For most Americans, health insurance has always been tied to employment. You start a job, your boss tells you about the group health plan, and you decide whether to enroll. It’s as simple as that! Because of this, some people don’t fully understand the different types of insurance plans – and this can make buying a private health policy very overwhelming.
There are several different types of private health insurance, all of which have their own benefits and drawbacks. The trick is to figure out which type of insurance is best for your family. Today, let’s look at some of the different types of insurance and the coverage they provide.
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Health Maintenance Organization (HMO)
An HMO (or Health Maintenance Organization) is one of the most common types of private health insurance available today. With this type of plan, your insurer offers coverage through a network of doctors or healthcare facilities who are contracted with the insurer. HMOs typically offer lower premiums than other plans, as well as coverage for a wide range of services.
There is one major drawback to an HMO: subscribers only receive coverage if they go to a contracted doctor or hospital. This limits your choices regarding your healthcare services; for example, your insurer may not pay for services from an out-of-network hospital, even if it is the closest hospital to you.
Preferred Provider Organization (PPO)
A PPO (Preferred Provider Organization) is like an HMO in its basic structure. The insurer makes contracts with several doctors, hospitals, or clinics, who then provide care to subscribers. Individuals who buy into the PPO can receive care from these individuals at reduced rates. However, a PPO has one main difference: PPO subscribers can receive care from out-of-network providers.
PPOs offer individuals more choice in their healthcare experience. For example, let’s say you want to stick with your current doctor when you change insurance plans. With a PPO, you can still receive care from them – even if they’re not in your network. However, it is important to keep in mind that out-of-network care is more expensive than in-network services.
Exclusive Provider Organization (EPO)
Let’s say that you like the low premiums of an HMO, but you also like the choices you get with a PPO. Is there any way to combine these policies? Yes – with an Exclusive Provider Organization, or EPO.
An EPO plan only covers an individual if they receive care from an in-network physician or facility (like an HMO). However, the insurer will make an exception for emergency care, and cover part of your cost even if you’re treated out-of-network (like a PPO). This is an excellent private health insurance plan for individuals who want a low-cost policy with the freedom to get help anywhere if absolutely necessary.
Point-of-Service (POS) Plan
If you’re someone whose lifestyle always has them on the road, you will need a health insurance plan that provides service no matter where you are. A Point-of-Service (POS) plan offers nationwide coverage, with many of the benefits that an HMO and PPO provide.
Just like the previous plans, insurers who offer POS plans have a variety of providers who are contracted into their network. Subscribers are free to visit any provider they choose (like a PPO), but their care will cost more if they visit an out-of-network provider. The nation-wide scope of POS plans make them a great option for consultants, freelancers, and anyone else who spends a lot of their time traveling.
Short-Term Insurance Policy
When an individual loses his or her job, they often lose their health insurance as well. This can be scary and adds undue stress during the job-hunting process. People dealing with unemployment can apply for short-term health insurance, which will provide them with coverage while they look for their next work opportunity.
Most short-term health insurance only covers an individual for three months (though some states offer plans that last up to 12 months). However, it is important to note that some pre-existing conditions can disqualify an individual from short-term healthcare. If you have a chronic health condition, you should find out if your condition precludes you from this private health insurance plan right away.
High-Deductible Health Plan (HDHP)
If you’re young, healthy, and you generally take good care of yourself, you may not feel like health insurance is necessary. After all, you never get sick, you’re a careful driver, and you only ever visit the doctor for your annual physical! Individuals in this position may not want to spend tons of money on insurance that they may never use – and so they can save with a High-Deductible Health Plan, or HDHP.
As the same suggests, this private health insurance plan has a rather high deductible (the amount you have to pay to cover your healthcare services). However, these plans also have lower monthly premiums than the average private health plan. This means that subscribers don’t pay too much for their insurance coverage – but if they suffer an accident or major illness, they may be left with an extremely high bill.
Simply put, catastrophic coverage is an HDHP on steroids. This private health insurance plan offers incredibly low monthly premiums, which can be especially useful for individuals who have very little room in their budget for insurance premiums.
With catastrophic coverage, individuals will have individual insurance coverage in the event of an accident or severe illness; however, these plans often have the highest possible deductibles, which mean that an accident or illness could cost you dearly. Additionally, individuals can only receive catastrophic coverage if they are under 30 and have a hardship exemption from the government.
Each of these private health insurance plan types offer different benefits to their subscribers. This gives you the freedom to select the insurance coverage that suits your needs. Do you want to save money on your monthly premium? Do you want the freedom to visit any physician you’d like? With private health insurance, you get to choose for yourself and your family.