Under the Affordable Care Act (ACA), also referred to as “Obamacare,” everyone is now required to have a major medical policy with specific minimum essential coverage; you may have to pay a tax penalty if you don’t have one. 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.
- Health Maintenance Organization (HMO). HMO was meant to be fix for the rising costs of traditional indemnity, or “fee-for-service”, insurance. It utilizes primary care physicians (PCP) as “gatekeepers” in order to prevent over utilization of physician or specialty services; in order to see a specialist, patients must receive a referral from their PCP. Customers who enroll in this plan are required to choose health care providers within the network of contracted physicians and hospitals. Patients enrolled in HMOs still pay monthly premiums, but their premiums tend to be lower because of the contracted network—providers know that patients will be directed to them. Furthermore, HMO patients typically have lower co-pays.
- Preferred Provider Organization (PPO). PPOs were created as middle ground between HMOs and traditional insurance. Their goal is to restrain overutilization, while allowing patients more flexibility in their choice of physicians and specialists. There is no PCP gatekeeper for PPO plans, but customers are encouraged to choose providers within the network. Patients who choose a provider outside of the network will pay more out-of-pocket. The network itself consists of contracted physicians, but their contracts do not exclude them from other networks. PPO patients typically pay higher premiums than those who choose an HMO. Often they must first meet a set deductible and then still pay coinsurance at the point of service.
- Exclusive Provider Organization (EPO). EPOs are essentially HMOs with a twist—EPOs have no PCP gatekeepers. They do, however, require patients to stay inside a set provider network. Because patients have direct access to the network, they are able to get lower rates on their premiums. EPOs are very restrictive in that you must remain within the network to get care. Even in the case of an emergency, some EPOs may make you pay some or all of the expenses out-of-pocket if you go out-of-network. There are also copayments with EPOs, but, like HMOs, they are usually quite small.
- Health Savings Account (HSA)HSAs should be thought of as bank accounts, rather than as insurance plans. They are tax-deductible accounts that cover medical expenses not covered by your your health plan—and you can’t have an HSA without an insurance plan. Traditionally, HSAs are coupled to high-deductible health plans, but some new plans under Obamacare offer EPO, HMO, and PPO plans with an HSA option. Much like IRAs, they roll over annually and grow tax-free; there are limitations to how much an individual or employer can contribute in a year. Qualified medical expense withdrawals are also tax-free. Patients with an HSA cannot be enrolled in Medicare, nor can they be enrolled on another person’s tax returns. Patients can write checks directly to their provider from their HSA account.
You can choose from health plans organized by the level of benefits they offer: bronze, silver, gold, and platinum. Bronze plans have the least coverage, and platinum plans have the most.
- Platinum: covers 90% on average of your medical costs; you pay 10%
- Gold: covers 80% on average of your medical costs; you pay 20%
- Silver: covers 70% on average of your medical costs; you pay 30%
- Bronze: covers 60% on average of your medical costs; you pay 40%
- Catastrophic: Catastrophic policies pay less than 60% of the total average cost of care. Catastrophic plans must also cover the first three primary care visits and preventive care for free, even if you have not yet met your deductible.