Types of health insurance plans

Here are the details on the five common health plan types and how each works, including provider networks and how to get specialist referrals in each plan. Each of these may be employer-sponsored or may be private health plans.

Preferred Provider Organization (PPO)

A PPO offers the widest range of options for getting care of any plan. Here are a few highlights:

  • A primary care physician is not required.
  • You don't have to get referrals to see a specialist.
  • Provider networks are usually larger, so you have more doctors to choose from.
  • PPOs allow you to receive both in-network and out-of-network care, so you can see any doctor you want.

A few things to know about PPOs:

  • Premiums are higher than other plans, sometimes more than double the cost of a health maintenance organization (HMO) or high-deductible health plan (HDHP).
  • Out-of-network care has higher deductibles and copays.

PPOs are a popular choice with employer-sponsored plans where the employer covers a portion of the premium.

Health Maintenance Organization (HMO)

HMOs cost less than a PPO because they place more limits on how you access care. Here are a few of the highlights:

  • Care is provided only by the health plan’s network of doctors and hospitals.
  • You will have a primary care physician (PCP) who is in charge of coordinating your care.
  • Premiums are lower thanks to the more controlled nature of the network and access to care.

A few important things to know about HMOs:

  • Out-of-network care is not covered except for an emergency.
  • Referrals are needed from your PCP to see a specialist.
  • In-network care is often limited to a specific geographical area.

HMOs keep costs lower by limiting the network and requiring referrals for specialists. You can expect both lower premiums and often lower coinsurance amounts.

Exclusive Provider Organization (EPO)

An EPO is similar to an HMO in that it has a limited network but has a few key differences. Here are some key highlights:

  • Care is provided by a local (sometimes national, depending on the plan) network.
  • A PCP is required, but you don’t always need a referral to see a specialist.
  • Premiums are lower than with a PPO.

Here are a few things to be aware of:

  • Out-of-network care is not covered unless it’s an emergency.
  • Deductibles may be higher with this type of plan.
  • EPOs tend to be a little more costly than HMOs.

Point of Service (POS)

POS plans fall somewhere between an HMO and a PPO plan. Here are the key points:

  • A PCP manages your healthcare and provides referrals to specialists.
  • You can see an out-of-network specialist, and the plan will cover more of the cost if your PCP refers you.
  • There is no deductible for in-network care, and copays are generally low.

There are a few more things you need to know about a POS plan:

  • If you see an out-of-network doctor, you must file the claim paperwork yourself.
  • You’ll pay more if you don’t have a PCP referral to an out-of-network doctor.
  • Premiums are higher than with an HMO but still lower than a PPO plan.

High-Deductible Health Plan (HDHP)

An HDHP, as the name implies, has a higher deductible than other health plans. These plans are designed for people who don’t anticipate many medical needs and want the most affordable healthcare plan. Here are a few important things to know:

  • Premiums are lower than any other type of plan.
  • It can be either an HMO or a PPO plan, so networks vary.
  • You can save money pre-tax in a health savings account (HSA) to pay healthcare costs.
  • Your employer may provide an HSA contribution as a benefit to you.

Here are some other things you need to consider before choosing an HDHP:

  • Deductibles are much higher than average.
  • Only preventative care is exempt from the deductible; you’ll have to pay for all other care until the deductible is met.
  • After the deductible is met, you will still have to pay a coinsurance amount.

How to pick the right health insurance plan

The right health insurance plan depends on many factors, including your financial situation and health status. Before you buy a health insurance plan, you should review the past few years of your healthcare services, as well as the healthcare provided to your spouse and family.

Then, think ahead to the next year. Think about your own and your family's health situations, healthcare use, prescription drugs, and whether you have the expendable income to pay out-of-pocket costs.

Here are a few questions to ask yourself:

  • Would I rather pay high premiums or potentially higher out-of-pocket costs?
  • Can I afford a high deductible?
  • Would I rather have a limited network of providers or be able to get my healthcare from more physicians?
  • Are my current healthcare providers part of the plan's provider network?
  • Do I mind getting a referral to see a specialist?

Once you answer those questions, you will know what type of health insurance plan is best for you. Make sure you compare health insurance plans to make the right choice.

How do I know what type of insurance I have?

If you’re unsure what type of health plan you have, check your insurance card. It should provide the plan’s name, including the type. If not, call your insurance company to ask about your coverage.

