application for health coverage

A staggering $7,296 on average — that’s how much each American spent on insurance and pensions in 2018. On top of that is the average $3,405 spending on health insurance.

Health care expenses, after all, continue to be one of the biggest financial burdens in the US. In 2018, for instance, people in the country spent a collective $3.65 trillion on health care services.

The good news is, the different types of health insurance can help offset some of these health care costs. Their premiums, deductibles, and co-pays are still lower than uninsured health care costs.

So, what are your options when it comes to health insurance plans? Is this type of insurance even mandatory?

We’ll get to the bottom of these questions below, so be sure to keep reading!

Affordable Care Act

Also known as Obamacare or ACA, the Affordable Care Act used to be the mandatory health insurance plan in the US. Today, it’s no longer required at the federal level. There are, however, a few states like California, where it still is.

The original goal of ACA was to make it easier for uninsured Americans to get coverage. In 2018, 8.5% of the population, or 27.5 million folks, had no insurance.

Although the Open Enrollment is now closed for 2020, you may still qualify for ACA. One such instance is if you lost another type of health coverage. You may also qualify if you’re about to get married or give birth.

Be sure to check your qualifications, as the ACA is one of the lowest-cost health plans out there. Researchers say that from 2010 to 2017, it has helped lower health care costs by $2.3 trillion.

Health Maintenance Organization (HMO)

An HMO plan is one of the private types of health insurance plans. It’s a network-based type of medical insurance. Many of the 67.3% of Americans with private insurance use an HMO.

An HMO plan provides coverage for most healthcare services, including hospitalizations. However, you need to see physicians or go to health facilities that are part of the network to get coverage.

Although HMOs have large networks, they don’t extend to all physicians. Meaning, your current doctor may not be part of the HMO network. As such, you would need to use your own money if you continue to see your out-of-network doctor.

If you need to see a specialist, the specialist must also be part of the HMO’s network. Moreover, your primary care doctor needs to give you a referral for the specialist first.

An HMO may give you the least freedom when it comes to choosing doctors. However, it also usually has the least number of paperwork that you need to sift through. Moreover, some HMOs offer cheaper health insurance in the form of short-term coverage.

Be sure to check with your employer as well, as you may already be getting some form of HMO coverage. After all, about half of all insured US adults get their coverage from their employers. If you do have this, you can save money by supplementing only with the coverage you lack.

Preferred Provider Organization (PPO)

A PPO health plan works much like an HMO, as it is also a network-based policy. It does, however, offer more freedom than an HMO, as you can go straight to a specialist without a referral. You can also see doctors that aren’t within the PPO’s network, although you’d still pay part of the cost.

Point-of-Service Plan (POS)

A POS plan has attributes similar to both HMO and PPO health policies.

Like an HMO plan, for instance, you may need to delegate an in-network Primary Care Physician (PCP). You also need to get a referral from your PCP before seeing a specialist so that you can get full coverage. You do have the option to see a specialist without a referral, but prepare to pay more.

Similar to PPO, a POS plan lets you see an out-of-network doctor and still get some level of coverage. You can also opt for an out-of-network specialist, but you may not get the same level of coverage. In both cases, you may also have to pay a deductible first before your POS coverage kicks in.

Exclusive Provider Organization (EPO)

An EPO plan is a type of group health insurance coverage. They’re like HMOs in the sense that you need to see in-network healthcare providers. The EPO would also appoint a specific PCP who you need to see for referrals.

Keep in mind that EPO plans don’t provide any coverage for out-of-network activities. Meaning, if you see a doctor who’s not part of the EPO network, you will shoulder the entire bill. The only exception is in the case of an emergency.

Fee-for-Service Health Plans

These are also known as indemnity health plans. They come with pre-determined percentages of costs that the insurer will cover. However, you’d need to pay for the entire bill first and then file a claim to get the reimbursement.

Let’s say that your indemnity plan covers 50% of your healthcare services. You then incurred, say $500, on covered services.

You need to foot the entire $500 first using your own money. You then file a claim with your insurer, who should reimburse you for $250.

Compare the Types of Health Insurance Now to Find the Best One for Your Needs

There you have it, your top options when it comes to the different types of health insurance. Now that you know more about them, you can make a more educated choice.

What’s important is to first check if you already have employer-provided coverage. This way, you’ll know how much more coverage you’d need to fill in the gap. This will also help you save money by not purchasing more than the insurance that you need.

Ready for more pro tips to get your health back on track? Then be sure to head over to this site’s Health section! We’ve got more useful guides like this to share with you.