STUDENT TALK 9 Types of Insurance to Know
In the US, healthcare coverage is a necessary cost when considering adulting living expenses. Unfortunately, the US government does not provide free healthcare. On top of that, if you’re like most people, you didn't grow up learning insurance acronyms. It’s like a foreign language. And I speak from experience when I say they’re not intuitive to figure out without a Google search. (Look to my article on healthcare coverage basics if some of the terms here look unfamiliar to you.)
1. The Metal Categories
Insurance plans frequently use levels of coverage that are given the names of precious and semi-precious metals. There's a reason for this reference and you may see the following:
Bronze: The insurance company pays 60% while you pay 40%. This plan will have the lowest monthly premium but balances it out with a high deductible. This choice is better if you want to insure yourself against medical emergencies but don’t want to pay a pricey monthly premium. If you're a frequent visitor to the ER, this may not be the best choice.
Silver: The insurance company pays 70% while you pay 30%. If you qualify for cost-sharing reductions (CSR)/extra savings, you have to enroll in a silver plan to cash in on those extra savings.
Gold: The insurance company pays 80% while you pay 20%. The higher monthly premium is worth it if you know you get a lot of medical care or are planning certain covered procedures.
Platinum: The insurance company pays 90% while you pay 10%. Again, this plan is probably more worth it if you get a lot of medical care.
Keep in mind, these categories are an example. The actual ratio of how much insurance pays vs. you pay may vary. And once you select a coverage, you're not stuck with it forever. Each year, during the policy renewal period, you can change your choice.
2. Health Maintenance Organization (HMO)
HMO plans are usually limited to in-network providers for care. They may provide out-of-network coverage during an emergency, but providers who treat you can still bill you directly. The HMO plan may require a referral before you can see a specialist.
3. Preferred Provider Organization (PPO)
With PPO plans, you can see in-network providers at a lower cost compared to out-of-network providers. You also don’t need a referral to see specialists. If the specialist is out-of-network, they will usually file a claim directly to get reimbursed for the cost, or you will pay the full bill and file a claim yourself to be reimbursed.
4. Exclusive Provider Organization (EPO)
EPO plans only provide coverage to in-network providers but generally offer greater freedom to choose than an HMO. They will not cover the cost of out-of-network services, except in cases of emergencies. You do not need a referral to see a specialist. If the same insurer is offering a PPO, the monthly premium of the EPO will be lower.
5. Point of Service (POS)
Similar to a PPO plan, POS plans cover in-network providers and out-of-network providers. However, the cost of seeing out-of-network providers will be higher, and you must pay the bill and then submit a claim to your insurer. You will also need a referral from your primary care provider to see any specialists.
6. High-deductible Health Plan (HDHP) and Health Savings Account (HSA)
HDHP plans can take the form of an HMO, PPO, EPO, or POS, except with lower monthly premiums and higher deductibles. With an HDHP plan, you can also open an HSA to help pay for your care. You can either open an account with a bank or credit union or with your employer if that’s how you get your insurance coverage. One nice property of HSAs is that the money can grow tax-free while in the account. The money you put in and take out for qualified medical expenses are also tax-free.
7. Medicaid and Medicare
Medicaid and Medicare are both government-funded forms of healthcare coverage. Medicaid is an option for those with lower-income and limited access to resources. Medicare is an option for all senior citizens.
Unfortunately, the eligibility requirements and coverage plans differ from state-to-state, so you’ll have to investigate to know what benefits you can get. For example, Massachusetts has two specific pages of resources for their Medicaid and Medicare programs.
8. Catastrophic Plan
Catastrophic plans have low monthly premiums and high deductibles. Only people under the age of 30 or people of any age with hardship exemptions are eligible. They also cover the cost of three primary care visits before you meet the deductible.
9. Supplemental Insurance Plans
Supplemental insurance plans can provide coverage for services traditional health plans don’t cover. They can also help pay for out-of-pocket costs such as co-pays, co-insurance, and deductibles. These plans will usually be added to a more comprehensive insurance plan and serve to cover a specific medical need that may not already be insured. For example, if you have cancer, you may consider critical illness/disease-specific insurance.
There are also supplemental plans that provide you a cash payment based on diagnosis to assist with lost wages, childcare needs, rideshare costs for treatment, etc. It pays to research these options. Even something as simple as a sprained ankle can result in costs you didn’t anticipate. The Balance provides a comprehensive look at different kinds of supplemental insurance.
Some other important considerations when shopping around for health insurance are:
what your medical needs look like during a typical year
how much are you willing to spend on monthly premiums and out-of-pocket costs
any anticipated extensive medical procedures in the near future.
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