Which Health Insurance Plan is Right for You?
Stephen Craford, Business Development
Craford Business Consultants
Here at Craford Benefits, one of the first objectives we are tasked with when working with a client is choosing the right plan type. Many factors are considered when determining this such as location, group size, financial budget, contributions, etc. We analyze all of these factors and then recommend a plan we believe best suits the client’s needs. But if you don’t have a broker to assist you with the decision making process or you are an individual looking to obtain insurance on the state or federal exchange, how can you determine which plan type is right for you? This is what I hope to accomplish in this post; a breakdown of the 3 most common plan types so that you can make an informed decision when enrolling in a health plan.
Preferred Provider Organization
PPO plans are the most popular health plan choice among the 3 in the U.S. It provides the buyer with a moderate level of freedom to pick and choose their doctors, specialists and health care facilities. Recommendation: PPO plans are favored by individuals who prefer choice over cost, have a non-HMO primary care doctor that they want to maintain or have a condition which requires specialized doctors.
- How it works - PPOs have contracts with providers and hospitals to afford services to their members at a lower fee schedule.
- Flexibility - PPO plans offer benefits both in and out of the insurance carrier’s network of healthcare providers. It is important to note that out of pocket cost may increase dramatically when straying from the carrier’s network so it is always in your best interest to contact your provider for their list of participating carriers before receiving care.
- No referrals needed - Health care providers can make referrals, however, members can contact doctors and specialist directly, whether they are in or out of network.
Health Maintenance Organization
HMO plans are the 2nd choice among American consumers with generally lower premium costs and a higher level of benefit with minimal freedom of choice for care. Recommendation: HMO plans are favored by individuals looking to spend less but still receive a high level of care or easy access (hospital, primary care, and pharmacy all in one place).
- How it works - HMOs offer in-network services only. Some insurers contract with doctors and facilities to negotiate their service pricing and others (like Kaiser Permanente) employ doctors and own their healthcare facilities which enables them to develop a pricing structure based on their pooling experience.
- Higher benefit / limited flexibility - HMOs are able to offer a higher level of benefit due to their restricted network. Freedom of choice is therefore limited to the doctors and facilities within the insurer’s network. If a member receives care outside of their network, they will be wholly responsible for claim payments (exception: emergency services).
- Cost Sharing Structure - HMOs typically use copayments instead of coinsurance for most covered services. Copays are a more attractive cost sharing scenario than coinsurance as it assigns a specific dollar amount to a particular service, whereas coinsurance assigns a percentage.
- Referrals needed - In order to see a specialist, a member will need a referral from their primary care doctor. HMOs do not allow self-referrals.
High Deductible Health Plan with a Health Savings Account
HDHPs are low cost low benefit health plans that are commonly attached to a HSA. Recommendation: HDHPs are a popular choice for young, healthy individuals or those who rarely make trips to the doctor’s office.
- How it works – A HDHP, sometimes referred to as a catastrophic health plan, are plans occupying the bottom tier of the insurance marketplace. It offers consumers the least amount of coverage available while still satisfying minimum essential coverage requirements according to the law. This plan type is usually attached to a health savings account (HSA) which allows the insured (and their employer if enrolled in an employer sponsored health plan) to make pre-tax contributions into the account to pay for medical expenses as they are incurred. HDHPs are typically offered as a PPO but HMOs offer them as well.
- Cost Sharing Structure – HDHPs have a benefit structure primarily based on coinsurance, leaving few to no services offered using copay. Everything from regular office visits to prescriptions will be subject to your deductible first before the coinsurance will kick in. This leaves you paying the full cost schedule for most health services.
You are now an expert on the three most common health plans in the U.S., right? That may be a stretch, but I’m sure you will come away from this article able to make an informed, confident decision on your benefits. Once you have made your decision, be sure to consult your HR representative to ensure the plan fits your needs.
Thanks for reading and stay tuned for more benefit insights from our experts here at Craford Benefits.
About the author:
Stephen has over 10 years of experience working in the Health Care Industry on both the carrier and broker side. He has spent his career concentrating on sales effectiveness at Hub International, Willis and Cigna. In 2012, he moved back to CA to join Craford Benefit Consultants in a business development role. Stephen focuses on servicing and growing membership of our association clients in CA and AK. He has a BA in Risk Management and Insurance from St. Johns University.