5 Basic Types of Health Insurance Plans Everyone Needs to Understand

The 5 basic types of health insurance plans are those bought through a Health Maintenance Organization, Preferred Provider Organizations, Exclusive Provider Organization, Point of service, and Fee for service.

Health insurance plans typically fall into 5 basic types, and each type has its own set of benefits and limitations. Health insurance agents may use Health Insurance Leads to determine what type of health insurance plan is suitable to a customer. However, as a smart insurance buyer, do your part and understand what the types are before making a decision.

Health Maintenance Organization

A Health Maintenance Organization is one of the most common types of health insurance. The majority of American employees purchase their insurance through an HMO because this is typically what their employers offer them. HMOs are the most affordable type of insurance plan and may include preventive care, dental care, and eye care in its coverage. HMOs provide their policyholders with a broad network of doctors, specialists and healthcare facilities. A primary-care physician works as a gatekeeper and is selected by policyholders to direct all healthcare services and medical needs when needed. HMOs will only cover expenses when the primary-care physical refers the patient to the specialist or medical service. The downside of an HMO plan is that it is the most restrictive type of healthcare plan. Depending on the plan stipulations, a co-pay may be needed in order for the patient to visit a doctor.

Preferred Provider Organizations

Unlike HMOs, a Preferred Provider organization, or PPO, does not necessitate a primary-care physician to make referrals. However, cost-wise it is better if the healthcare services and specialists selected by the policyholder are within the PPO’s own prescribed network. Services and facilities sourced from outside the network are more expensive and could require the insured to pay 20% of the total costs while the remaining 80% is covered by the PPO.

Exclusive Provider Organization

Exclusive Provider Organizations, or EPOs, are somewhat similar to PPOs, but has a distinctly smaller network. Unlike PPOs, EPOs normally do not offer coverage for services rendered by specialists outside their own network.

Point of service

Health insurance plans that fall under a point of service type is similar to PPOs in that they also have a primary-care physician. They also allow the insured to seek services from healthcare specialists outside its own network but is more expensive and requires additional paperwork to be complied.

Fee for service

Fee for services is the least restrictive type of health insurance plan and offers a wider range of choices of medical specialists and facilities. Fee for service policyholders are given the discretion to choose which doctor, facility or treatment they want. Before the insurance provider gives money for these services, the insured has to pay a preset deductible amount. The insured is also usually required to pay 20% of the costs for every service he or she accrues. A maximum amount that the insured is required to pay is stipulated in the insurance contract.

Always complete a thorough assessment of your own healthcare needs and financial capacity when choosing a health insurance plan so you can get the most out of the advantages the one you select offers and offset the disadvantages.