The Different Types of Health Insurance: This is What You Need to Know

As of 2019, 27.5 million Americans did not have any form of health insurance at any point during the year. That translates to 8.5% of the entire population that lives without any health plan.

For those who can afford health insurance, the options can be confusing due to the complexity of available plans in the market. Here is a look at some types of health insurance to help you make the right choice.

1. Health Maintenance Organization Insurance

A Health Maintenance Organization (HMO) policy is one that is geared more towards those who are in a group plan than individuals.

An HMO delivers healthcare services through a network of predetermined providers. Typically, HMOs either operate central medical clinics/offices or rely on a network of individual practices (referred to as in-network providers).

With HMOs, the decision is whether you prefer lower premiums over less freedom in picking out specialists.

An HMO will require you to stick to the primary care physician that you choose.

When you go to a physician not in your HMO’s network, you will pay out-of-pocket for the expenses. If you need to visit a specialist at any point, you will need to get a referral from your in-network physician.

Furthermore, if you have an emergency, you will also need to seek clearance, if you can pick up the phone.

In instances where you have an emergency and end up in an out-of-network hospital, the charges will be covered at in-network rates. If a non-participating doctor in the facility treats you during the emergency, they will have to bill you directly.

When you are making a claim with an HMO, you won’t have to fill out any forms on most occasions.

An HMO is especially suitable if you are focusing on getting quality preventative services. These include immunizations and checkups.

When it comes to payment, you get to settle a copay on top of your low premium. Some plans may also require you to pay a deductible, except when seeking preventative care.

2. Preferred Provider Organizations Insurance

Preferred Provider Organization (PPO) insurance is a group cover policy. Under a PPO, several in-network physicians are contracted to provide services to plan members at discounted rates.

With a PPO policy, you can see any physician that’s within the network. You also don’t have to designate a primary care physician. If you feel you need to see a specialist, you don’t need to seek pre-approval. As long as they are in-network, you are free to consult them.

PPOs financially incentivize their policyholders to stay within the network.

For example, you may need to copay $15 when seeing an in-network physician. If you opt to see an out-of-network physician, you will have to pay a higher fee by submitting the full costs (once you pay them upfront) and receive an 80% reimbursement.

Policyholders within a PPO will have to meet an annual deductible before the insurance kicks in. They may also have to meet a copay or coinsurance fee in instances where they are responsible for a portion of the total charges on their medical expenses.

If you value the flexibility of seeing different in-network physicians and not having to seek clearance for a specialist, then a PPO can offer you great value. However, you will have to part with higher premiums.

There is little to no paperwork when you see an in-network physician, but out-of-network visits will call for a bevy of paperwork.

3. Short Term Health Insurance

Short term insurance is a policy designed to help healthy individuals and families with no comprehensive medical cover when transitioning from one life event to another.

Before 2017, providers of short term health insurance such as Vera Health could cover you for up to one year. After 2017 however, the rules changed, and such a policy could only last for three months. In 2018 the government rolled back this restriction for such policies to hit a 364-day limit. 

While most states offer short term health insurance, eleven states don’t, and they are:

• Hawaii
• California
• Colorado
• Vermont
• Connecticut
• New Jersey
• New York
• Maine
• Massachusetts
• Rhode Island 
• New Mexico

Short term health insurance does not cover pre-existing conditions. In the states where the policy exists, its availability and regulations will vary.

A short term health insurance plan is favored for offering immediate coverage at an affordable premium. On top of that, such a policy provides more deductibles and flexibility in selecting providers.

4. Point of Service Health Insurance

A Point of Service (POS) insurance policy combines features of an HMO and a PPO plan for group members.

Just like an HMO, a POS policy can require members to choose a primary care physician among the in-network providers. Typically, any service that the primary care physician offers won’t be charged on the plan’s deductible.

When you need to see a specialist, you will have to get a referral from your primary care physician as well.

But just like a PPO, you can still refer yourself to an out-of-network physician and get some coverage. However, doing so will cost you more, and you will have to jump through several hoops.

Should your primary care physician be the one to refer you to an out-of-network specialist, then the policy will cover a majority of the costs.

On top of the premium, you will have to pay a deductible, and your insurance only kicks in once the deductible is over). The deductible will be higher whenever you seek out-of-network medical services.

To add to this, you will also foot a copay or a percentage of the charges on the care you get (co-insurance).

Some POS policies can also provide coverage for preventive care services. Others will even include health improvement programs such as health club discounts and nutrition workshops.

Understand the Various Types of Health Insurance

Having a plan to cater to your medical expenses is a critical buffer that can prevent you from falling into financial ruin. However, not everyone can afford to purchase medical insurance. Those who can afford it often get confused due to the many types of health insurance plans available today with complex terms. Take the time to grasp the strengths and weaknesses of each plan to zero in on the right fit for you.

Are you focused on staying healthy? Check out more of our content for actionable tips to help you bolster your health.