health insurance explained: types of health plans
Getting the right health insurance for you starts with knowing what types of health insurance there are to choose from. Take a minute and catch up on some of the common health insurance options on the market today.
Shopping for health insurance plans
More than ever, people are empowered to shop for health insurance plans that suit their specific needs. You typically have a few main routes for finding coverage, such as:
- Your employer. Taking this path means many choices are made for you, but not all. Most employers let their employees choose from a (limited) selection of health insurance types.
- The exchange. The Health Insurance Marketplace under Healthcare.gov (casually known as "the exchange") lets you shop for plans that adhere to Affordable Care Act regulations. Plans on the exchange are available annually during the open enrollment period. If the open enrollment period has passed, you can sometimes still qualify for a health plan if you've had a major life event that year, such as relocating, getting married, or having a baby.
- Independent sites. If you can't find the right plan or rate on the exchange, remember, you can go elsewhere. Our partner, ehealthinsurance, allows for convenient quotes and comparisons between top companies.
- In-person agents. The National Association of Health Underwriters is a directory for agents or brokers in your area.
6 health insurance types
Regardless of where you shop for coverage, it helps to know about the main types of health insurance available.
An HMO (Health Maintenance Organization) is a network of hospitals, doctors, and other caregivers you choose from in order to get coverage. You typically select a primary physician or caregiver, and he or she issues a referral if you ever need to visit a specialist.
PPO or POS plan
PPO (Preferred Provider Organization) and POS (Point of Service) plans are similar to an HMO in that they offer a network of recommended caregivers. Unlike an HMO, these 2 plans do usually allow you to get coverage outside your network, only it may be less coverage than usual and at a higher out-of-pocket cost.
With a PPO only, you have the freedom to see any doctor without a referral, and you don't need to choose a primary care physician.
High deductible health plan (HDHP)
An HDHP usually costs less than other plans, but comes with (as the name suggests) a higher deductible — the annual amount you pay before insurance kicks in. So while you might pay less at first, if a serious injury or illness arises, you could end up paying much more out of pocket for treatment than you would with other policies.
If you use an HDHP, however, you typically qualify for a health savings account (HSA). Any funds you put in a health savings account (HSA) are exempt from federal income taxes and can be used toward your out-of-pocket medical costs.
Probably the most flexible of all health insurance plans — you can often see whomever you wish, including specialists, with little to no restrictions. The downside: higher monthly premiums, higher up-front costs at appointments, and some minor headaches from keeping track of all your receipts. You may also get less money reimbursed for routine check-ups and preventative care.
Consumer-driven health plan (CDHP)
CDHPs use what's called a health reimbursement account — not to be confused with health savings account (we know, easier said than done) — a fund into which your employer deposits a certain annual amount. You can use your health reimbursement account to pay for medical expenses or even put toward another health plan.
Once you've used all the money in the account, you usually have to meet a certain deductible before full coverage begins. Unused cash can roll over to the next year.
Essentially a last resort coverage if you need the lowest premium possible. Policyholders typically pay thousands each year before their coverage kicks in. In short, it's backup to help ensure emergencies, surgeries, etc. don't totally wipe out your savings, but not much else. These plans often don't include prescriptions and are available only to those under 30.
Esurance makes it easy to shop for all types of health insurance
Memorizing main health insurance types can be a challenge — but finding them shouldn't be. Good thing we make it easy to peruse a wide range of health insurance options so you can find just the policy you need.
Simply start your free health insurance quote with us to compare rates and coverage from top companies with our partner, ehealthinsurance.
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