Finance Tips

You want to insure your health and ask your insurance agent to offer you a good policy. You are given quotes and start thinking about buying a certain plan when the inevitable question is asked “What type of plan do you want to purchase?” This question has left many first-time insurance shoppers confused as they didn’t know about any plan types before. Too bad, because by choosing the type of insurance plan you will pay for determines how your coverage will be distributed as well as how your medical services will be provided. And as you may guess this is crucial when it comes to insuring own health.

But do not worry, this article will explain the essence behind each coverage plan type you can get in the US so the next time you will be asked the question of plan types you would choose the perfect plan to meet your requirements.

HMO (Health Maintenance Organization)

HMO plans are the most popular type of managed care distribution these days. They provide a wide spectrum of healthcare services you can receive for a reduced fee or free of charge. But the main catch is that you can receive them only at specific locations and from specific professionals. And you will have to choose a primary care physician (PCP) who will refer you to other professionals when needed. Without your PCP’s affiliations you won’t be able to receive coverage for the services you took. Neither will you be covered for the costs if you address someone outside the network.

PPO (Preferred Provider Organization)

PPO insurance coverage is quite alike to HMO. This type of managed care also requires you to choose a PCP, however you have more options when choosing this doctor. This is especially useful to those who have a good relation with their family doctors who might be outside the insurance company’s network. Moreover, you have fewer restrictions on out-of-network services, still you will eventually pay more for them if compared to in-network services.

POS (Point of Service)

POS health insurance plans also require you to choose a primary car physician. But you aren’t restricted to a network your insurance company has. Still, it will be impossible for you to get individual health insurance coverage if you don’t get a referral from your PCP before visiting any other doctor.

EPO (Exclusive Provider Organization)

EPO health insurance coverage is almost the same as HMO plans. There’s a PCP you have to get a referral from in order to visit a specialist and there’s a network of physicians and facilities you are limited to. The only difference is that you pay only for the services you received, while with HMO plans you have to pay a regular monthly fee.

Fee-for-Service

This type of insurance coverage is the oldest out there and least complicated to understand. You have no restrictions on where to get your care or whom to address. You only pay for the services you receive when needed. However, you get less coverage with such plans and your overall expenses tend to be higher than with managed care plans.

In case you are looking for a comprehensive type of health coverage with much room for flexibility that still has a reasonable price-tag, a PPO insurance plan may be just the thing you need to cover your health needs.

Preferred Provider Organizations represent a network of medical workers, facilities and other professionals that are contracted by the insurance company in order to get more competitive fees for their customers. So those who are getting their medical services within the specified network will be charged with lower rates than if looking for them outside. However, you can still receive medical coverage outside the network too, only that your rates will be higher compared to what you get within the network.

PPOs can be regarded as a mix of traditional indemnity health plans and later-developed managed care options. In what concerns the network organization of medical services, PPOs are quite similar to HMO insurance plans. However, when you get a PPO plan, you aren’t required to choose a primary care provider (PCP). It’s the main difference between these two quite similar health insurance plan types. And since there aren’t any PCPs in PPO plans, you aren’t required to provide a referral when addressing any given specialist within the network. And when you receive your medical care in a facility or with a specialist outside the specified network your copayments will be considerably higher, but you still will receive partial coverage.

The advantages of PPO plans:

• PPO plans help keeping out of pocket costs within certain annual limits.
• PPO plans let you consult with any medical service provider even if he or she doesn’t make part of your network.
• PPO plans offer substantial money saving potential when receiving healthcare services within the specified network of doctors and facilities.

The disadvantages of PPO plans:

• PPO plans require you to pay the deductible before receiving any coverage.
• PPO plans make services you get outside the specified network a lot more expensive.
• PPO plans have higher copayment rates if compared to other managed plan types.

Flexibility has its price

As my may guess, when a plan provides more flexibility and options it will usually cost more than a cheap health insurance plan with greater restrictions. That’s why PPOs are generally more expensive than HMOs.

Even in case you choose a lower amount of coverage with your PPO plan, there are additional fees and payments that will make your plan more expensive. So don’t base your estimations on the amount of coverage alone.

For instance, besides the usual premiums you have to pay every month, there are also additional coinsurance fees, except for the cases when you use a preventive healthcare service. There is also a deductible to be paid before you can receive any benefits from your PPO plan.

How to get a good plan?

Sometimes it may be quite hard to get a good PPO plan that would provide increased flexibility for a reasonable price. If you feel that a PPO plan is just the thing you need to cover your medical costs, you first would want to get health insurance quotes from numerous providers or talk to your insurance agent about the options you have. Shopping around doesn’t take much time but as a result you can expect substantial savings if you manage to select the right provider.

If you have ever dealt with health coverage plans you definitely know that there are various types of plans out there on the market, each of them having their special features, pros and cons. And it’s quote hard to say which plan type is better, because they all appeal to different customers and different situations. Just like you can’t say that coffee is better than tea, you can’t affirm that HMOs are better than PPOs. So if you are a bit confused with different plans and don’t know which one to choose, this short overview will definitely help you decide with type of health coverage to purchase when you decide you need one.

Health Maintenance Organization (HMO)

This plan type is probably one of the most popular and widely used amongst managed care plans. It delivers a very wide selection of services, including preventive care, regular exams, access to different specialists and medications. However, you are limited to a specific network of medical facilities and physicians you can receive services from. Moreover, you are required to choose a primary car physician (PCP) who will refer you to other specialists when needed. Otherwise, if getting your care outside the network or without your doctor’s referral you will have higher out of pocket expenses.

Preferred Provider Organization (PPO)

PPOs are practically identical to HMOs, taking the fact that you are also limited to a network of facilities and have to choose a PCP in order to receive care. However, you have more freedom when choosing your primary physician, which is especially helpful if you have a good relationship with your family doctor who is out of the network. And you usually get a wider network of facilities to receive care in. Still, any out of network services will be considerably more costly.

Point of Service (POS)

POS plans have strict rules concerning referrals. If you don’t have a referral to other specialists issued by your primary physician then you won’t be able to receive any cheap health insurance coverage at all.

Exclusive Provider Organization (EPO)

EPOs are very close to HMO and PPO plans. It’s the same type of managed care health insurance where you have to select a PCP and are limited to a network of hospitals and doctors you can get medical services from. But the main difference is that with EPO plans you pay for each visit to the doctor or service received when required in contrast to HMO plans where you have a monthly fee that should be paid constantly regardless whether you have used your coverage or not.

Fee-for-Service

Fee-for-Service is the oldest type of individual health insurance that was around ever since health coverage was introduced. With such plans you have total control over where to get your care and whom to address. You pay only for the services you receive and don’t need any referrals in order to get to a specialist. However, the fees are usually much higher than with managed care plans and many insurance experts say that the resulting out-of-pocket expenses are larger than the amounts of money you would spend on a managed care plan.

Now it’s up to you to decide which plan type works best for you. Analyze your situation, see what your options are and get the plan that would reflect your personal interest and would be most convenient to you personally.