Individual and Family
The Different Types of Health Insurance Plans
Published on September 22, 2016
Major Medical Health Insurance will protect you from uninsured tax penalties
All health insurance plans compliant with the Affordable Care Act (the law commonly referred to as Obamacare) are major medical health insurance plan. Different types of major medical health insurance include:
- Obamacare health insurance plans for individuals and families
- Employer-based health insurance plan
- Qualified Health Plans (these are Obamacare plans that can be purchased with a subsidy)
- Catastrophic Plans (primarily available to people under age 30)
- Government-sponsored health insurance coverage (Medicare, Medicaid, etc.)
Other types of health insurance products that do not qualify as major medical health insurance include:
- Short-Term Health Insurance
- Gap Insurance (Accident, Critical Illness, Telemedicine, etc)
Most Americans get private health insurance from their employer or union. Others get it from the government through Medicaid or Medicare.
Unfortunately, some are uninsured.
The rest typically buy their own health plan through a government-run health insurance marketplace, a private online health insurance marketplace like eHealth, or through a local broker or agent.
Obamacare requires everyone to have major medical health insurance policy or pay a tax penalty for being uninsured.
Whether you’re purchasing health insurance for the first time, wondering if you should change your health plan as your personal needs change, getting ready for the next Obamacare open enrollment period, or becoming qualified for a special enrollment period because of a major life change—you’ll want to take a look at the major types of health insurance available.
Major medical insurance plans
Under the ACA, medical plans must offer minimum essential coverage, meaning that no one can be turned down for a plan during the Open Enrollment Period for medical reasons, including pre-existing conditions. In addition, certain services and treatments must be offered in all health plans, regardless of where you buy the plan or from what insurance company.
Here are the average monthly premiums paid by eHealth shoppers not utilizing government subsidies who selected Obamacare plans during the 2016 Obamacare open enrollment period:
- $321 per month for individuals
- $833 per month for families
For more detailed price and cost breakdown, see eHealth’s 2016 Health Insurance Price Index report..
HMO, PPO, EPO plans & more
Obamacare-compliant major medical health insurance plans come in several different formats, as described below:
Health Maintenance Organization (HMO) plans: HMOs are one of the most popular types of health insurance you can purchase. With this plan, an entire network of health care providers agrees to offer you its services. You have to select a primary care provider (PCP) who coordinates all of your health services and care.
HMOs usually offer coverage for most types of preventive care, including specialist visits, but specialist visits are only covered when your PCP makes a referral. Additionally, you will pay copayment fees for every non-preventive medical visit, and you may have an annual deductible. HMOs are usually best suited for individuals and families that plan to see their primary care doctor on a regular basis for check-ups and other health concerns. Since 2014, the popularity of HMO plans has increased significantly.
Preferred Provider Organization (PPO) plans: Under a PPO plan, both you and your family can see any health care provider in the insurance company’s network, including specialists, without a referral. In most cases, you are not required to choose a primary care physician or to get referrals to see specialists. You will typically have copayments for any non-preventive medical care you receive, and you may have an annual deductible. Individuals who visit a specialist regularly generally prefer this type of health insurance. Since 2014, the popularity of PPO plans has declined.
Exclusive Provider Organization (EPO) plans: With an EPO plan, you have access to all of the health care providers within the EPO network, including specialists. Whereas PPO plans may offer you some coverage outside of your network, EPO plans typically will not (except for emergencies). EPO plans can be suited well to individuals who don’t mind limiting themselves to providers within a network and who don’t want to coordinate their care through a primary care doctor. Since 2014, the popularity of EPO plans has increased.
Point of Service (POS) plans: POS plans are a hybrid of HMOs and PPOs. With a POS plan you will typically have to designate a primary care physician for regular check-ups and referrals. But you can also use out-of-network providers if you’re willing to pay more out of pocket; you’ll usually have a copayment and deductible as well. This type of plan is versatile, and can be right for people who are willing to pay a bit more for extra flexibility.
