What are the different types of health insurance plans?
There are several different kinds of health insurance plans available. Here's an overview of the main types of plans and what they mean for those who use them.
- Preferred Provider Organization (PPO): This type of plan is created when a health insurance company has contracted with a network of doctors, hospitals and other health care providers for care at reduced rates. PPO plans often let members receive care from non-contracted or "out of network" providers, but usually at a higher cost.
- Health Maintenance Organization (HMO): This type of plan is created when a health insurance company contracts with doctors, hospitals and other health care providers and pays them a fixed monthly amount to manage the care of their insured members. HMO plans typically restrict their members from receiving care from providers outside their organizations, and they may require a referral from the primary care physician for care from a specialist.
- Consumer Directed Health Plans (CDHP): These types of plans consist of high-deductible coverage for catastrophic health care needs. They are designed to work with tax-advantaged financial accounts, such as Health Savings Accounts (HSAs), Health Reimbursement Accounts (HRAs) and Flexible Spending Accounts (FSAs) to help manage the costs of health care.
- Medicare: This health insurance program is administered by the Federal government for Americans aged 65 and over and for people under 65 who meet certain eligibility conditions. Because Medicare has limited coverage, some Medicare enrollees choose to purchase a Medicare supplement plan from a health insurance company. Also, some health insurance companies are allowed by the government to offer Medicare Advantage plans that provide similar coverage to traditional Medicare but with additional features that the insurance company offers its other members, such as access to its provider network.
- Accountable Care Organization (ACO): An ACO is a new health insurance product built around an "accountable care" philosophy, in which providers work together and with their patients to achieve the best possible health outcomes. If you have an ACO, your health plan has a network of connected providers who will work together with the goal of less waste, better management of chronic conditions, and a higher level of wellness overall.