Notwithstanding state-wise variations, there are four main types of healthcare plans: PPO, HMO, HSA, and indemnity plans. These plans are further classified as catastrophic, bronze, silver, gold, platinum.
Types of Health Insurance Plans
PPO stands for “Preferred Provider Organization.” A PPO plan is a type of plan that contracts with health care providers and groups to create a participating pool of providers. A PPO plan is very popular, particularly among individual and family insurance purchasers. If you are covered under a PPO plan, you operate within a list of providers that are on the insurance company’s list. Going to a doctor, specialist or hospital on the insurance company’s list will allow you to get the most coverage for medical needs. Also, if you want to switch to a provider, you can, but it will cost extra to do so. https://www.healthcare.gov/glossary/preferred-provider-organization-PPO/
HMO stands for “Health Maintenance Organization.” An HMO offers care through a network of doctors and other medical professionals that exclusively contract with the HMO to provide care. Healthcare providers who contract with the HMO provide services to HMO members. HMO plans tend to require the selection of a “primary care physician,” who will coordinate your care. This primary care physician will refer the patient to specialists and other providers within the healthcare plan when needed. Obtaining health care from a provider outside the HMO is, generally, not covered. This plan is best for people who don’t mind the use of a primary care physician to coordinate care, and who also have no problem operating within a set list of doctors and other providers. An additional benefit of HMO plans is that they are great for preventative care: coverage for checkups, immunisations, and other services that fall within the preventative care realm are often prioritised by HMOs. https://www.healthcare.gov/glossary/health-maintenance-organization-HMO/
HSA stands for “Health Savings Account,” and plans are referred to as “HSA-eligible.” HSA plans are usually PPO plans with higher deductibles, as these PPO plans are designated for use with HSAs. An HSA allows you to set aside money, pre-tax, to pay for medical expenses that qualify for the plan. This “high deductible” insurance plan means that you are able to pay for medical expenses, such as deductibles and copayments, with untaxed money. The benefit to HSA plans is that they generally have lower premiums as opposed to plans with a lower deductible. HSA funds roll over yearly if you don’t spend them, and you can take your HSA with you if you change jobs or leave the workforce. Depending on the plan you have, your HSA may also qualify for earned interest. If your employees are young, healthy, and don’t need to see the doctor often, this plan may work for your business, and it may end up saving you money. The risk with HSA plans is that, in the event of unexpected illness, injury, or any other medical issue, the deductible will be very high. But, if your employees stay healthy long enough, the money will continue to roll over year to year, and your premiums will be low. https://www.healthcare.gov/glossary/health-savings-account-HSA/
Indemnityplans refer to member-directed healthcare. These plans allow members to direct their own healthcare and select any doctor or hospital they want. Indemnity plans let members visit providers of their choosing, and the insurance company pays a set portion of the medical costs. In some cases, members may have to pay for services up front and request reimbursement later from the insurance company. This type of plan is sometimes more expensive.
Health Insurance Categories
Most health insurance companies offer several plans that are classified as catastrophic, bronze, silver, gold, and platinum.
Catastrophic: this plan is termed catastrophic because it usually costs the least of all the plans, some are as low as $100 per month, but they also cover the least. Many of the plans will have a high annual deductible of around $6,000-8,000 and the majority of care will not be covered until the annual deductible is paid. The thought behind this plan is that if something “catastrophic” were to happen, like a car accident, that would leave you in thousands of dollars in bills, then a $6,000 deductible is better than say $100,000 in bills. In this case, you would pay the $6,000 to the hospital and the health insurance would cover the rest. The other assumption is that people who get this plan are “healthy” and will not need care besides seeing their primary care doctor a once or twice a year. Many of the catastrophic plans will cover a few primary care doctor visits per year. Specialists, however, are much less likely to be covered and other health needs such as imagining, surgery, prenatal care will all need to be paid out of pocket until the $6,000 annual deductible is met. After which the health insurance will cover such health care needs. In most cases the yearly deductible and the max out of pocket costs will be the same price, however, if the yearly deductible is $6,000 and the max out of pocket is $7,000 you could end up having to pay $7,000 total.
Bronze: this plan is a slight step up from catastrophic in cost and coverage. Like the catastrophic plan, general services such as ER, imaging, prenatal, surgery, hospital visits, etc will need to be paid in full until the deductible is met. After the deductible is met you will either pay nothing or need to pay a portion of the bill for such services. For example, if your deductible is $6,000 and you have a 30% co-insurance on x-rays after your deductible, then you will pay full price for an x-ray and other services until the deductible is met. After which you will pay 30% of that x-ray bill and the health insurance will cover 70%. Plans that offer 100% coverage after deductible are preferred. Medications are more likely to be covered by the bronze plan rather than the catastrophic plans.
Silver: As compared to the bronze plan, the monthly cost and coverage will both increase, but the yearly deductible will often decrease. However, in the silver plans, the deductible and the max out of pocket costs can be different. So the deductible may be $1,500, but the max out of pocket could be $6,000. This means that the plan will start paying for services after the $1,500 is met, but you may need to pay up to $6,000 before all medical bills are covered. Similar to the bronze plan, many services such as x-ray will be on a 20-30% co-insurance payment plan after the deducible is met. The silver plan is more likely to approve and cover specialist’s appointments and medications, and a few other services depending on the particular plan.
Gold: the gold plan will cost more upfront, but has the potential to save you more money in the long run. Especially if you have more than one medical condition that needs continued care. Many gold plans will have no yearly deductible and a max out of pocket amount similar to the silver and bronze. This means that you will not need to meet a deductible before the health insurance company will start covering your bills. However, you will still be responsible for co-payments on services such as x-ray up until an annual maximum amount of somewhere between $6,000-$8,000 depending on your plan. In the gold plan, the x-ray may be listed as 20% co-insurance, which means you pay 20% of the bill and the health insurance will cover the rest. In addition, many gold plans will offer fixed rates on certain services instead of co-pay amounts. For example, if you need to go to urgent care you may have a $250 co-pay on the gold plan compared to a 20% after deductible co-pay on a silver plan.
Platinum: will cost you the most upfront, but also covers the most. Platinum plans like gold have no deductible but have even lower annual out of cost maximums and lower co-pays.