Both employer-sponsored plans and private insurance offer a variety of health insurance types with different features and costs. There is a trade-off between your up-front cost in premiums, the amount of coverage you get, and the level of deductible and co-insurance you are willing to accept. Separate policies are usually necessary for dental and vision coverage, which are not included in most health plans.
Types of Insurance
Nearly 60 percent of U.S. citizens get health insurance through an employee-sponsored plan. Another 30 percent receive coverage through a government plan such as Medicare or Medicaid or through the military. The remainder get it as an individual or family or through membership in an organization. Employer group insurance typically offers the greatest benefits at the lowest cost, but is not available to everyone. Obtaining individual insurance requires going through underwriting, in which the insurance company assesses your risk and decides whether to offer you insurance, how much to charge and what to cover.
Managed Care Plans
Most insurance plan options are managed care plans, which contract with specific providers for better rates. The two most popular are the health maintenance organization (HMO) and the preferred provider organization (PPO). A point-of-service plan (POS) is a hybrid of the two. HMOs only give coverage for services received from a provider in the network, and each person must select a primary care provider (PCP) to coordinate care and provide specialist referrals. For a PPO, a lower level of benefits is usually available for services from an out-of-network provider, and the premium is usually higher. Some companies also offer mini-medical plans, which provide limited coverage.
High-Deductible Plans
High-deductible, or catastrophic, insurance provides coverage at a lower monthly premium in exchange for a higher deductible. This is a good option for people who cannot afford higher premiums or are mainly seeking insurance in case high-cost services are needed for major illness or injury. Some of these plans are qualified for use in conjunction with a special type of bank account called a health savings account (HSA). You contribute funds to the account, then withdraw funds to cover medical expenses on a pre-tax basis.
Insurance Costs
The first cost you encounter for health insurance is the monthly premium. For an employer-sponsored plan, your employer may pay part or all of this cost. When you obtain medical services, you may pay a co-pay, which is a specific dollar amount you pay the provider for an office visit, procedure or prescription. You may also have a deductible, which is the amount of services you must pay for on your own before your policy covers you. Finally, co-insurance is the percentage of the costs that you are required to pay after you have met your deductible. It usually ranges from zero to 30 percent, and most policies limit the amount you must pay in co-insurance in a given year.
Insurance Benefits
Covered conditions and services vary greatly among policies. Most provide for hospitalization, treatment of major illnesses and injuries, and any laboratory work or medications needed as part of diagnosing and treating a condition. Some cover not only treatment for illness and injury, but also preventive care, while others do not. Not all health insurance policies cover situations such as pregnancy and mental health services. With a network provider, you generally pay any co-pay, and the provider bills the insurance company for the remainder. If you see an out-of-network provider, expect to pay the provider directly, then file with your insurance company for reimbursement.
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