Health insurance plans: Common types and their benefits

 

What are the three types of health care plans?

Health insurance is designed to help policyholders offset the exorbitant costs of medical treatment by covering a portion of their healthcare and hospital expenses. But with each country implementing different public healthcare systems, the level of coverage likewise varies.

In this part of our client education series, Insurance Business discusses how health insurance plans work in the four major regions we cover – the United States, Canada, the United Kingdom, and Australia. We will also explain the different policies available for citizens and the benefits these plans provide.

How does health insurance work in the US?

Through these health insurance marketplaces, Americans can choose from a range of coverages designed to meet different healthcare needs.

“Some types of plans restrict your provider choices or encourage you to get care from the plan’s network of doctors, hospitals, pharmacies, and other medical service providers,” according to the government’s health insurance exchange website. “Others pay a greater share of costs for providers outside the plan’s network.”

Health Maintenance Organization (HMO)

This type of health insurance plan often limits coverage to care from doctors who work for or are contracted with the HMO. Policies generally do not cover out-of-network care except in an emergency. Plans may likewise require that a policyholder live or work in its service area to be eligible for coverage. HMOs typically provide integrated care and focus on prevention and wellness.

Point of Service (POS)

In this kind of plan, policyholders pay less if they access doctors, hospitals, and other healthcare providers belonging to the plan’s network. POS coverage also requires the insured to get a referral from their primary care doctor for them to see a specialist.

Preferred Provider Organization (PPO)

This health plan allows policyholders to pay less for healthcare if they choose to get treatment from providers in the plan’s network. However, they can also access doctors, hospitals, and providers outside of the network without a referral for an additional cost.

HealthCare.gov added that US health insurance plans are offered in four categories based on how the costs are split between the policyholder and the insurer. Also referred to as the “metal tiers,” these plans are:

• Bronze: 60% health insurer, 40% policyholder
• Silver: 70% health insurer, 30% policyholder
• Gold: 80% health insurer, 20% policyholder
• Platinum: 90% health insurer, 10% policyholder

What does health insurance in the US cover?

One of the changes the ACA has implemented is the standardization of insurance plan benefits in the country’s healthcare system. Before this, the benefits offered varied significantly depending on the insurance company and the type of policy. At present, US health insurance plans are required to cover these 10 “essential health benefits.”:

1.   Ambulatory patient services

2.   Emergency services

3.   Hospitalization

4.   Laboratory services

5.   Mental health and substance use disorder services, including behavioral health treatment

6.   Pediatric services, including oral and vision care

7.   Pregnancy, maternity, and newborn care

8.   Prescription drugs

9.   Preventive and wellness services and chronic disease management

10.               Rehabilitative and habilitative services and devices

Birth control and breastfeeding coverage are also required benefits. Dental and eye care coverage for adults, meanwhile, are not considered essential benefits but are available as optional add-ons, along with medical management programs.

How much does health insurance cost in the US?

Health insurance premiums across the US cost an average of $456 monthly per person, according to the latest marketplace benchmark premiums from the Kaiser Family Foundation. This can be a steep price to pay for some American families.

For many employed individuals, this may not be a cause for concern as their employers cover about four-fifths of their health insurance costs. But those without access to company-sponsored coverage need to shop around for their own health plan and cover the full cost of premiums.

According to HealthCare.gov, health insurers can only account for five factors when determining premiums under the ACA. These are:

• Age: Premiums can be up to three times higher for older Americans than for their younger counterparts.
• Location: Differences in competition, state, local regulations, and cost of living also dictate health insurance rates.
• Tobacco use: Insurers can charge tobacco users up to 50% more than those who are not into smoking.
• Individual vs. family enrollment: Insurance providers can charge more for a plan that also covers a spouse and dependents.
• Plan category: The different metal tiers – Bronze, Silver, Gold, and Platinum – also impact premium prices.

States can limit how much these factors affect insurance rates but are prohibited from using medical history and gender in calculating premiums.