Health insurance. We all need it, but sorting through the various options can seem overwhelming.
How does it work? What are the choices? Why is private insurance different?
These are just some of the common questions that you might find yourself asking. You’ll also want to know what the terms and benefits mean before making an informed decision.
That’s why understanding private health insurance coverage is essential. Our tips will shed some light on the matter, so keep reading to find out more.
What Exactly is Private Health Insurance?
While the state or federal government offers public insurance, private companies or brokers provide private options. These are divided into three categories:
Private plans falling under this grouping are sold on either the federal exchange, called the Health Insurance Marketplace, or on state-run exchanges.
Some primary features are as follows:
- Covers “the 10 essential benefits”
- State-mandated services must also be covered
- Includes a plan at the Bronze, Silver, Gold, and Platinum levels
- The only plans with tax credits or deductions available for eligible applicants
You guessed it. Plans in this category aren’t sold on any exchanges. Instead, they are offered by privately-run marketplaces, third-party brokers, or by the health insurance company itself.
However, they are still subject to the Affordable Care Act rules, which means there isn’t space for loopholes. These private plans have characteristics like:
- Also covering the “10 essential benefits”
- Not required to have a plan for each metal tier
- No premium tax credits
- No cost-sharing reductions
- Must still adhere to certain federal standards
Also referred to as group plans, these are purchased and managed by your employer. Nonetheless, they must still comply with the same rules as the other kinds of private health insurance.
Typically, group health plans are more affordable, with lower premiums and deductibles. Speak to your human resources department to find out more.
Different Types of Private Health Insurance Plans
Private health insurance plans are further divided up into sub-categories. Each one has varying degrees of coverage, costs, and processes.
Each type has its own networks of healthcare providers. Knowing the differences, however, will help you find a suitable option.
Health Maintenance Organizations (HMO)
HMO plans operate strictly within network boundaries, so you can only use in-network health care services. Other pros and cons are listed below.
- You’ll need to choose an in-network primary health care physician (PCP)
- PCP referral required for specialist appointments
- Out-of-network expenses not covered
- Usually cheaper than other private plan options
Preferred Provider Organizations (PPO)
Less restrictive than an HMO, PPO plans allow you to choose any doctor, even one outside of your network. Other factors to bear in mind are:
- Out-of-network doctors cost more
- Referral to a specialist isn’t required
- You may still need to select a healthcare physician
Exclusive Provider Organization (EPO)
EPO plans are a combination of the above two. Its typical features include:
- Option to see specialists without any prior referrals
- Doesn’t cover all out-of-network healthcare physicians
- Generally cheaper than HMO plans, but costs more than PPO plans
Point of Service Plans (POS)
Also a mix between the first two (HMO’s and PPO’s). These plan types usually have the following characteristics:
- In-network primary care physician
- Access to out-of-network specialists (at a higher cost)
- Referrals required for specialist appointments
- Cheaper than PPO’s, but more expensive than standard HMO plans