Just as auto insurance can help pay for repairs if your car gets damaged in an accident, personal health insurance can cover the medical bills if you’re injured or get sick.
Medical bills are a major cause of debt, bankruptcy and other forms of financial malaise, so just about everyone can benefit from carrying some form of personal health insurance!
Types of Health Insurance
Private insurance is what most people carry, whether through their employer, a government marketplace, or purchased with the expertise of an insurance agent. There are a few types of private insurance plans, each of which have substantial differences:
- Health Maintenance Organization (HMO): These plans require you to choose a Primary Care Provider (PCP), which is a physician within their network. Once you do, all care is coordinated by that PCP, including any referrals to specialists. Generally, health care costs that come from out-of-network providers are not covered under these plans. HMO plans tend to have cheaper premiums than other types of private health insurance plans, though they limit your choice of doctor.
- Preferred Provider Organization (PPO): These plans tend to have more expensive premiums, with the benefit of a bit more freedom when it comes to finding care. Generally, out-of-network care will still be covered under a PPO, though care from in-network doctors comes at a lower cost. Referrals from a PCP aren’t required in order to see a specialist under these plans.
- Exclusive Provider Organization (EPO): These are a mix between PPO and HMO plans, in which you’re able to see a specialist without a referral, but out-of-network care is generally not covered. Premiums for these plans are typically more expensive than an HMO but less expensive than a PPO.
- Point of Service (POS): Another mix of PPO and HMO type plans, these plans require you to select a PCP and consult one for referrals, but also allow access to out-of-network care at a higher cost. Like EPO’s, the cost of premiums for these plans is often in between that of HMO’s and PPO’s.
Parts of a Health Policy
Before we break down the workings of health insurance plans, let’s define the five major aspects of all plans that determine how much you’ll end up paying for care:
- Premium: Essentially the monthly bill for access to the plan. Generally, the less you pay in premiums, the more you’ll pay when it comes time to see a doctor. Under the Affordable Care Act, the five factors that go into the cost of a premium are your age, your location, the plan’s metal tier, whether it’s an individual or family plan, and whether or not you use tobacco.
- Deductible: How much you need to pay before the insurance takes effect. In many plans, even after you reach your deductible you’ll still need to pay copayments and coinsurance where they’re applicable under the plan until you reach the out-of-pocket maximum.
- Copayments: This is a fixed amount you (the insured) will pay for a service or medication under a given plan. Often there are specific services and prescriptions that come with copayments under certain plans before and after the deductible is reached.
- Coinsurance: Similar to a copayment, but a percentage paid for covered services.
- Maximum Out-Of-Pocket Amount: This is the most you’d ever have to pay for covered services in a year under a plan. Deductibles, copayments, and coinsurance payments all count toward this, but monthly premiums do not. Plans with higher premiums tend to have lower out-of-pocket limits, while the reverse is true for those with lower premiums. Under the Affordable Care Act, the maximum out-of-pocket limit for all plans in 2021 is $8,550 for individuals and $17,100 for families.
What Determines My Out-Of-Pocket Cost?
All health insurance plans essentially split the costs of care between the insurer and the insured. Insurers use Medal Tiers as an easy way to categorize that split among different plans. There are always exceptions and variances, but roughly speaking the splits go:
- Bronze Plans: 40% customer / 60% insurer
- Silver Plans: 30% customer / 70% insurer
- Gold Plans: 20% customer / 80% insurer
- Platinum Plans: 10% customer / 90% insurer
Generally, the amount paid for premiums is lowest for a Bronze plan, but that plan also has the highest out-of-pocket costs. With Platinum plans the premiums are the most expensive with lower out-of-pocket costs.
What Do Health Insurance Plans Cover?
While all plans vary, the Affordable Care Act makes certain categories of services mandatory for all plans available to consumers. These 10 essential health benefits are:
- Hospitalization for surgery and overnight stays
- Emergency services
- Ambulatory patient services (care received without being admitted to a hospital)
- Pregnancy, maternity, and newborn care
- Prescription drugs
- Mental health and substance use disorder services
- Rehabilitation services and devices
- Preventive and wellness services
- Pediatric services
- Laboratory services
The specific services covered within these categories will often vary from state to state, and it is worth noting that these services are mandatory for a policy to be considered ACA Compliant; but there are many noncompliant health insurance plans still legally available on the market. Premiums for noncompliant plans can be much cheaper, but covered services and even the ability of a customer to collect on a claim aren’t protected by the law.
Supplemental insurance products, like Dental, Vision, or Long Term Care insurance are available to purchase alongside a personal health insurance plan for more comprehensive coverage. Even if your employer or insurance plan doesn’t offer these coverages, they can be purchased completely on their own from an independent agent.
Public Health Insurance
Generally speaking, there are two main categories of personal health insurance: public and private.
Public insurance generally means Medicare, (Americans must be over 65 to qualify), and Medicaid, which is designed to help low-income individuals and families get coverage. Your state’s exchange or healthcare.gov can help you determine whether you qualify for either of these programs and show what policies are available.
Catastrophic plans are low cost plans with extremely high deductibles that are designed to only provide coverage in worst-case-scenario situations – you will pay for most standard procedures out of pocket. Only those under 30 years old or those within proven hardship or affordability exemptions can purchase catastrophic plans.
When to Buy Health Insurance
Agencies like When buying through an agency like Plummer Insurance, there are personal health insurance plans available at any time of the year.
For the most part, however, personal health Insurance can only be purchased during an Open Enrollment period. Federal open enrollment for 2022 begins November 1, 2021.
Employers may have open enrollment during a different date, and individuals have the option to join a group plan or qualify for a special enrollment period. Some examples of qualifying events for a special enrollment period are: getting married, having a baby, moving to a new zip code, and turning 26 years old. Our agents can help determine whether you qualify and assist in finding a plan that works for you.