Everything you need to know about health insurance plans in the United States

The United States has one of the highest healthcare costs in the world, making health insurance plans a must for those who want to ease the financial burdens of getting sick or accessing medical services. The health insurance system in the US can be complex to understand at first, as it is composed of a variety of options that can greatly impact your cost savings and the overall access to healthcare services.

What are health insurance plans?

Health insurance plans provide individuals and families with financial protection, easing the burden from the high cost of healthcare and medical services. In a nutshell, individuals and families can benefit from health insurance plans in two ways: they can protect themselves from financial hardships should they become severely ill, and they can ensure that they have access to medical and health services whenever they need.

Health insurance plans must be compliant with the Affordable Care Act (ACA), which means that they should cover essential service categories such as outpatient care, emergency services, hospitalization, maternity care, mental healthcare, prescription drugs, and rehabilitative and habilitative services for people with disabilities, injuries, or chronic conditions.

Other essential benefits that must be covered are pediatric services, laboratory services, and preventive and wellness services, including HIV screening and counseling.

Common type of health insurance plans

The type of health insurance plan that you should have and get depends on several factors, specifically how much you are willing to spend and what expenses or services you wish to be covered. Here are some of the common types of health insurance plans available in the United States:

Employer-sponsored health insurance

Also known as the preferred provider organization (PPO) plan, this type of insurance is typically the first exposure of working Americans with healthcare plans. PPO plans can vary in terms of deductibles, co-payments, and out-of-pocket maximums. One advantage of an employer-sponsored health insurance plan is the ability of employees to access a wide network of preferred health and medical providers. If you have a PPO plan with your employer, you will have the option to have some out-of-network costs covered.

You can also reach out to a specialist without needing any referral from a primary healthcare provider. One big downside of PPOs, however, is the deductible cost — in some cases, you will have an annual deductible you must meet before the insurance provider begins covering your bills.

Health maintenance organization (HMO) plans

With an HMO plan, you will be required to choose a primary care physician (PCP) who will serve as the point of contact for all your healthcare and medical needs. Under an HMO plan, you are usually required to receive all healthcare services from providers within the HMO network. For instance, in cases when you need to see a specialist, you must first receive a referral from your chosen primary care physician.

HMO plans offer lower out-of-pocket costs for covered services and they do not typically have a deductible. While the costs are lower for HMO plans, they also have limited flexibility when it comes to choosing the medical providers. This means that you will most likely not be covered if you have any services from outside of your HMO network, unless in emergency situations.

Exclusive provider organization (EPO) plans

EPO plans work similarly with HMO plans but with some key differences. While both will require plan holders to choose a primary care physician, EPS plans do not impose a requirement for a referral to see specialists within the network. If you have an EPO plan, you may be covered for out-of-network services, although at a higher cost. A disadvantage of an EPO plan, however, is the often smaller panel of medical providers included in the network.

Point of service (POS) plans

If you want to enjoy the benefits of a PPO and HMO, POS plans would be the right type of health insurance for you. Flexibility is the best feature of POS plans, as you have a wider network of healthcare providers. Similar to an HMO plan, a POS plan may require holders to nominate a primary care physician. However, like PPO, you will have to pay higher costs if you receive medical care outside the POS network.

Health savings account (HSA) plans

All of the other types of health insurance plans can be qualified as an HSA plan provided that the plan has two parts: a high-deductible health plan (HDHP) and a savings account. Take note that the HDHP has a higher deductible than traditional health insurance plans, meaning that you are responsible for paying more out of pocket before coverage kicks in. However, HDHPs typically have lower monthly premiums. The savings account associated with an HSA plan provides an avenue for individuals to contribute money on a tax-free basis, up to certain annual limits set by the Internal Revenue Service. The fund can be used to pay for eligible medical expenses, including deductibles, co-payments, and prescription drugs.

The key benefit of an HSA plan is the opportunity to lower an individual’s taxable income by contributing to the account. On top of this, the funds in an HSA account can be carried over from year to year, and any unused funds can be invested and grow tax-free.

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