Plans & Benefits - Health Insurance Basics
Health Insurance Types
Health insurance can be broken down into two broad categories:
Today, there are many variations and combinations of plan types:
- PPOs (preferred provider organizations)
- POS, or Point-Of-Service plans
- Health Maintenance Organizations (HMOs)
- High-deductible, consumer-driven health plans, often attached to HSAs and HRAs
one type of health care plan is better than the other. It really
depends on your needs and preferences – and your budget. Some people
enjoy the autonomy offered by less structured plans, while others
prefer the low costs associated with high-deductible plans and EPOs.
Also, as health insurers compete for business, distinctions among the
types of plans may blur.
Today's Healthcare Landscape
care has been around in one form or another since the 1930s, but it
really took off in the last ten to twenty years. As it grew, it
evolved, leaving us with three basic types of plans. Although there are
important differences among the different types of plans, there are
All managed care plans involve an arrangement
between the insurer and a selected network of health care providers,
and they offer policyholders significant financial incentives to use
the providers in that network. There are usually explicit standards for
selecting providers and a formal procedure to assure quality care.
Preferred Provider Organizations (PPOs)
have made arrangements for lower fees with a network of health care
providers. PPOs give their policyholders a financial incentive to stay
within that network.
With a PPO, you can refer yourself to a
specialist without getting approval and (as long as it's an in-network
provider) enjoy the same co-pay. Staying within the network means less
money coming out of your pocket and less paperwork. Preventive care
services may not be covered under a PPO.
Point of Service (POS)
(POS) plans are similar to PPOs, but they introduce the gatekeeper, or
Primary Care Physician. You choose your PCP from among the plan's
network of doctors. As with the PPO, you can choose to go outside the
network and still get a level of coverage.
Health Maintenance Organizations (HMOs)
today typically have a very flexible out of network benefit, but, when
people think about and talk about HMOs, sometimes they're really
talking about closed-panel HMOs -- the least expensive, but least
flexible type of health plan which require you to obtain care
in-network to have any coverage. HMOs sometimes have medical offices
(medical centers or clinics) but usually they consists of a network of
individual physician’s practices.
Consumer Driven Health Plans (CDHP)
latest development over the past several years is consumer-driven
plans. Consumer Driven Health Plans offer potential savings for both
members and employers while still providing reliable coverage. These
plans are customized solutions designed to empower you to make educated
decisions about your health care. Consumer health care coverage can be
combined with Consumer Driven accounts such as HSAs and HRAs, some of
which are employer sponsored or funded by you. These accounts offer tax
deductions or the benefit of pre-tax dollar contributions.