Shopping for health insurance stinks, but having health insurance rules. Should you go for the low premiums or the low deductible? HMO or PPO? How to pick a plan.

If you get health insurance through your job, you might not have an option of what type of plan you get. Some companies only offer one health insurance plan. That said, some companies offer multiple health insurance plans to choose from.

If you don’t get health insurance through your job, you have even more options. Unfortunately, health insurance can be super confusing. All of the acronyms can quickly make anyone’s eyes glaze over.

Here’s what you need to know about the different major types of health insurance plans and how to pick the right one for you.

First, here are the different types of health insurance plans?

Health insurance plans are categorized by how they work. Each type of plan below works in a slightly different way.

Exclusive provider organization plans (EPOs) 

Exclusive provider organization plans (EPOs) offer a network of providers for you to choose from.

You must only use the providers in the network to be covered unless there is an emergency. These plans have no coverage for providers considered out-of-network. If your healthcare visit to an out-of-network provider is considered a nonemergency, the visit won’t be covered.

You may also be responsible for a deductible, copayments and/or coinsurance under these plans.

Health maintenance organization plans (HMOs)

Health maintenance organization plans (HMOs) have a list of providers that work with your insurance and usually require you to pick a primary care physician or provider.

This primary provider is responsible for coordinating all of your healthcare needs. The reason for the limited network of providers and the requirement to have a primary care provider is to keep costs and premiums lower.

If you need to see a specialist under an HMO plan, you’ll need to go see your primary care provider to get a referral before you can see the specialist.

These plans are very popular and often have deductibles as well as copays for non-preventive care visits. That said, they usually prohibit you from seeing out-of-network providers unless it is prearranged by your primary care provider and approved by the insurance or it is an emergency.

High deductible health plans (HDHPs)

A high deductible health plan (HDHP) is usually another type of health insurance plan, such as a PPO, but with a high deductible. These types of health insurance plans require you to pay the deductible before they cover most services, but are usually much cheaper than other types of plans.

Additionally, you can usually qualify for a health savings account (HSA) with many of these plans. HSAs allow you to get additional tax savings on your medical costs by allowing pre-tax contributions or a tax deduction for money contributed to an HSA. Money in the HSA can be used for qualified medical costs without paying taxes.

Point of service plans (POS)

Point of service plans (POS) offer flexibility that other types of plans do not. These plans typically require you to have a primary care provider that you visit for preventative care visits as well as to get referrals.

However, rather than being limited to in-network providers only, you can usually visit out-of-network providers if you’re willing to pay the higher cost associated with their services.

Visits to the primary provider and the referred specialists may not be subject to the deductible, but visits outside of those guidelines often require you to pay the deductible first. Out-of-network visits may also require you to pay the provider directly and file paperwork to be reimbursed by the plan. 

Preferred provider organization plans (PPOs)

Preferred provider organization plans (PPOs) also have a list of providers that the insurance company allows you to see as in-network providers. These providers have pre-negotiated rates with your health insurance plan, so it’s a way of keeping plan costs down. You may also be able to visit out-of-network providers, but at a higher cost than in-network providers.

Unlike with HMOs, most PPOs don’t require you to visit a primary care provider to get a referral to see a specialist. Instead, you can visit the specialist directly. You’ll likely have copays or coinsurance for non-preventative care and an annual deductible with this type of plan.

Short-term health insurance plans

Short-term health insurance plans aren’t meant to cover every medical situation. Instead, these plans often do not cover preexisting conditions and may not cover preventative care, maternity care, or prescriptions.

Instead, these plans are often meant to cover major accidents or illnesses. You can’t usually renew these plans multiple times, but the laws vary by state and by the insurance company.

Where to find health insurance

Now that you understand the major types of health insurance plans and have an idea for how much they cost, it’s time to start looking for your health insurance plan options. Thankfully, there are quite a few places you can find health insurance plans.

Your workplace

First, you may qualify for health insurance through your workplace. If you do, this is often your best bet as your company may pay for part or all of your health insurance premiums.

If you don’t qualify for health insurance through work, you can shop for health insurance on your state’s health insurance exchange during open enrollment or when you have a qualifying event.

Insurance agents

Other options to search for health insurance include local professionals such as insurance agents that only represent a single health insurance company, or insurance brokers that can provide policies from several different health insurance companies.

Health insurance brokers will generally give you more options, but if you know there is a particular company you want to be insured by, visiting an insurance agent for that company will work, too.

Insurance aggregators

In addition to shopping on your health insurance exchange, you can use other websites and professionals to help your search.

Websites like Policygenius and eHealthInsurance aim to help you shop for and better understand the health insurance plans that will best fit your family’s needs. Unfortunately, they may not be able to offer every type of health insurance in your particular location.
In that case, here are a few alternatives for your location:

We’ll share an example of how to find health insurance with Policygenius and what to consider when shopping below.

Finding health insurance with Policygenius

If you want to find a health insurance policy with Policygenius, here’s how it works.

First, visit PolicyGenius.com and select “Health”.

Next, enter your zip code, select your county and click “Find Plans”.

Next, Policygenius asks for your household income to see if you qualify for a federal tax credit. Once you enter this, click “Check For Savings”

After that, they’ll show discounts you qualify for. Click “Continue & Shop Health Plans” to move on to the next step.

