type of coverage has a list of providers (doctors and facilities) that are within their PPO network. These providers have agreed to fixed costs for services provided and can pass those savings on to you. You can select a provider outside of their network, but you will usually need to pay a higher percentage of the total cost and may have a higher deductible. The paperwork is minimal if using a provider within the network. You may need to pay the provider directly when using an out-of-network provider and you must file a claim with the PPO to reimburse you. This type of coverage usually has lower premiums than an HMO, but may have higher deductibles and copayments.
Point of Service Plan (POS)
This type of service will combine the features of an HMO with a PPO. You would have more freedom to choose your doctors than with an HMO. You will still need to specify an in-network primary care doctor that will provide a referral to specialists. As with the PPO, you can be referred to doctors in- or out-of-network. The out-of-network providers may require you to pay more than for in-network doctors. The paperwork is minimal if using a provider within the network. You may need to pay the provider directly when using an out-of-network provider and you must file a claim to the POS to reimburse you. This type of coverage usually has premiums between the premiums for HMO and PPO. The deductibles and copayments are similar to PPO.
You may be thinking that these plans are expensive if you never (or rarely) need to go to the doctor. You are correct, but the high cost of medical services means that a single prolonged illness will probably cost more than your savings. If you are under 30 years old, you are generally healthy and rarely see the doctor, and you don't mind having high out-of-pocket costs, you may want to consider a catastrophic plan. These plans will cover accidents similarly to other plans, but you will need to pay higher deductibles and out-of-pocket costs for normal health issues and care. Deductibles for these plans are usually at least several thousand dollars. This coverage allows you to be prepared against high medical bills in a "worst-case scenario."
The paperwork is usually the highest of any other plan. You may need to pay the provider directly and keep track of all expenses to show you have met the deductibles. Deductibles are usually higher with this type of plan, but after reaching the deductible, your plan will pay 100% of eligible benefits. Monthly premiums for this type of plan usually are the lowest when compared with the other medical plans.
High Deductible Health Plan (HDHP) with or without a Health Savings Account (HSA)
This is similar to a catastrophic plan, but with a very large deductible that must be met before the plan will pay. It may be combined with an HMO, PPO or POS plan. These high deductible plans allow you to use a Health Savings Account (HSA) to help pay for health services. You can contribute pretax money into an HSA and use the contributions tax-free for eligible medical expenses. Unused funds in an HSA account roll over each year and accrue interest, tax-free. The catch is that an HSA is available only if you are enrolled in a HDHP. You may need to pay the provider directly and keep track of all expenses to show you have met the deductibles. If you use an HSA, you will need to submit the receipts for reimbursement, or some HSAs will provide a credit card to use at medical facilities. The premiums will depend on the type of health coverage used (HMO, PPO, POS), but are lower than the corresponding lower deductible plans.
HSA contribution limits will increase each year and are $3,500 for a single member and $7,000 for a family in 2019.
|Plan Type||Primary Care Doctor Required||Referrals Required for Specialist||Volume of Paperwork||Premium Costs||Deductibles / Copayments|
|POS||Yes||Yes, but can be out-of-network||Minimal