Your health and wellness are integral to your overall quality of life and that of your family and loved ones. Even if you prioritize a healthy and risk-averse lifestyle, accidents, injuries and illnesses may eventually require you to have access to essential medical services. With this in mind, health insurance emerges as a critical resource to limit out-of-pocket expenses and ensure adequate means of getting the care you need.
What Are the Different Types of Health Insurance Plans?
While health insurance may be among the most common types of insurance purchased and maintained by millions of Americans, coverage can be complicated and nuanced, and may come in many forms. To ensure your health plan is appropriate for your needs and circumstances, familiarize yourself with the following common types of policies:
- Health maintenance organization (HMO)—Under these plans, you select a primary care provider who is tasked with overseeing your general medical needs and referring you to specialists. HMOs typically have relatively low premiums but may have stricter network limitations.
- Preferred provider organization (PPO)—This type of health insurance arrangement may provide greater flexibility when selecting your health care providers and do not require you to get a referral to see specialists or out-of-network services. In exchange, premiums are typically higher.
- Exclusive provider organization (EPO)—These policies include elements of both HMOs and PPOs. Under these plans, you may be required to use in-network providers but may see specialists without referrals. Services outside your network are typically not covered except in some emergencies.
- Point of service (POS)—Like EPOs, POS plans can be seen as somewhat of a hybrid between HMOs and PPOs. When you have a POS, you’ll need to choose a primary care physician who can refer you to specialists while potentially receiving coverage for out-of-network services.
- High deductible health plan (HDHP)—HDHPs may provide savings on premiums while incurring higher out-of-pocket costs when receiving care. Many often partner these arrangements with health savings accounts, which offer tax-free opportunities to pay for out-of-pocket expenses.
How Do Health Insurance Policies Work?
Health insurance policies typically consist of several key components you must understand fully to ensure that your coverage is appropriate for you and your loved ones. When assessing your plan, consider that deductibles and copayments are two critical components of your health insurance policy and largely determine your out-of-pocket costs for health care services.
To ensure your coverage is suitable for your needs, consider the following summaries:
- Premiums are your regular (e.g., monthly or annual) payments that maintain your policy.
- Deductibles establish a minimum amount you must pay in a single plan year before your coverage kicks in.
- Copayments and coinsurance establish fixed amounts or percentages of total health care expenses you must pay.
- Out-of-pocket maximum is the limit of how much you will pay for covered health care in a single plan year, after which your insurance will cover all expenses.
How Are Health Insurance Premiums Determined?
Health insurance premiums can vary significantly depending on your unique circumstances. Insurance companies may consider the following:
- Type of plan
- Tobacco use
- Number of insureds on a policy
Get the Right Coverage
With extensive experience dating back to 1966, the dedicated team at The Wyatt Agency is well-equipped to help you assess your health insurance needs and acquire and maintain optimal coverage. Contact us today to learn more.