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Comparing Types of Health Insurance Plans

Health insurance is highly regulated and you can only purchase it from specific sources. Here are the most common places to buy health insurance:

Employer plans: Offered to employees, employer plans are very common. You sign up at work, usually during the open enrollment period.

Directly from an insurance company: Either online or through a licensed insurance agent, this is called individual health insurance. You can apply for an individual policy anytime throughout the year.

From the government: Either from the Federal Marketplace (healthcare.gov) or your State’s Marketplace, these online marketplaces were created as part of the ACA. Sign up is also once a year, during an open enrollment period.

Medicaid and CHIP are health insurance plans available from the government for people that meet very specific income and or health criteria.

From your school: RFU offers student health insurance thorough Blue Cross Blue Shield. 

The most common types of health insurance plans are HMOs, or PPOs,  plans. The kind you choose will help determine your out-of-pocket costs and which doctors you can see.

While comparing plans’ look for a summary of benefits, which lists the doctors and clinics that participate in the plans’ network.

Comparing health insurance plans: HMO vs. PPO

  • HMO: Health Maintenance Organization
    • HMOs usually limit coverage to care from providers who work for or contract with the HMO. An HMO generally won’t cover or has limited coverage for out-of-network care except in an emergency. If you use a doctor or facility that isn’t in the HMO’s network, you may have to pay the full cost of the services you get. HMO members usually have a primary care doctor and must get referrals to see specialists.
  • PPO: Preferred Provider Organization
    • PPOs give you the choice of getting care from in-network or out-of-network providers. You pay less if you use providers that belong to the plan’s network. You’ll pay more if you use doctors, providers, and hospitals outside of the network and you may have higher out-of-pocket costs for services. If you have a PPO plan, you can visit any doctor without getting a referral.

Health plans generally can’t require higher copayments or coinsurance if you get emergency care from an out-of-network hospital, no matter what type of plan you have. However, providers may bill you for some additional costs.

When comparing different plans, put your medical needs under the microscope. Look at the amount and type of treatment you’ve received in the past. Though it’s impossible to predict every medical expense, being aware of trends can help you make an informed decision.

If you choose a plan that requires referrals, such as an HMO, you must see a primary care physician before scheduling a procedure or visiting with a specialist. Because of this requirement, many people prefer other plans.

If you’d rather choose your doctors, you might be happier with a PPO.

Compare Health Plan Networks

Costs are lower when you go to an in-network doctor because insurance companies contract lower rates with in-network providers. When you go out of network, those doctors don’t have contracted rates, which costs your insurance company, and you, more.

If you have preferred doctors and want to keep seeing them, make sure they’re in the provider directories for the plan you’re considering. You can also directly ask your doctors if they take a particular health plan.

If you don’t have a preferred doctor, you’ll probably want a plan with a large network so you have more choices.

Eliminate any plans that don’t have local in-network doctors and those with very few provider options compared with other plans.

Compare Out-of-Pocket Costs

Nearly as important as network size is how costs are shared. Any plan’s summary of benefits should clearly lay out how much you’ll have to pay out of pocket for services.

This is where it’s useful to know a few health insurance vocabulary words. As the consumer, your portion of costs consists of the deductible, copayments, and coinsurance. The total you spend out of pocket in a year is limited, and that maximum is also listed in your plan information. In general, the lower your premium, the higher your out-of-pocket costs.

Compare Benefits

By now, you likely have your options narrowed down to just a few. go back to that summary of benefits to see which plans cover a wider scope of services. Some may have better coverage for things like physical therapy or mental health care, while others might have better emergency coverage.

Once you’re down to a couple of options, it’s time to address any lingering questions. In some cases, only speaking with a person will do, so call the customer service line of the insurers you’re considering. Write your questions down ahead of time, and have a pen or computer handy to record the answers.

Your questions will be based on your current health situation, but here are some examples of what you could ask:

  • I take a certain medication. How is that covered under this plan?
  • Which drugs for this disease are covered under this plan?
  • What happens if I get sick when traveling abroad?