Health Insurance Plans
How to choose between the three most common plan types: HMO, PPO and HDHP.
Though they are the most common types of plans; the HMO, PPO and HDHP are not the only types of plans available; there are also EPO, POS and choices between adding a HSA and FSA- have you thrown your hands in the air yet? Don’t worry we will have you decoding this alphabet soup in no time.
First some definitions you may want to refer back to them as you read along :
- Premium: The amount you pay for your health insurance every month.
- Network: The groups of doctors, facilities, hospitals and suppliers your health insurer or health plan has contracted with to provide you health care services.
- Deductible: The amount you pay for covered health care services before your insurance plan starts to pay.
- HMO: Health Maintenance Organization: A type of health insurance plan that limits coverage to care from doctors who work for or contract with the HMO. It generally won't cover out-of-network care except in an emergency. An HMO may require you to live or work in its service area to be eligible for coverage.
- PPO: Preferred Provider Organization: A type of health plan that contracts with medical providers, such as hospitals and doctors, to create a network of participating providers. Examples: Blue Cross, Aetna, Cigna, United Healthcare
- HDHP: High Deductible Health Plan: A plan with a higher deductible than a traditional insurance plan. The monthly premium is usually lower. A HDHP can be combined with a HSA, allowing you to pay for certain medical expenses with your HSA account..
- HSA: Health Savings Account is a way to save for medical expenses and reduce your taxable income. If you are enrolled in a high-deductible health insurance plan (HDHP) as defined by the government, you can qualify for an HSA.
- FSA: Flexible Spending account: An arrangement through your employer that lets you pay for many out-of-pocket medical expenses with tax-free dollars.
- Out of pocket Maximum: The most you have to pay for covered services in a plan year. After you spend this amount your health plan pays 100% of the costs of covered benefits.
Next use this checklist and write down your priorities.
Once you have that laid out it will be easier for you to see which plan aligns with your needs.
- Would you rather have the flexibility of choosing your doctors from a bigger pool or happy to join a closed network of doctors in your area?
- What is your company offering?
- Are the monthly premiums for PPO coverage out of your budget ?
- Is the HMO plan offered covered by your company 100% ?
- Does your company contribute to the HSA account associated with the HDHP plan?
- Do you have a particular doctor you want to continue seeing? Check with their office to see what networks they belong to prior to making your decision.
- Do you have any pre-existing medical conditions or planned medical procedures this year? Examples : Are you planning on getting your knee replaced or have a baby?
- Look at the prescription plan and assess any potential costs for medications you are currently or will be taking for the next year
So Which plan is best?
It really depends on how much you are willing and able to pay upfront, your current or expected medical status and personal accessibility preferences.
When a PPO might be right for you:
You want the flexibility to go out of network and not need to get referrals.
Flexibility is more important to you than paying higher premiums.
You would rather pay higher premiums, but likely pay less for health care services.
You do not want to go through a PCP ( Primary Care Provider) for referrals to specialists.
What kind of person should opt for a PPO: Someone who utilizes health care regularly and sees specialists or wants to have the option to see a specialist without getting a referral.
When an HMO might be right for you:
You have a primary care physician and other providers who are in the HMO network.
You don’t see many specialists and don’t need referrals often.
You don’t mind the limitations of only seeing providers in your network.
Cost is more important to you than flexibility.
What kind of person should opt for a HMO: Someone who wants to pay as little as possible in premiums, and not have to face high deductibles. An HMO could be a good option if you have a PCP and your other health care providers are already in the HMO. These plans usually have limited flexibility but that doesn’t necessarily mean they lack quality.
When a HDHP might be right for you:
You don’t have many health care costs, and you don’t expect to have many costs over the next year.
You’d rather pay fewer upfront costs in premiums with the understanding that the higher deductible means you’ll pay more out-of-pocket if you need care.
You don’t have children and/or a spouse on your plan who may use a lot of health care services.
What kind of person should opt for a HDHP: Someone who is healthy and doesn’t expect to use many health care services within the next year. You want the cheapest premiums and don’t mind having to pay a high deductible if you need care.
HDHPs typically feature a Health Savings Account. An HSA allows you to save money pre-tax to pay for qualified medical expenses. Some employers seed money into employee HSA accounts to help pay for care.
I hope this helped you with choosing your next health plan.
-Be well, Dr. D