Picking a health insurance plan can be tough. You need to answer so many questions and make so many choices, and few of either are easy to understand.
Can you get health coverage through an employer? Or do you have to use the federal or state marketplace?
Are you able to choose a plan type? If so, which is better for you or your family — an EPO, an HMO, a PPO or a POS?
Also, what services or treatments do the health insurance plans you’re considering cover? And what out-of-pocket costs are tied to them?
This guide will take you through the process of finding and selecting the best health insurance plan for you, which includes:
- Choosing where to get health insurance
- Selecting a type of health insurance plan
- Comparing out-of-pocket costs
- Weighing other benefits and services
Choose where to get health insurance
Most people get health insurance through an employer. Many others buy it using the government marketplace or “exchange” set up by the Affordable Care Act, also known as the ACA or Obamacare. And some find coverage outside the marketplace by going directly to an insurer.
Getting health insurance through an employer
In most cases, if you can get health insurance through an employer, that will be the best and cheapest option for you. This is because:
- Employers usually pay part of their employees’ premiums.
- Employer health plans often come with lower premiums.
One negative sometimes associated with employer- or job-based health insurance is that it doesn’t always let you choose a plan type. This is fine if you don’t care if you have an HMO vs. a PPO, but it can be a big deal if you prefer one type of health plan over another.
Buying health insurance from the government marketplace
If you can’t get health coverage through an employer, buying it from the federal or state marketplace may be your next-best option. You might want to use the marketplace even if an employer offers you health insurance — such as if that coverage is overly expensive.
Should you choose to get health insurance from the Obamacare marketplace or exchange, you’ll either use healthcare.gov or your own state’s website to enroll in coverage. Fourteen states plus the District of Columbia currently run their own health insurance exchanges or marketplaces. If you live in one of them, you’ll get coverage through its dedicated site rather than through healthcare.gov during open enrollment.
Purchasing health insurance outside the marketplace
Getting health insurance directly from an insurer is another option for those who can’t or don’t want to get coverage from an employer or the government marketplace.
You can buy "off-marketplace" health insurance plans from:
- Health insurance companies.
- Insurance agents or brokers.
- Online health insurance sellers.
Buying an off-marketplace health plan can be a good idea in some situations, but keep in mind: you might pay a lot more for it than you would if you bought it using the federal or state marketplace. Why? You may qualify for premium tax credits or other savings based on your income with marketplace coverage. That’s not possible if you get coverage outside the marketplace.
Decide on a health insurance plan type
Whether you get health insurance from an employer, the marketplace or an insurer directly, you’ll often be able to choose a plan type.
Here are the pros and cons of the most common types of health insurance plans:
- Health Maintenance Organization (HMO)
- Preferred Provider Organization (PPO)
- Point of Service (POS)
- Exclusive Provider Organization (EPO)
| Health plan type | Pros | Cons |
|---|---|---|
| HMO | Low out-of-pocket costs if you stay in network. | Need to name a primary care physician. Usually need a referral to see a specialist. |
| PPO | Out-of-network care is cheaper than if you have an HMO. Rarely require referrals. |
Higher out-of-pocket costs than with HMOs. |
| POS | More freedom to go out of network for care, but out-of-pocket costs are lower if you stay in network. | Often need to go to a primary care physician. Often need referrals to see specialists, too. |
| EPO | May need to name a primary care physician. Usually don’t need to get referrals for specialists. |
Must stay in network for non-emergency care to be covered. |
HMO
A hallmark of HMO plans is that they limit coverage to care provided by physicians, labs, hospitals and more that are “in network,” or that have contracts with the insurance company.
In other words, you're usually on your own when it comes to paying for unauthorized or out-of-network care. At best, you'll have to pay for more of that care than you would if you got it through an in-network provider.
Also, HMOs often require you to get a referral from your primary care physician if you want or need to see a specialist.
So, why choose an HMO over a PPO, POS or EPO? One reason is that the out-of-pocket costs tied to HMOs tend to be pretty low as long as you don't venture outside your plan's network for care.
The main cost you'll be responsible for with an HMO is a monthly premium. Besides that and a deductible, you'll likely only have to pay a small copayment or coinsurance when you see your physician or otherwise seek medical assistance.
PPO
If you’re looking for a health insurance plan that offers a bit more freedom than an HMO, consider a PPO.
Like HMOs, PPOs push you to use care providers who are part of their network. Unlike HMOs, however, PPOs are far more flexible about allowing you to receive out-of-network care.
For example, your insurer might reimburse you for 80% of in-network costs but only 60% of out-of-network costs if you have a PPO plan.
Another reason to consider a PPO plan over an HMO (if you have the choice): PPOs rarely require referrals. And that's true whether you stay within your plan's network or go outside it.
POS
Combine the components that make up the HMO and PPO plans explained above and you've basically got a POS plan.
On the one hand, POS plans are like HMOs in that they often ask you to name an in-network doctor who will serve as your primary care provider moving forward. They also usually require you to get a referral to see a specialist.
On the other hand, POS plans are like PPOs, too, in that you can go out of network to receive care. You'll pay less, though, if you use an in-network doctor, clinic, lab or hospital.
