Individual health insurance plans vary as much as the individuals themselves. There’s no checklist of requirements or standards that establish the best health plans. The best health insurance plan is the one that works for the individual and their needs.
Of course all health insurance plans will vary in options and features, but the biggest difference which is generally most important is price. Most individuals and families are looking for the best deal for the lowest price. Health insurance companies' rates can be drastically different from one option to another. Understanding the basics of these options will help you understand what your needs are and how to make the best decision.
Health Maintenance Organization (HMO)
HMOs are the oldest and cheapest way to get medical care. They include several options, and there is no deductible, but rather a co-payment system where you pay a minimal fee for each doctor visit or service. HMO plans require you a referral from your Primary Care Physician before the plan will cover treatment by a specialist and your Primary Care Physician must be chosen from a pre-determined list of participating doctors.
Preferred Provider Organizations (PPO)
The biggest difference between an HMO and a PPO is that a PPO allows you to use any physician you choose. However, choices come with a cost. If you choose a doctor on their preferred list, your costs are less expensive. If you choose a doctor or specialist who is not a “preferred provider,” you’ll end up paying more. Generally, a preferred doctor is covered at 80% whereas a non-preferred provider is only covered at 60%.
Point of Service health insurance is a combination between an HMO and a PPO. In a Point of Service plan, you choose one primary care physician who controls all referrals to other specialists. As long as all care received is under one physician's guidance, or one “point of service,” all care is fully covered. If there is a circumstance which requires care from an out-of-plan provider, it may be reimbursed, but comes with a high deductible.
Major Medical is the least restrictive option of the three main health insurance plans. With this option, you can see any doctor for anything covered by insurance. You choose your deductible and other options when you apply. Costs that exceed your deductible are covered by a coinsurance plan, that is generally at 80/20 or 85/15 provision. Meaning the insurance company pays 85% and you pay 15% of all expenses after you meet your deductibles.
Making a Choice
To make the best decision about which type of health insurance is best for you, it’s important to talk to an agent, or representative who can carefully go over all your options. If you are receiving healthcare through an employer’s health plan, the type of plan is likely already pre-determined, but it is important to talk to a representative to understand your options, obligations, and limitations.