With the passage of the Affordable Care Act (ACA), Americans have access to more choices about their health insurance plans than ever before. The ACA, also known as ObamaCare, setup state Marketplaces where citizens can compare health insurance plans and choose the one that best meets their needs.
These Marketplaces have exposed Americans to a wider variety of plans than most have seen before, and understanding the different types of coverage is important. Below is a description of the four most common types of health insurance coverage.
Health Maintenance Organization (HMO)
This common type of coverage generally requires you to choose a primary care provider (PCP) to coordinate your care. In general, you do not need pre-authorization from the insurance company to receive care in an HMO. HMOs often have lower insurance premiums because they focus on integrated,or coordinated, care and use the PCP to make sure that any testing or treatment is truly needed. One drawback to an HMO is that providers outside the network are generally not covered, except in case of emergency.
An HMO is best for a person or family who enjoys having their care closely coordinated among providers and has a strong relationship with their PCP. In addition, those who receive almost all of their care in the same area and are looking for a lower insurance premium and co-payment may benefit from an HMO. Because outside providers are not covered, it’s important to make sure all of your providers and specialists are in the network of the HMO you choose.
Point of Service Plan (POS)
A point of service plan is similar to an HMO in many ways.It also usually requires a PCP to be chosen, and all care and referrals come through the PCP. Care is closely coordinated among providers, and generally does not require pre-authorization from the insurance company.
The primary difference with a POS is that providers outside the network may be covered, although at a significantly higher cost to the patient. A POS can be a good choice for those who travel a lot and are concerned about needing care outside the local area, or who cannot find an HMO that contains all of their providers.
Exclusive Provider Organization (EPO)
An EPO does not require a primary care physician to be designated as a gate keeper to your care. However, insurance companies may need to provide you with pre-authorization prior to certain medical tests and treatments. Certain medical tests and treatment may need to be pre-authorized by the insurance company before they can be performed. The monthly premiums and cost-sharing arrangements of an EPO are low, but there is no coverage provided for care outside the EPO network except in a true emergency.
An EPO can be a great choice for Americans who don’t want to use a PCP as a gatekeeper to care but want to keep costs low by staying in a single network. You will want to thoroughly research your EPO options because they often keep costs down by having a very limited provider selection. If you can find an EPO that contains all your providers, you can manage your own care at a significant savings.
Preferred Provider Organization (PPO)
As the form of health insurance that provides the most comprehensive care and flexibility, a PPO is also one of the more expensive. APPO gives you access to a wider range of providers by covering both in-network and out-of-network care, generally at different cost-sharing levels. You do not have to designate a PCP to handle your specialists and referrals, but you may need to pre-authorize some care may require pre-authorization by your insurance company before treatment can begin.
PPOs are best for Americans who need a wide network of providers or who have providers who are not available in a specific EPO network. In addition, since many Americans prefer to manage their own care, a PPO can be a great choice for those who don’t want to coordinate through a PCP. A PPO can also be helpful to those who travel a lot or who otherwise can’t be restricted to a narrow network. However, the flexibility of a PPO does come at a higher cost, both in terms of monthly premiums and cost-sharing.
The health insurance Marketplace can be confusing in terms of the number of different plans and plan types offered. By understanding clearly the differences between each type of insurance plan, and by checking carefully to make sure your key providers are in the network of a plan, you can make the best health insurance choice for yourself and your family.