Types of Employer-Provided and Private Insurance Health Care PlansTypes of Employer-Provided and Private Insurance Health Care Plans

Employers and private insurance companies offer a variety of benefit plans. We’ll explain five types of them below, stating for each its typical plan features. Nearly all plans are variations of these five types, though. Use this information as a quick reference. Your health care plan documentation will provide a more accurate description of your health care benefits.

Health Maintenance Organization (HMO)

This type of plan is the most restrictive in what doctors you can see and the type of health care offered. HMOs cover expenses related to an illness and offer preventive care services such as check-ups, well-baby care, and mammograms. Some government health care assistance programs require that plan beneficiaries use specific HMOs for their services. If you have an HMO, you must:

  • Use doctors employed by the HMO. Ask an HMO representative about the plan’s policy for seeing doctors not employed by the HMO.
  • Use hospitals affiliated with the HMO except for out-of-town emergencies.
  • Make co-payments for each doctor’s visit, typically $10–$30.

It is also important to know what your plan’s policy is on seeing both in- and out-of-network specialists. Speak with your primary care physician or an HMO representative about this before seeking a specialist. Your doctor’s office usually submits claims to the HMO for you. The HMO in turn sends you an Explanation of Benefits (EOB).

Preferred Provider Organization (PPO) 

This type of plan offers a wider access to doctors and may offer some coverage to alternative types of health care, such as acupuncture. PPOs cover expenses related to an illness and typically offer some preventive care services. Under this plan you:

  • Use doctors who are members of the PPO’s network.
  • Make co-payments for each doctor’s visit, typically $25–$45.
  • May need permission from your primary care physician to see a specialist who is a member of the network.
  • Have the option to see out-of-network providers (doctor’s and specialists who are not members of the PPO). Permission to see them is usually not required, but you will pay an additional cost to see out-of-network providers.

Your doctor’s office usually submits your claims to the PPO for you. The PPO in turn sends you an EOB.

Point-of-Service Plan (POS)

This type of plan is the most flexible of all. Its features are similar to those of the HMOs and PPOs just described. The name of this plan says it all—the point, or place, where you receive the service affects your out-of-pocket cost. Under this plan you:

  • May use specific doctors who are members of the network and pay the low co-pay (similar in cost to an HMO).
  • May select from a list of doctors outside of the network, but who are affiliated with the plan, and pay a higher co-pay (similar in cost to a PPO).
  • May select a doctor not affiliated with the plan at all and pay the highest co-pay and possibly a deductible (an amount you pay before your health care plan starts paying your health care claims).

 

Your doctor’s office usually submits your claims to the POS for you. The POS in turn sends you an EOB.

Indemnity Plan

This is a fee-for-service plan. You can go to any doctor you choose, including a specialist—no permission required. These plans, though, are often more expensive than plans described above. And, they typically only cover medical expenses related to illness and accident, not preventive care. Under this plan you:

  • Pay an annual deductible.
  • Pay a co-pay for doctor’s visits.
  • Pay a portion of each medical expense. Often you’ll see an 80/20 split, which means your health care plan would pay 80 percent of the cost of your service; you’d pay the remaining 20 percent.
  • May be required to pay for services up front and then submit the bill to your health care plan administrator for reimbursement.

Exclusive Provider Organization (EPO)

There are two types of EPOs. The first operates like an HMO, but EPO health care providers are not employees of the organization. An insurance company generally manages an EPO while an HMO is a business unto itself. The second type of EPO, which operates like a PPO, is used by employers. Each employer has a unique EPO. The name of the insurance company providing the benefits is displayed on health care plan documentation (not the name of the employer). An EPO may be insured or self-funded by an employer.

 

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