What is health insurance?
Health insurance is a contract between you and an insurance company. You pay a monthly premium and the plan helps pay for covered medical care, such as doctor visits, hospital stays, emergency care, prescriptions and preventive services. You usually share part of the cost through a deductible, copays and coinsurance, up to a yearly out-of-pocket maximum.
Many people get health coverage through an employer. If your job doesn't offer it or your share of the employer plan is more than you can manage, you can buy an individual or family plan on your own. Small businesses can also offer group health plans to their employees. People 65 and older are usually eligible for Medicare and people with limited income may qualify for Medicaid, depending on their state.
How health insurance costs work
Health insurance has a language of its own. A good grasp of a few basic terms makes it much easier to compare plans:
- Premium: The amount you pay each month to keep your coverage active, whether or not you use care.
- Deductible: The amount you pay for covered care each year before the plan starts paying its share. Many plans cover some preventive care before you meet it.
- Copay: A set dollar amount you pay for a service, like a doctor visit or a prescription.
- Coinsurance: Your percentage of the bill after you meet the deductible. For example, with 20% coinsurance on a $100 bill, you pay $20 and the plan pays $80.
- Out-of-pocket maximum: The most you pay for covered in-network care in a plan year. Your deductible, copays and coinsurance count toward it. Your premiums don't.
A plan with a low premium often has a higher deductible and the reverse is also true. We compare all of these numbers together, not just the monthly price.
Health plan types: HMO, PPO, EPO and POS
Most plans use a network of doctors, hospitals and other providers who agree to set prices. The plan type decides whether you need referrals and whether the plan pays anything for care outside that network.
Health plan types: HMO, PPO, EPO and POS| Plan type | Out-of-network care | Specialist referrals | Premiums |
|---|
| HMO | Usually not covered, except emergencies | Usually required | Often lower |
|---|
| PPO | Covered, at a higher cost to you | Usually not required | Often higher |
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| EPO | Usually not covered, except emergencies | Often not required | Often lower than a PPO |
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| POS | Sometimes covered, at a higher cost to you | Usually required | Often between HMO and PPO |
|---|
Health maintenance organization (HMO)
An HMO usually covers care only from doctors, hospitals and other providers in its network, except in an emergency. You typically choose a primary care doctor, who coordinates your care and refers you to specialists. HMOs often have lower premiums and out-of-pocket costs, but you usually need to live or work in the plan's service area.
Preferred provider organization (PPO)
A PPO gives you more freedom. You pay less when you use providers in the network and the plan also pays part of the cost when you go outside it. You usually don't need a referral to see a specialist. That flexibility typically comes with a higher premium.
Exclusive provider organization (EPO)
Like an HMO, an EPO covers care only from providers in its network, except in an emergency. Unlike many HMOs, it often lets you see a specialist in the network without a referral. If you choose a provider outside the network, you may pay the full cost yourself.
Point of service (POS)
A POS plan mixes HMO and PPO features. You usually pick a primary care doctor and need referrals to see specialists and you pay less when you stay in the network. The plan may pay part of the cost for out-of-network care, usually with higher costs and more paperwork for you.
Individual and family plans that follow Affordable Care Act (ACA) rules are grouped into four metal tiers: bronze, silver, gold and platinum. The tiers show how you and the plan share the cost of covered care. They don't measure the quality of care or the size of the network and each tier can include HMO, PPO or other plan types.
- Bronze: The plan pays about 60% of covered care costs on average. Usually the lowest premiums and the highest costs when you get care.
- Silver: The plan pays about 70% on average.
- Gold: The plan pays about 80% on average.
- Platinum: The plan pays about 90% on average. Usually the highest premiums and the lowest costs when you get care.
These percentages are averages across many people, not a promise about your own bills and they don't include your monthly premium. Catastrophic plans are another option for people under 30 and for some people who qualify for a hardship exemption. They have low premiums and very high deductibles and they mainly protect you from worst-case costs.
Depending on your household income, you may qualify for help paying the premium on a Marketplace plan and some people also qualify for lower deductibles and copays on silver plans.
High-deductible health plans and HSAs
A high-deductible health plan (HDHP) has a higher deductible than many traditional plans in exchange for a lower premium. If the plan meets IRS rules, you can pair it with a health savings account (HSA). Money you put into an HSA is tax-advantaged, it can pay for qualified medical expenses and what you don't spend stays in the account from year to year. Some employers also pair an HDHP with a health reimbursement arrangement (HRA).
Good fit for: people who are generally healthy, want a lower premium and can set money aside to cover the deductible if they need care.
Short-term health insurance
Short-term health plans are meant to fill a temporary gap in coverage, such as the time between two jobs. They often cost less than ACA plans because they don't have to follow ACA rules. That means they can exclude pre-existing conditions, may leave out services like maternity care, prescriptions or mental health care and can cap what they pay.
Federal and state rules on how long these plans can last have changed in recent years and they differ from state to state. We'll check what's available where you live and explain the trade-offs before you decide whether a short-term plan is the right choice.
When can you buy health insurance?
Individual and family plans that follow ACA rules are sold during a yearly open enrollment period, which usually starts in November. The exact dates depend on your state. Outside that window, you generally need a qualifying life event, such as losing other health coverage, getting married, having or adopting a child or moving to a new area, to get a special enrollment period.
Employer plans have their own enrollment windows, usually once a year and when you're first hired. Medicaid and the Children's Health Insurance Program (CHIP) accept applications any time of year.
What affects the cost of health insurance?
- Your age
- Where you live
- Tobacco use, where state rules allow insurers to consider it
- How many people the plan covers
- The metal tier and plan type you choose
- The deductible and out-of-pocket maximum
Plans that follow ACA rules can't turn you down or charge you more because of a pre-existing condition. That makes the plan's design and how well it fits the care you actually use, the biggest thing you control.
How to compare health insurance quotes
When we compare health plans for you, we look at:
- Whether your doctors, specialists and hospitals are in the network
- Whether your prescriptions are on the plan's drug list and what they cost
- The deductible, copays, coinsurance and out-of-pocket maximum, not just the premium
- Whether you need referrals to see a specialist
- Coverage for care you expect to use, like therapy, maternity care or ongoing treatment
- Whether the plan can be paired with an HSA
How ChaCha helps with health insurance
If you don't have health insurance through an employer, we can walk you through individual and family plan options. If you run a business, we can help you compare group health plans for your team. We check networks and drug lists, explain the trade-off between the monthly premium and what you pay when you get care and guide you through the application for the plan you choose.
ChaCha Insurance is an independent insurance agency. Quotes are free and asking for one doesn't start or change any policy.
