Which type of health insurance should I get?
If you’ve had a chance to research health plans since the exchanges opened, you know that not all plans were created equally. You’ve researched the costs; you’ve researched the basic benefits. But does seeing HMO, PPO, EPO, or HSA have you saying “SOS!”?
Knowing which of these managed care plans to choose boils down to individual preference. Health plans can differ in terms of network and health care provider preferences, patient cost-sharing, and coverage limitations.
Health Maintenance Organization (HMO)
An HMO was meant to be fix for the rising costs of traditional indemnity, or “fee-for-service”, insurance. It utilizes primary care physicians (PCP) as “gatekeepers” in order to prevent overutilization of physician or specialty services; in order to see a specialist, patients must receive a referral from their PCP. Customers who enroll in this plan are required to choose health care providers within the network of contracted physicians and hospitals.
Patients enrolled in HMOs still pay monthly premiums, but their premiums tend to be lower because of the contracted network—providers know that patients will be directed to them. Furthermore, HMO patients typically have lower copays.
HMOs are ideal for individuals who visit the doctor infrequently and who seek health services at an overall less cost. If a patient sees a provider outside of the HMO network, they are responsible for the full cost of treatment. Aside from having to choose providers in the network there are few other limitations; in the case of emergency care, patients do not have to stay within the network.
Preferred Provider Organization (PPO)
PPOs were created as middle ground between HMOs and traditional insurance. Their goal is to restrain overutilization, while allowing patients more flexibility in their choice of physicians and specialists. There is no PCP gatekeeper for PPO plans, but customers are encouraged to choose providers within the network. Patients who choose a provider outside of the network will pay more out-of-pocket. The network itself consists of contracted physicians, but their contracts do not exclude them from other networks.
PPO patients typically pay higher premiums than those who choose an HMO. Often they must first meet a set deductible and then still pay coinsurance at the point of service.
A PPO plan is ideal for those who need (or want) more provider options, whether due to living in a remote area or having to see different specialists.
Exclusive Provider Organization (EPO)
EPOs are essentially HMOs with a twist—EPOs have no PCP gatekeepers. They do, however, require patients to stay inside a set provider network. Because patients have direct access to the network, they are able to get lower rates on their premiums.
EPOs are very restrictive in that you must remain within the network to get care. Even in the case of an emergency, some EPOs may make you pay some or all of the expenses out-of-pocket if you go out-of-network. There are also copayments with EPOs, but, like HMOs, they are usually quite small.
EPOs are great for individuals who want a lower premium and who hate waiting for referrals to see specialists. Individuals who don’t mind doing a little leg work to find the right provider or specialist in a particular network will thrive with this plan.
Health Savings Account (HSA)
HSAs should be thought of as bank accounts, rather than as insurance plans. They are tax-deductible accounts that cover medical expenses not covered by your your health plan—and you can’t have an HSA without an insurance plan. Traditionally, HSAs are coupled to high-deductible health plans, but some new plans under Obamacare offer EPO, HMO, and PPO plans with an HSA option. Much like IRAs, they roll over annually and grow tax-free; there are limitations to how much an individual or employer can contribute in a year. Qualified medical expense withdrawals are also tax-free.
Patients with an HSA cannot be enrolled in Medicare, nor can they be enrolled on another person’s tax returns. Patients can write checks directly to their provider from their HSA account.
HSAs are for individuals who want the flexibility of a traditional plan, while allowing them to be financially vigilant of excess. They are also great for those who worry about medical expenses after retirement and want to plan ahead.
Decided on a plan?
To avoid the glitchy government sites, try an established health insurance marketplace site such as eHealthInsurance.com to see your complete range of options. Be sure to select 2013 to see the plans available now: to see Obamacare plans, select 2014 in your search.
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