Depending on the type of health insurance you buy, your care may be covered only when you see a network provider.
Health Insurance Plans
Understanding where to go and who to see can give you a headache.
You will pay more if you choose to get care from a provider who isn’t in your plan’s network.
Types of plans you should become familiar with include: PPO, POS, HMO, EPO, HDHP, CDHP Catastrophic, HSA, HRA, FSA
Preferred Provider Organization (PPO)
PPOs give you the choice of getting care from in-network or out-of-network providers.
You pay less if you use providers that belong to the plan’s network.
You’ll pay more if you use doctors, providers, and hospitals outside of the network, and you may have higher out-of-pocket costs for services.
If you have a PPO plan, you can visit any doctor without getting a referral.
♦ PPO plans are considered richer than other plans. They have a wider choice of providers. In some cases, you may be able to utilize providers in other parts of the country.
People desiring to seek the best doctor or the best hospital for their condition would be wise to look closely at a PPO plan even though the premium will be higher for these plans.
Unfortunately, the trend is away from PPO and also POS plans as insurance companies work to control their costs. The majority of plans available at the Marketplace are now HMO type plans.
Which doctors, hospitals and other providers can I use?
You can see preferred providers or out-of-network providers
• A PPO has a network (or group) of preferred providers. You will pay less if you go to these providers. Preferred providers are also called in-network providers.
• With a PPO, you have the option of going to a doctor or hospital that is not on the preferred provider list. This is called going out-of-network.
• Having this option can be good if you are seeking treatment for a serious condition and wish to use the ‘best’ hospitals and doctors without fear of large out-of-network costs.
What are my costs if I have a PPO?
• Costs can vary. It depends on the providers you go to and it can even depend upon how they submit their bill. As a general rule, if you stay in the PPO's preferred provider network, your costs are less.
• If you choose to go to a provider outside the PPO network, you pay more.
• Before you see an out-of-network provider, check with your PPO to find out what is and what is not covered. Your insurance company should provide you with a detailed breakdown of your coverage. This is referred to as a Summary of Benefits and Coverage (SBC).
• If you have difficulty understand the SBC do not hesitate to call your plan’s customer service number that is located on your insurance card to ask for clarification.
POS plans let you get medical care from both in-network and out-of-network providers.
If you have a POS plan, you’ll choose a primary doctor from a list of participating providers. Your primary doctor can refer you to other network providers when needed.
If you want to visit an out-of-network provider, you’ll also need a referral and you may pay higher out-of-pocket costs.
POS plans are considered a blend of PPO and HMO.
Health Maintenance Organization (HMO)
HMOs usually limit coverage to care from providers who work for or contract with the HMO.
♦ An HMO generally won’t cover or has limited coverage for out-of-network care except in an emergency.
If you use a doctor or facility that isn’t in the HMO’s network, you may have to pay the full cost of the services you get.
HMO members usually have a primary care doctor and must get referrals to see specialists.
HMOs are one of the oldest forms of managed care. What are managed care plans?
Which doctors, hospitals and other providers can I use?
You must use providers in the HMO network.
• Usually, you must have a primary care doctor. This doctor provides your basic care and makes referrals to specialists.
• If you see a provider outside of your HMO's network your plan will not pay for those services (except in the case of emergency and urgent care).
• To enroll in an HMO, you must live in the area the HMO services. Outside this area you can only get emergency or urgent care.
What are my costs if I have an HMO?
If you stay in the HMO's preferred provider network your costs will be less. If you decide to see a doctor outside of the HMO network, you must pay for the full medical bill.
Usually you can expect to pay a flat copay for an office visit, such as $25.
You may also pay a coinsurance for some services, such as testing.
Coinsurance is usually a certain percentage of the cost, 20% or 30% is common.
It depends upon how your particular plan is setup.
Exclusive Provider Organization (EPO)
EPOs generally limit coverage to care from providers in the EPO’s network (except in an emergency).
EPOs are restrictive but in some ways they are a little less restrictive than HMOs.
EPOs usually have a more limited network of doctors than HMOs.
Which doctors, hospitals and other providers can I use ?
You must use providers in the EPO network.
• Generally, you do not have to use a primary care doctor.
• Most of the time, you do not need to get referrals to see specialists who are in-network.
• EPOs can have many limits on the doctors or hospitals you can use. With an EPO, you can use the doctors and hospitals within the EPO's network. However, you cannot go outside the network for covered care.
• If you do go out-of-network, your EPO will not pay for any services. The only exception is if you have an emergency or urgent care situation.
What are my costs if I have an EPO ?
As with all types, if you stay in the EPO's preferred provider network your costs will be less. If you decide to see a doctor outside of the EPO network, you must pay for the full medical bill.
|Need to choose PCP||X||X|
|See specialist without referral||X||X|
|Coverage while traveling||sometimes|
High Deductible Health Plan (HDHP)
This type of plan offers lower monthly premiums and higher yearly deductibles.
