Health care coverage reduces out-of-pocket costs when you need medical treatment. However, health insurance is never one-size-fits-all. You'll need to choose from different health insurance plans offering varying approaches.
The main types of health insurance plans are:
- Health Maintenance Organization (HMO)
- Preferred Provider Organization (PPO)
- Point of Service (POS)
- Exclusive Provider Organization (EPO)
The federal Health Insurance Marketplace further categorizes plans by metal levels: Platinum, Gold, Silver or Bronze. Your plan category determines how you split the cost of care with your insurer. Understanding the different types of healthcare coverage can help you choose the right insurance for your needs.
Types of Health Insurance Plans
Distinguishing between the different health insurance plans means understanding how they work and what they'll cost. It's also helpful to know the pros and cons of each health insurance option.
Health Maintenance Organization (HMO)
An HMO allows you to get health care services from an approved network of providers. Out-of-network care typically isn't covered unless it's an emergency.
You may be required to live or work in the HMO's service area to get covered. You'll typically need to choose a primary care provider (PCP), and referrals may be necessary to see a specialist.
Preferred Provider Organization (PPO)
PPO plans allow you to visit out-of-network providers, but you save the most when staying in-network. You don't have to choose a primary care provider and may not need a referral to see a specialist if you're going out of network. A PPO can be more expensive than other plans in terms of premiums, co-pays, coinsurance and deductibles. However, you might consider that a trade-off worth making if you'd like more flexibility in choosing your care provider.
Point of Service (POS)
A POS plan shares some features of an HMO and a PPO. You can choose a primary care provider from the plan's network. But you can also go out of network to seek care, either by choice or out of necessity. You may also need to choose a primary care provider and get referrals for care. You'll generally pay most out-of-network costs unless your primary care provider refers you to another doctor. Referrals are required to see a specialist.
Exclusive Provider Organization (EPO)
An EPO is a type of managed care plan similar to HMO and PPO plans in certain regards. You're only covered when you see in-network providers. However, you don't have to choose a primary care provider, and you don't need a referral to see a specialist.
High-Deductible Plans
Any of these types of health insurance plans can be a high deductible health plan (HDHP). High-deductible health plans do have high deductibles, as the name implies. The deductible is the amount you pay for health care items and services before your plan starts to pay.
But HDHPs also typically have lower premiums and make you eligible for a Health Savings Account (HSA), a tax advantaged account that helps you save for medical expenses not covered by your insurance.
Here are the minimum deductibles required for an HDHP in 2023, although the deductible a particular plan requires can be significantly higher.
Obamacare Health Plan Categories
If you're purchasing any of the health insurance plans listed above through the federal Health Insurance Marketplace, you'll also have to choose which plan tier or category you'd like. The Marketplace was established following the passage of the Affordable Care Act (ACA), and plans listed there must meet certain basic requirements.
The four plan categories are Bronze, Silver, Gold and Platinum. Your choice of which type of Marketplace plan you choose determines what you pay in premiums and your out-of-pocket costs for care.
Bronze
With a bronze category plan, you'll pay the least amount for premiums. However, this plan category has the highest costs when you need care since deductibles can easily run into the thousands of dollars.
You may also pay more out of pocket for copays or coinsurance. A bronze plan may be best suited for people who don't visit the doctor often and can afford a higher deductible in exchange for worst-case-scenario healthcare.
Silver
Silver plans have a moderate monthly premium and moderate out-of-pocket costs if you need care. Deductibles are usually lower than what you'd pay for a bronze plan, though more expensive than gold or platinum plans.
Enrolling in a silver plan could help you qualify for cost-sharing reductions. Those reductions can translate to lower copays, coinsurance, and deductibles.
Gold
Gold plans have a high monthly premium but offer lower costs on a routine basis. Deductibles are usually low and you may pay less for copays or coinsurance as well.
A gold plan could be a good option if you visit the doctor regularly. It may not take you as long to reach the deductible and once you do, your insurer can pick up the rest of your costs.
Platinum
Platinum plans have the highest premiums overall but cost you the least out of pocket when you need care. Platinum plan deductibles are the lowest of any plan tier, so your insurance company starts shouldering more of the costs of care faster. You might choose a platinum plan with higher premiums if you want to reduce your other out-of-pocket costs as much as possible.
What Are Medicare and Medicaid?
Medicare is government-sponsored health insurance for seniors aged 65 and older, and people under 65 with specific disabilities and conditions. Medicaid is a state-administered government program providing affordable health care to low-income individuals and families. Eligibility for Medicare is based on age, while Medicaid eligibility is typically dependent on income, assets, and household size—but varies by state.
What Is Short-Term Health Insurance?
Short-term health insurance covers you for a limited time period, ranging from a few months to a year or so. For example, you might get short-term health insurance if you get laid off and don't want to pay for COBRA insurance until you find new employment. However, these plans are often medically underwritten, so you’ll have to qualify. Short-term health insurance may not be required to provide the same essential health benefits coverage as an ACA-compliant plan.
What Is COBRA Insurance?
COBRA insurance allows you to maintain your employer's health insurance for a specified period of time if you lose your group health benefits. For example, if you get laid off, quit or retire, you may be able to maintain the same health plan through COBRA coverage. However, it’s generally not as inexpensive as an employer-subsidized plan. You pay the premiums, and your employer can tack on an additional administrative charge—you could end up paying 102% of the plan’s cost.
The Bottom Line
Having health insurance can give you peace of mind if you or one of your family members gets sick or injured. Navigating the different plan types and policy options can be overwhelming, but research thoroughly to know what you're getting. Comparing different health insurance companies can help you select a policy aligning with your needs and budget.
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