What are the Different Types of Health Insurance Plans?
Usually, a health insurance plan type is dictated by the type of provider network the plan has. Common types of plans (and networks) include:
Unfortunately, the question above is more complex than it initially seems, because there are many ways to classify health insurance plans. Some ways to classify plans are by:
- Network type: As noted above, common types include HMO, PPO, POS and EPO.
- Metal tier: Tier describes the percentage of costs paid by the plan. Tiers include platinum (90%), gold (80%), silver (70%) and bronze (60%).
- Deductible type: High-Deductible Health Plans provide tax savings when paired with an HSA or HRA.
To help you make sense of the options available to you, we'll go through each of the common plan network types, but we’ll also look at metal tiers and deductible types in a bit more detail as well.
By Provider Network Type: HMO, PPO, POS and EPO Health Insurance Plans
PPO, HMO, POS, EPO… That’s a lot of three-letter acronyms. Generally, when talk about insurance plan types involves acronyms like these, we’re breaking down managed care plans by the type of provider network they have. Managed care plans are different than traditional health insurance plans, where you’d see any doctor you wanted, pay the doctor, and be reimbursed for a portion of the cost of care. Managed care plans try to control costs while maintaining quality of care. One way to do this is to build a network of providers that agree to accept lower fees in exchange for access to patients in the network. Because health care costs continue to increase, managed care plans and their cost control measures have become increasingly popular. Below are some common network/plan types.
Please note that these are general characteristics of certain plan types. The details and coverage of any particular plan may differ from what’s listed here.
Health Maintenance Organization (HMO) Plans
HMO plans feature low costs (e.g., lower premiums and lower or no deductible), but there are certain restrictions in the providers you can see. Typically, care is only covered if you see a provider within the HMO network (with exceptions like emergency care) and there are restrictions that limit coverage to a certain number of visits, tests or treatments. Additionally, you may be required to choose a primary care physician, who will coordinate care and refer you to specialists.
Read more details on HMO plans here.
Preferred Provider Organization (PPO) Plans
PPOs are extremely popular, because they offer more flexibility than HMO plans. There’s still a provider network, but you will usually have coverage for out-of-network services as well, though the cost to you will be higher. You won’t need to select a PCP, and no referrals are necessary to see specialists, though you’ll spend less when you see in-network specialists. The tradeoff for this flexibility is higher premiums and deductibles than with HMO plans.
Read more details on PPO plans here.
Point-of-service (POS) Plans
POS plans share some characteristics of both PPOs and HMOs. Like HMOs, you are usually (but not always) required to choose a primary care physician (PCP), who will coordinate your care, and refer you to specialists. Care provided by your PCP is usually not subject to a deductible. Preventive care benefits are also typically included. You can choose to seek care outside the plan’s network if you are willing to pay more, much like a PPO plan.
You can see a specialist without a referral, but your costs will be higher for many plans, even if your specialist is an in-network provider. You may be able to see an out-of-network specialist and be covered at in-network rates if you are referred by your PCP, but this varies from plan to plan.
Additional key points about POSs:
- Typically, you must be willing to coordinate your care through a PCP
- It’s best to choose a PCP who already participates in the network
Exclusive Provider Organization (EPO) Plans
Very similar to an HMO plan, an EPO is a type of insurance plan that requires you to use doctors and hospitals in the network, with the exception of emergency care. But unlike an HMO, you do not have to select a Primary Care Physician, nor do you need a referral to see a specialist.
Additional key points about EPOs:
- You can see the doctor or specialist you like without a referral from a PCP.
- If you choose to see a doctor outside of the network, you may have to pay the entire cost of medical services.
By Metal Tier: Platinum, Gold, Silver and Bronze Health Insurance Plans
Another way of classifying health insurance plans is by metal tier. The Affordable Care Act established levels or tiers for individual health insurance plans so that buyers understand what their potential costs for medical care may be and to provide side-by-side comparisons. The tiers available include Platinum, Gold, Silver and Bronze.
It’s important to note that metal tier isn’t an indicator of the size or quality of the plan’s provider network. Furthermore, metal tiers can have plans of any provider network type. For example, there are gold HMO plans, as well as gold PPO plans.
Medical Coverage by Metal Tier
Generally speaking, higher metal tiers will cover a higher percentage of your medical costs. The covered percentages below show the approximate breakdown of costs for medical care, including whatever monthly and out-of-pocket costs you’re responsible for.
Please note: If you meet certain income requirements, you may qualify for Cost Sharing Subsidies that will further reduce medical costs associated with your silver plan.
Plan Costs by Metal Tier
As far as plan costs, plans in higher metal tiers come with higher monthly costs (premiums), but out-of pocket costs like deductibles, coinsurance and copays will be lower.
By Deductible Type: High-Deductible Health Insurance Plans
A high-deductible health plan (HDHP) is simply a plan that meets certain IRS requirements; most importantly, a minimum deductible. The IRS has a say because this type of health plan can be combined with a Health Savings Account (HSA) or Health Reimbursement Arrangement (HRA) to help you pay medical costs on a pre-tax basis. Lower premiums are another important feature of a high-deductible health plan. However, while you’ll pay less on a monthly basis, you will be responsible for paying your healthcare costs up to a certain amount (deductible) before your insurance company begins paying its share. Learn more about the premium/deductible relationship here.
Additional key points about High-Deductible Plans:
- Most plans do provide exceptions for preventive care expenses (check-ups, immunizations, certain screenings, etc.)
- You are not allowed to be covered by any other health plan
- Typically, copays for prescription drugs and office visits are offered after reaching the deductible
For help choosing between an HDHP and a traditional copay plan, review our video on Choosing an HDHP or Copay Plan. For additional videos and articles on HSAs and HDHPs, consult our HSA information page.
By Term: Short-term Health Insurance Plans
As the name suggests, short-term health plans are designed to cover small gaps in health insurance coverage. They are available for terms up to three months, and can often be less expensive than Affordable Care Act (ACA) health plans. However, these plans are not considered Qualifying Health Coverage (they do not meet the minimum essential coverage requirement of the Affordable Care Act), so having one would not help you avoid paying a tax penalty for not having health insurance, as required by the Affordable Care Act. They are also not guaranteed issue, so your application may not be accepted.
Despite these and other drawbacks, short-term plans can provide protection from unexpected health expenses, and may be the right choice for some people.
You can learn more about short-term plans, and see what plans Medical Mutual offers on our short-term health insurance products page.
Need Help Choosing?
We've created an article on comparing health insurance plans to help you evaluate your options. You can also call us at (866) 488-3266 or call your licensed insurance agent for additional assistance.