♦ A HDHP may be one of the plan types above but with a high deductible.
With these types of plans you usually have to pay more healthcare costs yourself before the insurance company starts to pay its share.
A HDHP may provide preventive care benefits without requiring a deductible first be met.
A high deductible plan can be combined with a Health Savings Account (HSA) or a Health Reimbursement Arrangement (HRA).
This allows you to pay for certain medical expenses with untaxed dollars.
♦ For 2023, the IRS defines a High Deductible Health Plan as any plan with a deductible of at least $1,500 for an individual or $3,000 for a family.
And an out-of-pocket maximum no higher than $7,500 for an individual and $15,000 for a family.
• The trend has been an increase in HDHP plans being offered by employers as they attempt to cut back on health care spending.
HDHP Plans Are Not For Everyone
If you are taking several expensive prescriptions this type of plan usually is not a good fit since most HDHP plans do not cover prescriptions until the deductible is met.
Read your plan’s description of benefits carefully before deciding.
♦ The high deductible can be a major burden for people with health problems.
Their illnesses can keep them from working and as a result they may have a tough time paying the deductible.
Consumer-Driven Health Plan (CDHP)
A Consumer-Driven Health Plan (CDHP) is usually a High Deductible Health Plan (HDHP) tied together with a Health Savings Account (HSA) or Health Reimbursement Account (HRA).
The theory behind CDHP plans is that employees will be encouraged to make informed decisions and spend wisely.
CDHP's are a complicated subject. If you are considering such a plan, you are strongly encouraged to read more about CDHPs.
Catastrophic Health Insurance
A catastrophic health insurance plan is for individuals under 30 and those with an extreme financial hardship.
♦ These plans have low monthly premiums but very high deductibles.
You pay most routine medical expenses yourself. Learn more about Catastrophic Health Insurance Plans.
Health Savings Account (HSA)
A medical savings account available to taxpayers who are enrolled in a High Deductible Health Plan.
♦ The funds contributed to the account aren't subject to federal income tax at the time of deposit. Both the employer and employee can contribute to the account.
The employee would deduct contributions from their tax returns.
Funds must be used to pay for qualified medical expenses. Unlike a Flexible Spending Account (FSA), funds roll over year to year if you don't spend them.
♦ The funds in a HSA belong to you.
How does an HSA work? Learn more about Health Savings Accounts.
Health Reimbursement Arrangement (HRA)
A health reimbursement arrangement (HRA) must be funded solely by an employer.
The contribution cannot be paid through a voluntary salary reduction agreement on the part of an employee.
♦ The funds are tax-deductible for the employer.
There is no limit on the amount of money your employer can contribute to the accounts. However, the plan may impose a ceiling on the value of the HRA.
♦ Employees are not taxed on these contributions since they are considered excluded from wages. There are no reporting requirements for HRAs on your income tax return.
Employees are reimbursed tax free for qualified medical expenses up to a maximum dollar amount for a coverage period.
♦ An HRA may be offered with other health plans. Often times an employer will offer an HRA in combination with a High Deductible Health Plan (HDHP) or Consumer Driven Health Plan (CDHP).
• In this way, should an employee use a lot of health benefits more health costs can be shifted toward the employee.
Any unused amounts in the HRA can be carried forward for reimbursements in later years.
♦ The funds in the account belong to the employer, so should the employee leave the company any funds in the account do not move with the employee.
Why would an employer offer a Health Reimbursement Arrangement?
An employer may offer a plan with a high deductible so they can save money on the premium.
To keep employees happy the employer will offer an HRA together with these high deductible plans.
• The HRA account is to cover the additional costs the high deductible plan may cause the employee.
♦ The employer saves money because on average only 30-50% of employees use the HRA funds.
The employer controls their cost while potentially shifting more responsibility to the employee.
• The employee benefits most if they are healthy and do not incur a lot of health related expenses.
The employee may need to take a more active role in deciding what health services to receive and from whom to receive it.
Flexible Spending Account (FSA)
A Flexible Spending Account (also known as a flexible spending arrangement) is a special account you put money into that you use to pay for certain out-of-pocket health care costs.
♦ You don’t pay taxes on this money. This means you’ll save an amount equal to the taxes you would have paid on the money you set aside.
Employers may make contributions to your FSA, but aren’t required to.
♦ Technically the funds belong to your employer so if you are terminated or change jobs you cannot take the funds with you.
If you have a health plan through a job, you can use a Flexible Spending Account (FSA) to pay for copayments, deductibles, some drugs, and some other health care costs.
• Using an FSA can reduce your taxes.
There is a risk of losing money in an FSA due to time constraints, so carefully planning is needed when using an FSA account. Learn more about an FSA account.