Whether you’re looking at individual health insurance or group health insurance, there are several different types of health plans available. The four you should know are:
PPO Health Insurance Plans,
HMO Health Insurance Plans,
HSA-Qualified Health Insurance Plans, and
Indemnity Health Insurance Plans.
The plan type that is best for you depends on what you and your family want, and how much you are willing to spend. Here’s a brief review of each type of health insurance plans:
1) PPO Health Insurance Plans
PPO or “Preferred Provider Organization” plans are the most common. Employees covered under a PPO plan need to get their medical care from doctors or hospitals on the insurance company’s list of preferred providers in order for claims to be paid at the highest level.
2) HMO Health Insurance Plans
HMO stands for “Health Maintenance Organization.” HMO plans offer a wide range of health care services through a network of providers that contract exclusively with the HMO, or who agrees to provide services to members. Employees participating in HMO plans will typically need to select a primary care physician (“PCP”) to provide most of their health care and refer them on to a HMO specialist as needed.
3) HSA-Qualified Health Insurance Plans
HSA-qualified plans are typically PPO plans designed specifically for use with Health Savings Accounts (HSAs). An HSA is a special bank account that allows participants to save money – pre-tax – to be used specifically for medical expenses in the future. Health Reimbursement Arrangements (HRAs) are often used in place of HSAs due to their advantages for employers (see HRAs vs. HSAs for more information).
4) Indemnity Health Insurance Plans
Indemnity plans allow members to direct their own health care and generally visit any doctor or hospital. The insurance company then pays a set portion of the total charges. Employees may be required to pay for some services up front and then apply to the insurance company for reimbursement.