EPO
Think of EPOs as even more restrictive HMOs. If you want your EPO plan to cover health or medical treatments or services, you have to go to an in-network doctor, specialist, lab or hospital.
Go outside that network, and you'll probably have to pay the entire bill. This may even be true in emergency situations, where costs add up quickly.
On a more positive note, most EPO plans don't make you find and name a primary care physician or provider. Also, they usually don’t require you to get referrals to see specialists.
Marketplace metal categories
When you buy health insurance through the Obamacare marketplace, you don't just choose one of the plan types detailed above. You also choose one of these "metal" levels or categories:
- Bronze
- Silver
- Gold
- Platinum
These metal categories determine how you and your health insurance plan share the costs of your medical care. And here's how much they cost, on average.
These rates vary quite a bit depending on where you live. West Virginia, on one hand, has the highest average rate for a gold plan at $804 per month. Rhode Island, on the other hand, has the cheapest gold plan premium at $325 a month.
If you select a bronze marketplace plan, for example, you'll pay the lowest monthly premium of the four metal-level offerings. That said, you'll also pay the highest out-of-pocket costs when you receive care. The opposite is true of platinum marketplace plans. Here's how each metal tier plan pays for covered health service.
Keep reading to learn more about these marketplace health insurance options.
Bronze marketplace plans
Bronze plans have the lowest monthly premiums of the marketplace's metal-level offerings with an average monthly rate of $331. But they also come with the highest out-of-pocket costs. Bronze plans covers 60% of health care costs, and you pay the other 40%.
Also, deductibles tied to bronze plans can total thousands of dollars per year. That means you might have to spend a lot of your own money on medical care before your plan kicks in and helps out.
Silver marketplace plans
If you choose a silver marketplace plan, you'll pay a monthly premium that's slightly higher than you would if you'd gone with a bronze plan. An average premium for a silver plan is $442 a month. And you'll pay a bit less out of pocket when you receive care — your insurer covers 70% of health care costs, leaving you with the other 30%.
Silver plan deductibles are lower than those of bronze plans, too.
Gold marketplace plans
Gold marketplace plans usually have fairly high monthly premiums and fairly low out-of-pocket costs. The average monthly rate for a gold plan is $501. You're responsible for just 20% of health care costs, while the gold plan covers 80%.
Are you looking for a health plan with a low deductible — meaning you won't have to spend much before the plan takes over and covers the rest? A gold plan may be the option for you, assuming you can afford the higher premiums.
Platinum marketplace plans
You'll pay the highest monthly premiums and lowest out-of-pocket costs if you select a platinum marketplace plan.
Which type of Obamacare plan is best for you? If you rarely see a doctor or need medical assistance, consider enrolling in a bronze plan. You'll only have to pay a low monthly premium, and you'll be protected in case of serious illness or injury.
If you need a lot of care, though, and you can afford the high premiums, consider a gold or platinum marketplace plan. They'll cover most of your medical bills.
Compare out-of-pocket costs
Just as important as picking a health insurance plan type is deciding how much you'll pay out of pocket for one of those plans.
Thankfully, you can come to that decision a lot easier by focusing on these health plan components:
- Premium
- Deductible
- Copayment
- Coinsurance
Here’s what you need to know about each of these out-of-pocket costs:
| Health plan component | Explanation |
|---|---|
| Premium | What you pay per month to maintain or access your plan. |
| Deductible | How much you have to pay before your plan kicks in and covers some or all of the rest of your healthcare costs. |
| Copayment (or copay) | The set amount you pay for specific services (like doctor visits), treatments or drugs. |
| Coinsurance | The amount you pay for covered services and treatments. Usually this is a percentage rather than a set or fixed amount. |
Most health insurance plans tie copays and coinsurance costs to out-of-pocket maximums. What this means is some plans only make you pay coinsurance costs until you reach a certain amount. Or they'll only charge you copays until you reach a certain amount.
It's important to look closely at a plan's copays and coinsurance costs before you settle on one — assuming you're given a choice.
It's also important to take a close look at the premiums and deductibles associated with any health plan placed in front of you. Don't just pick the one with the lowest premium or the lowest deductible. In most cases, plans with low premiums have high deductibles. And plans with low deductibles often have high premiums.
Consider other benefits
Something else you should look at while you choose a health insurance plan is what each plan does and doesn't cover in terms of other benefits, services and treatments.
Most health insurance plans help pay for prescription drugs, for instance. Not all job-based, marketplace or other health plans cover the same medications, though. Nor do they all cover them to the same extent. Don’t settle on a particular plan before you’re sure it will cover the drugs or medications you take.
Many health plans pay for a wide range of preventive care, too. This can include immunizations, screenings, tests and more. If preventive care is important to you, make sure any plan you enroll in covers as much of it as possible.
Here are other services or treatments to keep an eye out for while you scan a plan’s summary of benefits and coverage:
- Acupuncture or chiropractic care.
- Fertility treatments.
- Maternity services.
- Mental health care.
- Physical or occupational therapy.
- Weight-loss treatments.
References:
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