SIMPLIFYING YOUR HEALTH INSURANCE CHOICES
There’s such a thing as choice fatigue. Who doesn’t feel overwhelmed in the cereal aisle at the local grocery store? We like having lots of choices, but too many can feel like a burden. Sometimes we just want to keep things simple.
If you’re in the market for an individually-purchased health insurance plan, your choices can feel pretty intimidating. In some states, consumers may have over a hundred different health insurance plans to choose from.
One way to help simplify your options is to decide which type of plan is most interesting to you. There are a half dozen different types of health insurance plan out there, but here are four of the most popular ones, and some guidelines to help you understand if they’re right for you.
PPO or “Preferred Provider Organization” plans are the most popular in the individual and family market. Like the name implies, persons covered under a PPO plan need to get their medical care from doctors or hospitals on the insurance company’s list of preferred providers in order for claims to be paid at the highest level. It’s your responsibility to make sure that the health care providers you visit participate in the PPO. Services rendered by out-of-network providers may not be covered or may be paid at a lower level.
A PPO plan may be right for you if:
- Your favorite doctor already participates in the PPO: you can sort for plans accepted by your doctor after getting quotes at eHealthInsurance.
- You want some freedom to direct your own health care but don’t mind working within a list of preferred providers
HMO stands for “Health Maintenance Organization.” HMO plans offer a wide range of health care services through a network of providers that contract exclusively with the HMO, or who agree to provide services to members. Members of HMO plans will typically need to select a primary care physician (“PCP”) to provide most of their health care and refer them on to HMO specialists as needed. Health care services obtained outside of the HMO are typically not covered, though there may be exceptions in case of an emergency.
An HMO plan may be right for you if:
- You’re willing to play by the rules and coordinate your care through a primary care physician
- You value preventive care services: coverage for checkups, immunizations and similar services are often emphasized by HMOs
These are usually PPO plans with higher deductibles, designed specially for use with Health Savings Accounts (“HSAs”). Similar to a flexible spending account (FSA) or 401(k), an HSA is a special bank account that allows participants to save money – pre-tax – to be used specifically for medical expenses in the future. Unlike FSAs, the money in an HSA rolls over every year and can also gain interest. By pairing a qualifying high-deductible health plan with an HSA, participants can save money on health care and earn a tax write-off. Talk to your accountant to learn more.
An HSA-eligible plan may be right for you if:
- You would like to pay for health care expenses with pre-tax dollars
- You’re relatively healthy and don’t often visit the doctor
- You prefer a cheaper monthly premium even if it means having a higher deductible in case of unexpected injury or illness
Indemnity plans allow members to direct their own health care and visit most any doctor or hospital they like. The insurance company then pays a set portion of the total charges. Members may be required to pay for some services up front and then apply to the insurance company for reimbursement. Because of the freedom they allow members, Indemnity plans are sometimes more expensive than other types of plans.
An Indemnity plan may be right for you if:
- You want the greatest level of freedom possible in choosing which doctors or hospitals to visit
- You don’t mind coordinating the billing and reimbursement of your claims yourself