Understanding Insurance Plans
A survey done by Policygenius in 2019 found that “More than one in four people (27.2%) said uncertainty over their coverage had led them to avoid treatment” (Ma, 2019). The company has conducted national surveys for the past several years regarding health insurance literacy and the findings suggest the confusion and lack of knowledge regarding health insurance is an increasing issue.
Even some of those who work closely with health insurance every single day still have difficulty navigating this complex world. As patient responsibility increases, it is our job to educate our staff and our patients, to the best of our ability, so they know and understand how their insurance plans work. If insurance is discussed with patients, they can better decide what healthcare services are the best and most affordable for them. When they are expecting a bill for the services you provide, it contributes to the positive experience you want them to associate with your practice, rather than getting an unexpected bill that will surely bring negative connotations to you in the patient’s eyes.
Therefore, it is increasingly important to have a simple understanding of the not so simple health insurance plans and policies. Sharing this knowledge with staff and patients can help to eliminate some of the simple mistakes that cost a practice money, can boost your staff’s confidence in providing the appropriate patient education, and can improve a patient’s overall experience and impression.
The Four Main Types of Health Insurance Plans
Health Maintenance Organization (HMO) plans deliver healthcare through their own network of healthcare providers and facilities. Finding in-network care is extremely important with HMOs. HMO plans require their members to find an in-network primary care provider (PCP) who is then responsible for coordinating their care. To see most specialists, members must get a referral from their PCP and the specialist must be in-network.
Preventative care is mostly covered under an HMO plan. Individuals and families that see their PCP on a regular basis regarding their health would likely be best suited for an HMO plan.
Preferred Provider Organization (PPO) plans give members more freedom to choose their healthcare providers but there is a higher out of pocket cost to see out of network (OON) providers. PPO plans do not require their members get a referral from their PCP before seeing a specialist, but they do have more paperwork and a higher out of pocket cost than other plans, for OON services.
Exclusive Provider Organization (EPO) plans, similar to a PPO, allow more freedom to choose providers and do not require referrals to see specialists. However, there is no coverage for OON providers, just like an HMO, unless the care received was emergent. The premium is lower than a PPO.
Point-of-Service (POS) plans mix HMO and PPO features, members have a greater choice in providers but must have a PCP coordinate their care and refer them to specialists, in-network or OON. Members can see OON providers at a higher out of pocket cost.
Other Types of Health Insurance
Catastrophic plans are only offered to people under 30 years old and allow up to three PCP visits annually before the deductible applies. Preventative care is covered at no cost to the member. The premium is lower than other types of health insurance, but the deductible and co-insurance can be quite high.
High Deductible Health Plan (HDHP) is an HMO, PPO, EPO, or POS but with a lower premium than normal as there is a higher out of pocket expense. If a member reaches their out of pocket maximum, the plan will then pay for 100% of their care. These plans are good for people who want to save money with a lower monthly premium but don’t seek health services regularly.
Health Savings Account (HSA) plans are exactly that, an account that saves money for future health expenses. HSA accounts are often paired with HDHPs and money that is used from them towards medical expenses is not taxable.
Health Reimbursement Arrangements (HRA) is also a savings account exclusively for healthcare expenses but unlike an HSA, it is purchased and maintained by an employer on their employee’s behalf.
Flexible-Spending Account (FSA) like an HRA, an FSA is established by an employer; however, it is the member who makes contributions to the account that are deducted directly from their paycheck. For both an HRA and FSA, contributions are not taxable and annual contributions are limited at $2,500.00. Typically, FSA contributions must be used while the account is active, although $500.00 of an unused fund can be rolled into the next plan year.
Short-term health insurance plans offer more limited benefits than major plans, can exclude pre-existing conditions, are non-renewable, and do not include coverage for preventative care. They are used to cushion a member’s finances in the event of a covered illness or accident but some states and insurance companies may limit a member’s ability to consecutively apply.
Gap insurance plans are for unexpected medical costs or other costs that may be associated with a medical emergency. Usually including products like critical illness insurance, accident insurance, or fixed-benefit indemnity. Depending on the specific gap insurance plan, members can get paid a lump sum if you suffer from or are diagnosed with specific illnesses or injuries that are covered by that gap policy. Accidents may also be covered under a gap insurance policy. For example, a person with a family history of cancer may feel better financially prepared and protected if they were to purchase a gap insurance plan designed specifically for a cancer diagnosis and treatment. Since it is hereditary, they might get peace of mind knowing that they won’t take such a financial hit if they were to end up with a cancer diagnosis.
References
eHealth. (2020, February 12). The Different Types of Health Insurance Plans. Retrieved from ehealthinsurance.com: https://www.ehealthinsurance.com/resources/individual-and-family/different-types-health-insurance-plans
Lally, C. (2020, March 26). Health insurance basics: The 101 guide to health insurance. Retrieved from policygenius.com: https://www.policygenius.com/health-insurance/learn/health-insurance-basics-and-guide/
Ma, M. (2019, October 29). Health Insurance Literacy Survey 2019: Americans are increasingly confused about health care. Retrieved from policygenius.com: https://www.policygenius.com/blog/health-insurance-literacy-survey-2019/
WebMD. (2018, July 24). Different Types of Health Plans: How They Compare. Retrieved from webmd.com: https://www.webmd.com/health-insurance/types-of-health-insurance-plans#5