You can contact HR for assistance if you get your health insurance through your employer.

What coverage do all health insurance plans include?

All ACA health insurance plans must cover "essential health benefits." These covered benefits include:

  • Outpatient care
  • Emergency care
  • Hospitalization
  • Pregnancy and newborn care
  • Mental health and substance abuse services
  • Prescription drugs
  • Rehabilitation services
  • Lab tests
  • Preventive and wellness services
  • Dental and vision care for children

Essential health benefits provide a coverage baseline for all plans. However, there are still many variations of health insurance plans depending on plan type, deductibles, copays, out-of-pocket costs and provider networks.

You can find out the specifics about each plan offered by reviewing the Summary of Benefits and Coverage on each plan's website. Your employer or the ACA marketplace should also provide side-by-side comparisons of available plans.

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COBRA

Consolidated Omnibus Budget Reconciliation Act
People who lose their employer-sponsored health insurance may qualify for a COBRA plan. COBRA lets you keep your former employer's health plan, but you're responsible for paying all of the costs, including your former employer's portion.
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Medicare

People who are 65 and over qualify for Medicare. You can choose Original Medicare (also called Parts A and B), which is offered by the federal government, or Medicare Advantage (also called Part C), which private insurers provide. The average annual premium for Original Medicare is about $1,600. Medicare Advantage's average yearly premium is $336, but you may have higher out-of-pocket costs than Original Medicare.
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Medicaid

Low-income Americans qualify for Medicaid. Thirty-eight states expanded Medicaid eligibility, so lower-middle-class Americans may also be eligible in those states. Medicaid offers comprehensive benefits, but at little to no cost depending on your income. Each state has its own eligibility. Some states are flexible with Medicaid eligibility for people who are pregnant, a parent or disabled. If your household income is below 138% of the federal poverty level, you're likely eligible for Medicaid if you live in a Medicaid expansion state. That level is $17,609 for an individual, $23,791 for a family of two, $29,974 for a family of three and $36,156 for a family of four. Non-Medicare expansion states have stricter income guidelines. Check with your state's Medicaid program to see if you qualify.
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Parent's employer-based health insurance

The Affordable Care Act lets children stay on a parent's health plan until the age of 26. Having a child on a parent's health plan may or may not increase premiums. It depends on whether you already have family coverage when adding the child to the plan. If a parent already has family coverage, adding a child won't likely increase premiums. However, going from single or couple to family coverage could cause premiums to skyrocket. The average single coverage employer-sponsored plan premium is $1,186. The average family plan is $5,447.
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Spouse's employer-based health insurance

Most employers allow employees to add spouses to their health insurance. Going from single health coverage to a family plan may triple or quadruple your premiums. The average single coverage employer-sponsored plan premium is $1,186. The average family plan is $5,447. Not all jobs allow for spouse's coverage, so you'll want to check with your employer to make sure it's an option.
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  • HMO
  • HDHP
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Employer-based health insurance

Most people with private health insurance get their coverage through a job. employer-sponsored health insurance is usually cheaper than individual health insurance unless you qualify for Affordable Care Act subsidies. Job-based plans are generally less expensive because businesses often pick up more than half of employer-sponsored health insurance premiums. Kaiser Family Foundation estimates the average premiums for a single coverage employer-sponsored health plan is $1,186 and the average family plan is $5,447 annually.
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  • PPO
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  • HDHP
  • EPO
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Employer plans are often one of these types of four plans. Click on each one to find out more.
  • PPO
  • HMO
  • HDHP
  • EPO

Preferred-provider Organization (PPOs)

  • Pay higher premiums with a lower deductible
  • You have access to more providers, but pay much more for health insurance
  • You don't want to choose a primary care physician
  • You don't want to get a referral
  • You want the ability to get out-of-network care
Preferred-provider organization (PPOs) plans are the most common type of employer-based health plan. PPOs have higher premiums than HMOs and HDHPs, but those added costs offer you flexibility. A PPO allows you to get care anywhere and without primary care provider referrals. You may have to pay more to get out-of-network care, but a PPO will pick up a portion of the costs.
Find out more about the differences between plans

Health maintenance organization (HMO)

