The Different Types of Health Insurance Explained
If you’re not one of the lucky Americans who have their health care covered through their workplace, then you should know that November means it’s time to shop for health insurance.
Given the Covid-19 related job market disruption, this year might be the first year you’ve had to use the Health Care Market Place to shop for insurance. If so, you may not know much about the types of health insurance offered.
Before you choose your health care plan for the upcoming year, read this guide to learn more about the different kinds of health insurance.
The Four Metals
The Affordable Care Act, colloquially known as Obamacare, passed congress in 2010.
This law made health insurance available to every American regardless of any pre-existing condition. It provides subsidies for low-income citizens and requires all health insurance plans to offer a set of free preventative care services.
The marketplace ranks all available plans you can buy. These four types are Bronze, Silver, Gold, and Platinum. You need to know what these mean before purchasing health insurance.
A Bronze plan has the lowest premium payment but the highest out-of-pocket cost for care. Your health insurance company covers 60% of the cost while you are responsible for 40%.
These high-deductible, low premium plans work great for healthy young people who won’t require a lot of care through the calendar year. If you don’t need a doctor for much more than your yearly check-up, Bronze plans are best.
Silver plans are a 70/30 split between you and your insurance company. These plans offer lower deductibles than Bronze, but higher premiums.
If you qualify for the cost-saving subsidy mechanism of the ACA, you are required to enroll in a Silver plan to receive the benefits.
A Silver plan is not as cost-effective for a monthly budget as a Bronze plan, but it covers more. Enrollment in a Silver plan is perfect for people in their late 30s or early 40s who may need a bit more care than they did half a decade before.
Gold plans split 80/20, which means they offer similar coverage to most workplace group health insurance plans.
The 80/20 split means a high premium but a low deductible. The lower your deductible, the less you’ll have to pay out of pocket for care.
If you can afford them, Gold plans offer the most comprehensive coverage at the best value. A typical Gold plan enrollee is someone who needs or anticipates needing more care in the upcoming calendar year.
Platinum plans are the top of the line, cream of the crop health care plans. They split 90/10 and offer the most comprehensive care of all plans. These are the plans meant for people who will need an atypical amount of care.
Health Insurance Types
Now that you have a working understanding of what the Health Insurance Marketplace is and how it works, you need to know about the different types of health insurance.
Health Maintenance Organization (HMO)
HMO health insurance is a group plan that reduces premium and out-of-pocket costs by keeping all care within one health care network.
While an HMO covers a broad range of care, you’re required to stay within the system to receive the benefits. If your current PCP is out of network, you’ll have to select an in-network PCP.
With an HMO plan, you have to get a specialist referral from your primary care physician.
Preferred Provider Organization (PPO)
A PPO plan is similar to an HMO. To get the most out of the group savings you have to stay within the health care network.
Unlike an HMO, a PPO allows you to seek care from a doctor outside the network. There is an increased cost for this, however. Doctors within the network are contracted by the insurance company to offer a set of services at a specific price.
A PPO also allows direct access to a specialist. With one of these plans, a referral from a PCP isn’t necessary for specialist care. In that way, they cut out the middle man.
Exclusive Provider Organization (EPO)
An EPO that requires you to seek care from doctors within your network only. Unlike HMOs and PPOs, these plans do not cover a single cent of an out-of-network.
In exchange for a lack of flexibility, you make lower premium rates.
Point of Service (POS)
A POS plan is a plan where you must choose an in-network PCP and receive referrals for specialist treatment. Like HMOs and PPOs, you receive a discount if you use in-network services.
Unlike PPOs and HMOs, your out-of-network service deductible is much higher.
What’s the point of a POS? While your out-of-network deductible is higher than an HMO or PPO, your insurance will cover a portion of treatment no matter the network. These plans are excellent choices for those who travel often.
Short Term Health Insurance
Short term health insurance offers a bridge between plans. Say you’ve lost your job and the health insurance that came with it. You need to maintain coverage for at least a few months before you get back on your feet.
Or maybe you’re self-employed and can’t afford the burden of a Marketplace plan. Short term health insurance offers lower premiums to keep you covered.
If this is the case, why doesn’t everyone sign up for short term insurance?
The short term is meant to be temporary. Given the low premiums offered, it covers less than other plans. Since short term insurance falls outside of the ACA, you may not get coverage if you have a pre-existing condition.
The Types of Health Insurance You Need to Know
This might be the first year you’ve ever had to ask the question, “Which health insurance should I get?” If you’ve never shopped for coverage in the Health Care Marketplace, you need to know the types of health insurance available.
Whether you need a Platinum PPO, or a short term bridge plan to get you through the next few months, you must buy coverage. You never know what’s around the corner.
Have you recently lost your job and need to enroll in a short term health insurance plan? Being laid-off is tough enough, so let us help. Contact us today for a free quote.