All Americans are required to have qualifying health insurance policies according to the Affordable Care Act. Anyone who does not faces consequences on their annual taxes.
More importantly, rising health care costs make insurance a crucial protection against medically induced bankruptcy for individuals and families alike.
In theory, selecting a plan should be simple. Health insurance plans come in all shapes, sizes and styles. They range from limited and strict to expansive and flexible. Different types of plans are flexible on different factors of care or costs.
Yet, a huge percentage of the American population spends significantly more on health care each year than they should because they chose the wrong plan for their needs. Many Americans openly profess to have an extremely poor understanding of what their plans do and do not cover and at what costs. Only by broadening people’s understanding of the types of plans available to them and their unique combinations of costs and benefits can this unfortunate trend be reversed.
Exclusive provider organization plans are a form of managed care. EPOs tend to offer policyholders significant flexibility in key areas. They do not force enrollees to select a designated primary care provider (PCP) or to get referrals from a PCP before seeing specialist providers. Enrollees have a large degree of leeway within which to direct their own care, so long as they stay within the plan’s network.
EPOs generally have relatively small networks and are quite strict about the need for enrollees to receive all their care from in-network providers and facilities. With the exception of emergency care, services received out-of-network are almost never covered or reimbursed in any amount.
Health maintenance organization plans are a type of managed care structured to deliver extremely efficient high-quality care. Policyholders must live within range of a plan’s network to enroll. Designated primary care providers are mandatory and serve as both gatekeepers and guides to all other forms of care. PCP referrals are required before HMOs will pay for any specialist visits or care. All care must be received in-network.
HMOs are often considered excellent choices for policyholders with chronic illnesses, complex health conditions or disabilities. HMOs are also known for placing emphasis on preventative care and maintaining overall wellness.
Point of service health insurance plans package the benefits of network-based managed care with a minimum of restrictions. The additional freedoms they offer come at a higher cost, but they often appeal to consumers looking to strike a balance between savings and options.
POS plans allow enrollees to access out-of-network care, albeit at higher costs than in-network care. They rely on PCPs to manage and coordinate both in- and out-of-network care. POS plans may be considered good options for enrollees who need or want a designated primary care provider but who are unwilling to give up the flexibility to see out-of-network providers when they want to.
Preferred provider organization health insurance plans can be considered a sort of hybrid health insurance. They offer the flexibility of EPOs combined with the format and cost savings of HMOs. PPO plans enforce few restrictions on enrollees. Neither primary care providers nor referrals are necessary. Enrollees can even continue to work with PCPs who are not part of their plans’ networks if they wish.
Preferred provider organizations often maintain bigger networks than the average EPO or HMO plan. Unlike most other plans, preferred provider organization plans also routinely pay at least some portion of the costs associated with out-of-network care. Although PPOs generally cost more than HMOs or EPOs, their unparalleled flexibility can be well worth the cost for the right consumers.
Health savings accounts and flexible savings accounts provide eligible consumers with opportunities to save pre-tax dollars and put them towards medical and health care expenses. HSA and FSA contributions are often matched by policyholders’ employers, instantly doubling the amount of tax-free money consumers have to put toward deductibles, copays, premiums and other qualifying expenses. Although they serve the same larger purpose, health savings accounts are different from flexible savings accounts in key ways.
HSAs are only available to policyholders enrolled in high-deductible health care plans. Hard limits apply to the total amounts of money account holders can contribute and withdraw from their accounts each year. HSA accounts can be invested or set up to earn interest, further expanding account holders’ health care funding pool. Any balances that remain at the end of a fiscal year can be rolled over.
Flexible savings accounts are available to everyone. Like HSAs, they are subject to firm contribution and withdrawal limits. However, they cannot be rolled over from employer to employer or year to year the way that HSAs can. In rare cases, it is possible to layer an FSA account on top of an HSA account for maximum savings.
While selecting the right health insurance plan can feel like a struggle, it does not have to be. By taking the time to truly understand their needs and applying a handful of key questions, consumers can cut through the insurance market noise and find the plan that is perfect for them. Properly accounting for these and other needs, as well as key financial factors, can simplify and speed up the health insurance plan selection process.
Identifying the best plan starts with understanding the real needs of an individual or household. This can involve reviewing their records from the last year to examine care patterns and a review of personal or household priorities when it comes to receiving care. For example, consumers who prioritize self-direction in their care will likely benefit from different plans than potential buyers concerned primarily with keeping their existing primary care providers. Likewise, individuals with specific needs, such as mental health care, will need to select plans that cover their medical needs.
Lifestyle factors play a role as well. Families who travel often will need different coverage than those who spend most of their time within range of a single health care provider network. Individuals or families with chronic or complex health conditions need more coordination and support in their care than consumers who are generally healthy and seek mostly routine preventative care.