Policygenius will now ask for your monthly budget. As you move the slider, the number of available plans will update in the top right corner of the box. Once you pick a budget, click “All Set? Let’s Continue”

Keep in mind, your monthly budget is just for the plan’s premium. It does not include other costs such as copays, coinsurance and deductibles. At the same time, your other costs will likely be lower if the monthly premium is higher. You’ll have to decide how to balance these costs based on your anticipated healthcare needs.

Next, Policygenius asks you to pick how much you could afford to pay upfront in a worst case scenario to get an idea of what type of deductible would be suitable for you. Select a deductible then click “All Set? Let’s Continue”

Policygenius will now ask questions to help determine what type of plan best fits your needs. In this case, they ask if you care about getting referrals or want to book appointments directly. Select an option then click “Continue”.

Choosing whether you care about referrals is a big decision. Being able to visit a specialist directly could save you the cost of a primary care visit to get a referral. That said, plans that require referrals may be cheaper to offset this cost. Additionally, primary care providers may be able to address your issue without an expensive trip to a specialist.

After that, Policygenius asks if you have any doctors that must be included as part of the network for your new plan. If you don’t care what doctor you see, you can skip this step by clicking “All Set? Continue”. If you do, add doctors before clicking.

Next, add any must have prescriptions you need then click “Continue”. Doing this will allow you to verify your must-have medications will be covered under the plans Policygenius shares with you.

Policygenius asks you to prioritize what is a must-have and what is nice-to-have in your health insurance plan. Make the required selections then click “Continue”

Finally, Policygenius shows you available health insurance plans for you to choose from.

If you see a plan that’s clearly the one you want, you can click “How To Enroll” to start the enrollment process.

If you’re not sure which plan is best for you, you can click “Details” to learn more about a plan.

If multiple plans look like they might be a good fit, you can click the compare checkbox on the screen with the list of plans. Once you click at least two compare boxes, click the black “Compare” button on the top right of the screen.

Get a health insurance plan with Policygenius. 

How expensive is the typical health insurance plan?

You’ve probably heard that health insurance is expensive, but just how expensive is it?

Plan prices vary greatly depending on the benefits you choose. However, according to eHealthInsurance, the average premium paid for people age 25-34 was $312 per month.

Part of the lower price is due to being younger, but part is also likely due to the types of plans chosen. eHealthInsurance also mentioned the average monthly premiums per metal level were:

  • $206 for catastrophic plans
  • $434 for bronze plans
  • $498 for silver plans
  • $597 for gold plans
  • $709 for platinum plans

Keep in mind, if you get health insurance through a job, your employer will likely pay part or potentially all of the monthly premium of the health insurance plan.

Monetary considerations when picking a health insurance plan

Picking a health insurance plan can be a monetary nightmare. You want to spend the least amount as possible on health insurance, but there are so many moving parts.

Here are the major financial considerations you’ll want to look at:

Premiums

Premiums are the monthly payments you make to have health insurance. You have to pay these to have access and will pay them no matter what.

While getting a cheaper premium may sound smart, it will likely result in higher costs in the following categories.

Deductibles

Your deductible is the amount you must pay out of pocket before certain parts of your insurance coverage kick in. While preventative care and certain visits with copays may be exempted, you’ll have to be prepared to pay this amount should a major medical event, such as a hospitalization, happen. Policies with lower deductibles usually offset this lower cost with a higher cost elsewhere.

Copays and coinsurance

Copays and coinsurance are two ways health insurance spread out the cost of service to make sure you only get what you need. A copay is usually a flat rate paid for a service, such as a doctor visit or lab work.

Coinsurance is a percentage you must pay for any health costs covered by certain types of insurance. For instance, you may have to pay 20% of the bill for in-patient hospital services. Coinsurance and copays can add up quickly if you visit healthcare providers frequently.

Maximum out of pocket costs

The maximum out of pocket cost listed for each plan is the maximum amount you’ll pay, not including premiums, for healthcare covered by a plan in a year.

Let’s say you have a $4,000 out of pocket maximum, a $1,000 deductible and 30 percent coinsurance on all services. In this case, you’d have to pay $1,000 of the first $1,000 in medical expenses for your deductible, then 30 percent of the next $10,000 of medical expenses.

After this, you’ll have reached the out of pocket maximum and the plan will cover all other allowable expenses at 100 percent. If you have another $10,000 of medical expenses, you wouldn’t have to pay for those at all.

Summary

Ultimately, picking your health insurance plan is a balancing act between your budget, the services you need, how you want your plan to work, and the networks each health insurance option offers.

You’ll have to decide what’s most important to you and fits in your budget to find the best health insurance plan for you and your family.

Read more

 

Related Tools

About the author

Total Articles: 67
Lance Cothern is the founder of Money Manifesto, a personal finance blog that helps people to master their money so they can live their ideal life. In addition to blogging, he enjoys spending time at the beach with his wife and son. You can connect with Lance on Twitter, Facebook, Pinterest and Reddit.

Article comments

We invite readers to respond with questions or comments. Comments may be held for moderation and will be published according to our comment policy. Comments are the opinions of their authors; they do not represent the views or opinions of Money Under 30. Comments have not been reviewed or approved by any advertiser, nor are they reviewed, approved, or endorsed by our partners. It is not our partner’s responsibility to ensure all posts or questions are answered.