  • Pay higher premiums with a lower deductible
  • Restricted network of providers with lower premiums
  • You want to choose a primary care physician
  • You don't mind getting a referral
  • You don't care about the ability to get out-of-network care
Health maintenance organization (HMO) plans have lower premiums than PPOs. However, HMOs have more restrictions. HMOs don't allow you to get care outside of your provider network. If you get out-of-network care, you'll likely have to pay for all of it. HMOs also require you to get primary care provider referrals to see specialists.
Find out more about the differences between plans

High-deductible health plans (HDHPs)

  • Pay lower premiums with a higher deductible
High-deductible health plans (HDHPs) have become more common as employers look to reduce their health costs. HDHPs have lower premiums than PPOs and HMOs, but much higher deductibles. A deductible is what you have to pay for health care services before your health plan chips in money. Once you reach your deductible, the health plan pays a portion and you pay your share, which is called coinsurance.
Find out more about the differences between plans

Exclusive provider organization (EPO)

  • Restricted network of providers with lower premiums
  • You don't want to choose a primary care physician
  • You don't want to get a referral
  • You don't care about the ability to get out-of-network care
Exclusive provider organization (EPO) plans offer the flexibility of a PPO with the restricted network found in an HMO. EPOs don't require that members get a referral to see a specialist. In that way, it's similar to a PPO. However, an EPO requires in-network care, which is like an HMO.
Find out more about the differences between plans
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Individual insurance/Affordable Care Act
The Affordable Care Act created insurance exchanges that allow people to compare plans. The health law also requires insurers to accept everyone and not charge them exorbitant rates. People who make below 400% of the federal poverty level qualify for subsidies to help pay for an ACA plan.
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Individual insurance/Affordable Care Act
The Affordable Care Act created insurance exchanges that allow people to compare plans. The health law also requires insurers to accept everyone and not charge them exorbitant rates. People who make below 400% of the federal poverty level qualify for subsidies to help pay for an ACA plan.
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People who would prefer to pay lower premiums with a higher deductible may want the below plans
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Silver is the second most popular plan in the ACA exchanges, with 35% of people with a Silver plan. Silver has lower premiums than any plan except for Bronze. However, it has lower out-of-pocket costs than Bronze. Silver plans pick up 70% of the costs, while members pay 30% The average single coverage in a Silver plan is $481 monthly and $1,179 for a family plan.

Bronze is the most popular type of plan in the ACA exchanges, with 41% of members with a Bronze plan. These plans have the lowest premiums, but also the highest out-of-pocket costs in the exchanges. Bronze plans pick up 60% of the costs, while members pay 40%. The average single coverage monthly cost in a Bronze plan is $440 and $1,080 for a family plan.

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Individual insurance/Affordable Care Act
The Affordable Care Act created insurance exchanges that allow people to compare plans. The health law also requires insurers to accept everyone and not charge them exorbitant rates. People who make below 400% of the federal poverty level qualify for subsidies to help pay for an ACA plan.
Know more individual insurance / ACA
People who would prefer to pay higher premiums with a lower deductible may want the below plans
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Platinum plans have the highest premiums but the lowest out-of-pocket costs. So, you pay more for the coverage initially but less than other plans when you need health care services. Platinum plans pick up 90% of the costs, while members pay 10%, Not many health insurers offer Platinum plans. Only 2% of members in ACA plans have a Platinum plan, so you may have trouble finding one. The average monthly premiums for single coverage in a Platinum plan is $706 and the average family coverage costs $1,460.

Gold plans have lower premiums than Platinum, but higher premiums than Silver and Bronze. Gold also has lower out-of-pocket costs than Silver and Bronze, but higher than Platinum. Gold plans pick up 80% of the costs, while members pay 20%. The average monthly premium for a single Gold plan is $596. Family coverage averages $1,426 per month.

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Health insurance terms to know

To help you shop for health insurance, here's some basic terminology you'll need to know.

  • Premiums – What you pay to have insurance.
  • Out-of-pocket costs – What you have to pay when you get healthcare services.
  • Copayment – A flat fee that’s charged each time you visit a provider. Visits to primary care providers (PCPs) usually cost less than specialists.
  • Deductible – The annual amount you'll have to pay out-of-pocket for your medical expenses before the insurance company begins to pay claims.
  • Coinsurance – The percentage of medical costs for which you are responsible.

Knowing these terms will help you compare the different plans.