Health Insurance

There are several types of health insurance plans, the main ones being Health Maintenance Organization (HMO) plans, Preferred Provider Organization (PPO) plans and Point of Service (PSO) plans which are a combination of the other two. There are also employer sponsored plans which cover you while you are working for a particular company, and which you pay (if at all) only a fraction of the policy’s cost.

The HMO plan is a contract with a provider network of health care providers and facilities. You pay a lower premium and co-payments for this type of plan. Co-payments are predetermined fixed amounts in dollars which you have to pay to receive a particular service or a defined percentage of charges you pay to receive specific services. On a co-payment plan, once the co-payment has been paid for a covered service, there is no further payment necessary. The problem with this type of plan is that your primary health care provider may not be in the provider network, so if you wish to continue visiting him/her, you will have to pay. Alternatively you can choose another physician who is a member of the provider network. These are the cheapest health care plans, but if you have to have treatment from providers outside of the network, in an emergency for example, it will be expensive. You also have to be referred by a primary health care provider if you wish to consult a specialist.

PPO plans are more flexible than HMO ones although these also have a network of providers and facilities. However, if you have to be treated outside the network, PPO health insurance will cover some, although not the whole amount, of the costs. Your payments will be low as long as you use health care providers within the network, and you don’t need to be referred to consult a specialist as long as you see one who operates within the network. The disadvantages are that if you need to see someone who is outside the network for any reason, you have to pay the difference between the cost of receiving treatment from a physician within the network and the person who is not. However, a PPO health plan will at least cover some of the costs you incur.

health insurance costs

A second disadvantage is that you may have to pay higher co-payments if a physician charges more than the insurer deems to be reasonable or more than is customary for the particular service. With a PPO plan you get a wider range of access to health care, but the costs are higher than those of a HMO plan.

A Point of Service Plan is a combination of the HMO and PPO plans. With this type of plan you can choose to use HMO and PPO services whenever you visit a health care provider. With a POS plan you can see an out-of-network provider if you pay a higher fee for your plan. There are some HMO plans which include a PPO plan so that you can see out-of-network providers.

Employer sponsored plans are offered in almost all large private companies and these are usually offered in an employees benefit package. The employer typically pays 85 % of the plan’s costs for the employee and around 75% for the employees’ family members (children and spouse).The employee pays the remainder of the premium(s) generally with pre-tax or tax exempt earnings. However the employee typically gets less salary to off-set the costs to the employer, but this certainly benefits higher earners. Costs of health plans have risen over the years, so if you can have an employer sponsored plan you are ultimately saving money on your health care plans.

If you have to pay for your own health care plan then shop around to get the best deal that you can and read the fine print very carefully. If you don’t understand it completely, ask someone who does either a lawyer or a Human Resources person in the firm you work with.