There are many types of health insurance plan designs, and they have evolved especially over the last few years. It is easiest to break down health plans and correlate them to the health care continuum in the following manner:
HMO – health maintenance organization patients much select a PCP (primary care physician) and utilize services within an insurance carrier’s network. No coverage is permitted outside of the network, and normally your PCP guides you to specialists and other physicians through a referral process. Many carriers offer non-gatekeeper (NG) HMOs now, which removed the necessity of a referral, as such, members can navigate freely throughout the networks, but must always access care only in-network.
POS – a point-of-service plan (POS) is a marriage of an HMO plan and an indemnity plan. As such members can have benefits outlined above via the HMO/network benefit, BUT, they may also choose to navigate freely outside of the network and pay a deductible and coinsurance. Patients normally will be required to submit claims forms for out-of-network services and get reimbursed whereas HMO plans do not require any paperwork from a patient. Many POS plans now have NG options too, just like the explanation above, as such, on the network side, patients do not need PCPs or referrals and can always still go out-of-network. These have been some of the most popular plans in the 2000s.
EPO – exclusive-provider-organization – these plans are easiest to explain and compare to a PPO rather than an HMO. As such with an EPO you have free reign in-network only (a PPO plan without out-of-network benefits) and are not able to go out of network; however you are normally offered an insurance carrier’s largest PPO network (the most rebust hospital/physician network) in which you must navigate.
PPO – preferred-provider-organization – very similar to a NG (non-gatekeeper) POS plan, however because the network side of the benefit is not an HMO filed product, there are some different nuances that are different. In a nutshell the PPO is one of the most expensive products, provides the most flexibility, but also requires patients/members to take on more of the coordination of care, filing of claims and overall responsibility for management of the plan that on POS and HMO plans the onus falls on the providers or PCPs. Also now many plans have EPO (Exclusive Provider Organization) plan designs, which are essentially the network side of a PPO. As such with an EPO you have a big network in which you must stay, but no PCP or referrals. EPOs have been some of the most popular plans in 2008-2009.
Indemnity – the plans are basically dinosaurs now and when even available are priced out of reach for most employees, and consumers. These plans normally have no restrictions, but patients must pay deductibles, coinsurance, and file claims. They were much more popular in the early 1990s and prior.
Once you feel comfortable with understanding the plans, then it is also important to understand some basic information such as: As premium (the monthly rate the insurance carrier charges you) increases, your out-of-pocket expenses in the hospital or at the physician’s office are normally lower. So we call these plans “rich” plans meaning the benefits are very rich (PPO, Indemnity). Conversely, if you have a lower premium per month (HMO or EPO), normally you are going to have higher out-of-pocket expenses when you utilize that same type of care. Out-of-pocket expenses could be copayments (flat dollar amounts), deductibles (a dollar amount you must first pay before the insurance carrier begins to either reimburse you, or pay the physicians directly) or coinsurance (a % amount of the underlying charges that you will pay AFTER your deductible has been met). Many plans these days have a variation of copays, deductibles and coinsurance.
Also, plans have different out-of-pocket expenses at the hospital versus perhaps the pharmacy or doctor’s office. It is always important to have your broker/advisor explain in detail what your payments are in these different areas as most carriers have broken those benefits in to 3 different buckets.
Most insurance carriers offer all of the above plans unless based on specific state mandates a particular type of product is not filed with that state’s insurance department.
