Health Insurance 101: The Different Types of Health Insurance
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Contact: Amanda Edmunds
I & E Insurance Agency
Health insurance is one of the most important things one can buy. Without insurance, illnesses, injuries, and other medical setbacks can be wildly expensive. Seeing any sort of healthcare could completely break the bank whether you’re covering a hospital visit or a routine checkup. Health insurance seems complicated if you don’t have a solid understanding of the basics of the industry. The first step of picking a health insurance plan is to determine what sort of coverage you need. Once you’ve figured out the type of coverage you need, it’s time to determine the best plan for you and your family that most adequately suits your needs. There are four major types of plans to consider, HMO, EPO, PPO, and POS.
Health Maintenance Organizations (HMO)
HMO plans have their own network of doctors, hospitals, and healthcare providers that will accept payment for any services they provide. Typically, these plans offer lower monthly premiums than other kinds of insurance plans. This is because they include an agreed-upon payment level upon sign up. HMO insurance plans require one to choose a primary care physician (PCP) within your network. This primary care doctor should have the best understanding of your overall health, which means they should be able to refer you to a specialist in your network in the event that you need to receive care your PCP cannot provide. within your HMOs network.
If you find that you aren’t someone who needs a lot of specialist care, an HMO plan might be best for you. Or, in the reverse, if you’re comfortable with your PCP facilitating these visits with a specialist. This can also be a major drawback of the HMO plan as working through a middle man makes things more complicated. The affordable cost of monthly premiums is a major benefit, though there is some flexibility that you lose by having to search for doctors and healthcare providers within your HMOs network.
Exclusive Provider Organizations (EPO)
An EPO plan is similar to an HMO plan, but you don’t need to go through a primary care physician in order to get a referral. You’re still bound to a network of healthcare providers for the most part and out of network treatment results in higher out of pocket costs (and is only allowed in the event of emergencies.) EPOs are ideal because they’re inexpensive, much like an HMO plan, and lack the same amount of restrictions. The main disadvantage of an EPO plan is that your network is small, especially compared to a PPO or HMO plan. This network is close-knit, which means they have an in-depth understanding of their colleague’s specialties, skills, and weaknesses.
Preferred Provider Organizations (PPO)
Preferred Provider Organization plans are one of the most popular types of plans. PPO plan is nearly identical to an EPO plan. Like both EPO and HMO, costs are low while your visits stay in-network, but there is more freedom involved. You are no longer required to choose a primary care physician, you can see a specialist without a referral, and if your network is quite large. Out of network care are expensive, just as they are for EPOs, but all paperwork involved with payment and insurance is at the responsibility of the individual. Co-payments with this type of plan are more expensive as are premiums due to the number of extra amenities these providers offer.
Point of Service Plans (POS)
A POS plan is more similar to an HMO plan in the sense that that is based on the managed care foundation of lower medical costs in exchange for more limited choice. Still, this plan is not nearly as limited as an HMO because you can travel out of network in exchange for a higher deductible. This deductible along with a percentage of the medical expenses must be paid prior to receiving any care. Preventative care is one of the main tenants of this plan in order to promote cost-effectiveness.
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