Navigating through the terminologies used in health insurance industry and choosing the best health insurance plan can be quite difficult. The sheer number of different types of health insurance plans can easily get you confused. In this article we will explain it to you all the types of major health insurance plans so that you can make an informed decision.
The first and foremost thing to understand here is that not all health insurance plans are meant to serve the same purpose. Specific health insurance plans are designed to meet specific needs. When you compare the available plans, it is important to understand the way they are organized and structured.
- HMOs and EPOs
HMO stands for Health Maintenance Organization and EPO stands for Exclusive Provider Organization. The fact that differentiates them from other health insurance plans is that such plans limit your coverage. They implement this limit by providing you with a list of doctors or hospitals. This list is also known as the network of the insurance provider. If you opt for treatment at any hospital that is not included in the list or the network then you get disqualified from receiving any benefits. However if you get treated at a facility listed in the network then the insurance provider is liable to cover all the medical bills. In most of the cases, you are also required to seek permission from the insurance provider to see a specialist.
PPO stands for Preferred Provider Organization. Such insurance plans present you with a clear choice of opting for in-network doctors or out-of-network doctors. The main thing to understand is that if you opt for out-of-network doctors then you will be required to pay the medical bills from your pocket if you get treated from an in-network doctor.
HDHP stands for High Deductible Health Plan. The defining feature of such a plan is that they feature higher deductibles but lower premiums. A lot of people buy such plans as it helps them to save on the total federal tax.
If you have a HDHP then you can use a health savings account in order to pay for all the qualified out of pocket medical expenses. You show this expenditure at the time of filing income tax returns.
- Catastrophic Health Insurance Plans
As the name suggests, Catastrophic Health Insurance Plans are designed to provide coverage in times of serious illness or accidents. Such plans have very high deductibles but low premiums. It is common for insurance companies to exclude the coverage of prescription drugs and vaccines from the Catastrophic Health Insurance Plans. One important point to note here is that such plans provide coverage only for very expensive medical treatments and do not cover your regular medical expenses.
Since the premiums of such plans are lower and deductibles are higher, it directly means that you will be required to pay a large amount before full coverage kicks in.
Currently, in marketplace, Catastrophic Health Insurance Plans are available to only those individuals who are less than 30 years of age.
This article is written by Brianna Wilson. She is a former insurance saleswoman and now works as a freelance writer. Her articles are very helpful in comparing different affordable health insurance plans.