Health insurance plans are often offered through a group plan via your employer or your other family member's employer, such as your parent, spouse, or partner. Other plans are available for purchase directly from an insurance company, the Health Insurance Marketplace, or through COBRA coverage.
If you're married, single, a parent, young, or old, health insurance can help protect you against financial disaster in the event of a serious illness or accident. Whether you choose a group plan or an individual plan, there are important choices to be made that will affect not only the quality of your medical care coverage but also your wallet.
Review some of your options below so that you can make an informed decision that fits both your specific health care needs and your budget.
- Health maintenance organizations (HMOs), preferred provider organizations (PPOs), and indemnity, fee-for-service (FFS), or point-of-service (POS) plans are the most common types of health insurance plans.
- Indemnity or FFS plans offer the greatest flexibility of managed care options, yet usually at a higher out-of-pocket cost than other plans.
- The main difference between PPOs and HMOs is that PPOs allow you to visit providers outside of your network, though usually for a higher premium.
- If you do not have coverage through an employer-sponsored health insurance plan, you can find plans through the Health Insurance Marketplace, directly through health insurance companies, or via sharing plans.
Types of Health Insurance Plans
There are three common types or categories of health insurance plans:
- Health maintenance organizations (HMOs)
- Preferred provider organizations (PPOs)
- Indemnity, fee-for-service (FFS), or point-of-service (POS) Plans
Most health insurance plans, such as one offered through an employer or one that you purchase through the Health Insurance Marketplace, will fall into one of these three categories. The policy that you ultimately choose will likely be one of these types of plans and it'll come with more information, such as specific coverage, costs, and benefits. But before even getting into those confusing terms and weeding through the details, it's helpful to understand these three categories first.
Let's take a deeper dive into these three categories of health insurance plans to learn who each is best for and what advantages and disadvantages they each have.
Health Maintenance Organizations (HMOs)
An HMO, or health maintenance organization, is an association of health care professionals and medical facilities that sell a fixed package of health care services for a fixed price. Within an HMO insurance plan, each patient has a primary care physician (PCP) who is often referred to as a "gatekeeper." The plan does not cover services provided by a specialist unless the PCP determines that the specialist is necessary and issues an in-network referral. As such, all of your care is coordinated through your PCP.
Out-of-pocket costs are typically lower than all other plans
Costs may be more predictable
Claims forms aren't usually necessary
Out-of-network services typically aren't covered
Referrals may be required, which could mean more doctor visits
Some services may be limited to outpatient, such as mental health services
Who Is This Plan Best For?
HMOs may be best for healthy individuals who don't go to the doctor often and are looking for a budget-friendly health insurance plan.
Exclusive provider organizations (EPO)s are similar to HMOs. They're a smaller type of health insurance plan that limits coverage to the sole use of doctors, specialists, or hospitals in the plan’s network.
Preferred Provider Organizations (PPOs)
A PPO, or preferred provider organization, contains the managed care aspect of an HMO but with the added flexibility of being able to go outside the network of health care professionals and facilities to any health care provider of your choice when you feel it's necessary. When you go outside the network, your benefits may be less, and you may pay more out of pocket than you would if you had stayed within the network, but you do still receive some coverage (unlike in an HMO).
Flexibility with in- and out-of-network health care providers
A primary care physician and referral may not be required
Costs may be unpredictable
More responsibility on the policyholder
Who Is This Plan Best For?
PPOs may be best for people looking for flexibility with which health care providers they choose to see, whether in-network or out-of-network.
Indemnity, Fee-for-Service (FFS), and Point-of-Service (POS) Plans
Traditional plans that allow you to go to any doctor or specialist you choose without the need for a referral are called "indemnity," "fee-for-service" (FFS), or "point of service" (POS) plans. With these plans, the insurance company pays for a set portion of your charges, and you pay the rest. These plans provide the most flexibility as they do not set restrictions on the providers you can use and generally do not require that you select a primary care physician (PCP).
It's important to note that indemnity plans are less popular than they used to be and may be more expensive health insurance options.
Complete control over the health care providers you choose to see
Referrals or prior approvals are not required
Costs tend to be higher than both HMO and PPO plans
May have to pay for medical expenses upfront and then claim reimbursement later
Who Is This Plan Best For?
Indemnity, FFS, or POS plans may be best for those looking for a combination of both HMO and PPO plan structures.
When choosing a plan, consider whether it makes more sense to pay a higher deductible in exchange for lower premiums or to pay a higher premium for a lower deductible. High-deductible health plans (HDHP) may be offered within all three categories of health insurance plans. HDHPs often come with a health savings account (HSA) that can help you save money pre-tax for medical care costs, as well as your future.
Where Can I Get Health Insurance?
If you or a family member has access to an employer-sponsored group health insurance plan through work, you may be able to sign up for a policy with them. Unfortunately, many small businesses don't offer health insurance. If you work for a company that doesn't offer health insurance—or you're unemployed and not eligible for coverage through anyone else's plan—you can sign up for an individual health insurance plan yourself directly through a health insurance company's website or on the Health Insurance Marketplace.
The Health Insurance Marketplace is the website developed as a result of the Affordable Care Act—also known as the ACA and Obamacare—which overhauled the individual health insurance market and made individual plans more accessible and affordable.
Through the Marketplace, you can compare major health insurance companies, coverage options, costs, and more. You can generally sign up for health insurance on the Marketplace if you've experienced a qualifying life event, such as loss of coverage due to a layoff, or during open enrollment which is usually between Nov. 1 and Jan. 15 each year.
Other ways you may be able to get health insurance include Medicare, Medicaid, or the Children's Health Insurance Program (CHIP), or via membership in a labor union, professional association, club, or other organization that offers health insurance to members.
You may also have seen health care sharing plans as an option. These plans require you to pay a monthly share amount into a pool of money with others covered under the plan. When you go to the doctor, your health care sharing plan uses money from the pool to cover eligible expenses. The share amount you pay may not be deductible at tax time, and there may be limitations on what medical expenses are covered. Additionally, some plans require you to commit to certain moral, ethical, or religious standards to participate in the plan. Consider all your options first.