An agreement between you and an insurance company concerning your physical and mental well-being is known as health insurance. Users of this policy pay a monthly premium in exchange for the company covering their medical expenses. This typically entails trips to the doctor and hospital, as well as prescription medications.
Health Insurance Plan Types
People often have multiple alternatives whether purchasing a plan through the Health Insurance Marketplace or selecting an employer-sponsored plan. The following are some of the most prevalent insurance plans:
Plan Offered by a Health Maintenance Organization (HMO)
An HMO is a type of health insurance policy that has a range of providers and facilities that you must use except it’s an emergency. An insurance company has signed with a group of providers and healthcare facilities to form a network. Most HMOs require you to select a primary care physician, who will then offer you a recommendation if there is a reason to visit a specialist.
Note: This plan is the greatest option for individuals who don’t care about remaining in-network and want to save money on their insurance. Hospital and doctor services, medicines, and other medically essential expenses are frequently covered by HMOs. Exclusive provider organizations (EPOs), point-of-service (POS), and PPO plans are often more expensive than HMOs.
Preferred Provider (PPO) plan
This insurance plan is unique with its network, yet still allows you to see physicians outside of the network. If you don’t stay within the network, you’ll usually pay extra. In most cases, you wouldn’t need the recommendation to see a specialist.
Note: People who don’t want to be bound by a network should opt for a PPO. PPOs pay for medically required expenses such as doctor and hospital visits, as well as prescription drugs. HMOs, EPOs, and POS policies are frequently less costly than PPOs.
EPO (Exclusive Provider Organization) Policy
In the same way that HMOs exclusively cover in-network care, EPOs do as well. They frequently have more extensive networks than HMOs. As regards, if you require a reference to visit a specialist, they differ.
Note: EPOs are ideal for consumers who want a broader network while still saving money on their premiums. Medically required expenses, such as hospitalization, doctor visits, and drugs, are covered by EPOs. HMOs are cheaper than EPOs, but PPOs are more expensive.
Point-of-Service (POS) Plan
These plans have a network, however, providers can be found both inside and outside of it. If you go to an out-of-network provider, you’ll pay extra. If you go outside the network, you may have to file your claims documentation.
Note: POS plans are ideal for consumers who prefer to stay in-network for the majority of their care but want the flexibility to exit if necessary. Medically required healthcare bills are covered by POS programs. POS plans are more expensive than HMO policies but less expensive than EPO and PPO plans.
Health Insurance with a High Deductible
Deductibles differ by policy, and some policies are labeled as high-deductible health plans (HDHPs). These plans can be used in conjunction with a health savings account (HSA). HDHPs must have a deductible of at least $1,400 for an individual and $2,800 for a family in 2021 and 2022. In 2021, the maximum deductible available under these plans will be $7,000 for a person and $14,000 for a family, or $7,050 for an individual and $14,100 for a family in 2022.
Note: Individuals who have the finances to pay the deductible, wish to use an HSA, or don’t use healthcare frequently and want a reduced premium should choose an HDHP. HMOs, PPOs, EPOs, and POS plans are all examples of HDHPs.
Health Savings Account (HSA)
An HSA is a type of bank account that allows one to put money aside before taxes for medically essential medical expenses. Copays, deductibles, coinsurance, and prescriptions can all be paid using an HSA.
If you’re registered in an HDHP, that is when you can contribute to an HSA. In 2021, contributions are capped at $3,600 for individuals and $7,200 for families, and in 2022, contributions are capped at $3,650 for people and $7,300 for families. HSA funds can be invested and rolled over from year to year.
If you have an HDHP and want to save money before taxes, an HSA is the way to go. HSAs can be used to pay for a variety of medical expenses (the IRS has an extensive list). Cosmetic surgery and other elective procedures are usually not covered. If you take money from an HSA for something other than a certified medical bill, you may be liable for tax and a 20% penalty.
Note: If you have an HDHP, you are qualified for an HSA. Several financial firms allow you to open an HSA. Many providers don’t require paying to open or maintain an account, but this varies, so make sure you read the terms and conditions.