Types of Health Insurance Plans

Health insurance plans can be broadly categorized into two main types: managed care plans and fee-for-service plans.

Managed care plans emphasize preventive care and coordination of care within a network of healthcare providers. They typically have lower premiums than fee-for-service plans, but they may also restrict your choice of doctors and hospitals.

Here are the most common types of managed care plans:

• Health maintenance organization (HMO): With an HMO, you must choose a primary care physician (PCP) who coordinates all of your care. You can only see specialists within the HMO network if your PCP refers you.
• Preferred provider organization (PPO): With a PPO, you have more flexibility in choosing doctors and hospitals, both in-network and out-of-network. However, out-of-network care will typically cost you more.
• Point-of-service (POS) plan: A POS plan is a hybrid of an HMO and a PPO. You have more flexibility than with an HMO, but less than with a PPO. You typically need to choose a PCP, but you can also see specialists without a referral.
• Exclusive provider organization (EPO): An EPO is similar to an HMO, but it typically has a larger network of doctors and hospitals. You must stay within the network to receive covered benefits.
• Fee-for-service plans give you more freedom in choosing your doctors and hospitals, but they typically have higher premiums than managed care plans. You are also responsible for paying a larger share of the costs of your care.

Here are the most common types of fee-for-service plans:

• Traditional indemnity plan: With a traditional indemnity plan, you are reimbursed for a percentage of the covered charges for your care. There is no network of doctors or hospitals, so you can go to any provider you want.
• High-deductible health plan (HDHP): An HDHP has a high deductible, which is the amount you must pay out of pocket before the insurance company starts to pay for your care. However, HDHPs typically have lower premiums than traditional indemnity plans. You can also pair an HDHP with a health savings account (HSA), which is a tax-advantaged account that you can use to pay for qualified medical expenses.

The best type of health insurance plan for you will depend on your individual needs and circumstances. Consider your budget, your health needs, and your preferred level of flexibility when choosing a plan.