High Deductible Health Plan (HDHP) plans: High-deductible plans cross categories. Some are PPO plans while others may be EPO or HMO plans. This type of health insurance has a high deductible that you have to meet before your health insurance coverage takes effect. These plans can be right for people who want to save money with low monthly premiums and don’t plan to use their medical coverage extensively. HDHPs are often coupled with a Health Savings Account (HSA). If you already contribute money to an HSA, you can buy an HSA-compatible health plan. Money contributed to an HSA can be saved on a pre-tax or tax-deductible basis to pay for qualifying medical expenses, including annual deductibles.
Short-term health insurance plans: Short-term health insurance plans do not comply with the Obamacare law. However, if you missed the Obamacare open enrollment period, a short-term health policy can provide you with some level of coverage you in the meantime.
Short-term insurance offers more limited benefits than major medical, but can help safeguard your finances in the case of a covered illness or accident. The downside to this type of coverage is that it does not meet the minimum essential coverage required by the Affordable Care Act, so you may also be subject to the tax penalty.
In addition, short-term plans can exclude coverage for pre-existing conditions. Short-term insurance is non-renewable, and doesn’t include coverage for preventative care such as physicals, vaccines, dental, or vision.
Note that some states and insurance companies may limit your ability to apply consecutively to short-term plans.
Gap insurance plans: Gap insurance plans are designed to provide an emergency safety net for unexpected medical costs, or other costs you may face in case of a medical emergency. If you don’t have a major medical policy, you might want to get gap insurance to get coverage in case of serious health issues. But, you can also get gap insurance even if you have a major medical policy or short-term policy, as a supplement to provide additional protection.
Gap insurance includes products like:
- Critical-illness insurance, which pays you a lump sum if you are diagnosed with cancer, heart attack, stroke, and certain other serious illnesses
- Accident insurance, which gives you a cash payout in case of covered accidents (separately from your automobile accident coverage)
- Fixed-benefit indemnity medical insurance, which provides cash payouts if you suffer from specific illnesses or injuries covered by your policy
Be aware that catastrophic plans don’t meet the minimum essential coverage required by the ACA. So, if you have a catastrophic plan, you may still be subject to the tax penalty if you don’t simultaneously have a major medical insurance plan.
Download our 2016 eBook on Understanding Accident and Critical Illness Insurance Plans which is full of infographics and a comparison chart comparing major medical, accident and critical illness insurance plans.
Ancillary dental and vision plans: The insurance plans described so far—major medical, short-term, and catastrophic—don’t typically cover routine dental or vision care. So, you may need to add separate plans for that kind of care.
To get coverage for dental exams, x-rays, cleanings, and fillings, you’ll need to choose a dental plan. Dental plans may also cover more specialized services such as orthodontia, periodontal treatments, veneers, bonding, dentures, and others.
For coverage for vision exams, eyeglass frames and corrective lenses, contact lenses, and other eye-related care, you’ll need to consider adding a vision plan. Keep in mind that a vision plan can be more critical as you or your family member’s age, even if you’ve never needed vision correction previously.
In a Supplemental Health Insurance Products Inventory Report conducted by eHealth in 2014, we gathered a breakdown of plans available at eHealth and the average premiums of these plans. Please review the table below for a breakdown of monthly average premiums for short-term, accident, critical-illness, and fixed-benefit indemnity insurance plans.
|Plan Type||Average Monthly Premium*||Total Number of Plans Available at eHealth|
*Average for monthly premiums for each product type, where available through eHealth, for a 29-year-old. With the following exceptions: Critical Illness Insurance is not available at eHealth.com in Hartford Connecticut and Fixed-Indemnity Insurance is not available at eHealth.com in Hartford, Connecticut; Los Angeles,San Diego and San Francisco, California; Baltimore, Maryland; or Seattle, Washington
Clearly, your choices for health care coverage are varied; but, at the end of the day, there’s only one set of plans that’s right for you and your family’s needs and budget. Use eHealth’s tools and services to get help finding a health plan that’s suited to your circumstances.