Learn about the types of health insurance in the United States

Learn about the types of health insurance in the United States

Fee for Service

The traditional medical insurance in the United States is fee-for-service medical insurance (Fee for Service Plan or Indemnity Plan). You can choose to visit any hospital clinic at any time. But you must pay all medical bills first. Then go to the insurance company for reimbursement with the receipt. Insurance companies generally reimburse 80% of medical expenses, and you need to pay 20% yourself.

Fee-for-service health insurance is more expensive. If you don’t care much about the cost of your insurance and need more options, then fee-for-service health insurance may be right for you.

Managed Care

Currently, in the United States, most private health insurance companies are Managed Care. This insurance model has restrictions on medical expenses and the policyholder’s use of health care services. Before you use certain medical services, such as medical examinations, specialist doctor visits, and hospitalization, you need the consent of the insurance company. Otherwise, the insurance company can refuse to pay the medical bills. In addition, if the insurance company determines that the medical services you use are beyond the reasonable scope, the insured will be required to pay for it.

Controlled medical insurance companies also control the medical behavior of medical service providers (doctors, hospitals, etc.) to prevent doctors from abusing medical services for their interests. Controlled medical insurance can help reduce overall medical costs, but it may also affect patients’ timely access to reasonable treatment.

In the United States, there are three main types of managed medical insurance companies: Health Maintenance Organization (HMO), Preferred Provider Organization (PPO), and Point-of-Service (POS) ).

Health Maintenance Organization (HMO)

A Health Maintenance Organization (HMO) is a managed insurance company. HMOs are the cheapest type of managed health insurance plan.

Insurance premiums for HMO insurance plans are relatively cheap, and the proportion of patients who pay out-of-pocket after seeing a doctor is also lower.

The goal of HMO is to provide health management for each member, emphasizing the reduction of medical expenses by improving the overall health of the insured through preventive and comprehensive coordination of medical services. Therefore, the HMO plan has more preventive medical benefits, such as providing members with free annual physical examinations, vaccinations, female breast examinations, etc.

The disadvantage of HMO is that there are few options for medical treatment. Each HMO has its network of doctors and hospitals, and members must seek medical care at a health care unit within the network for the insurance company to reimburse related expenses, except in emergencies. If you seek medical care at a hospital or clinic outside the HMO’s designated network, you must pay for all costs out of pocket.

In addition, after becoming an HMO member, the insurance company will ask you to appoint a doctor as your Primary Care Physician. PCP doctors are usually family patient physicians, internists, or pediatricians. Every time a sees a doctor, he must first go to the designated doctor. The health care practitioner becomes, in a sense, the gatekeeper of the insurance company. This is one of how insurance companies control medical expenses.

The advantage of this model is that your healthcare practitioner is more familiar with your overall health and can coordinate treatment. The downside is that a patient must be referred by a primary care physician to see a specialist or be hospitalized, which can sometimes delay a patient’s treatment.

If you need to see a doctor a lot, then after choosing the HMO plan, the medical expenses you need to pay are lower, which can save you the cost of seeing a doctor.

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Preferred Provider Organization (PPO)

Preferred Provider Organization (PPO) is an optional insurance plan between Fee for Service (Fee for Service) and Health Maintenance Organization (HMO). PPO insurance companies negotiate with doctors and hospitals to obtain preferential medical service prices. This way, PPO insurance companies can offer cheaper health insurance to their members.

After participating in PPO insurance, the insurance company provides members with a list of preferred medical institutions (in-network providers). Members can choose their favorite doctor’s clinic from the list. When you visit a medical institution in the network, you can get discounted rates for members, and the insurance company will pay most of the medical expenses.

PPO members can also choose out-of-network providers, but the proportion of personal out-of-pocket expenses is relatively high, and the proportion of medical expenses reimbursed by insurance companies is correspondingly lower. Moreover, out-of-network medical institutions cannot get discounts on medical services, so medical expenses are higher.

The advantage of PPO is that it gives you more options. Policyholders do not need to appoint a primary care physician, nor do they need to be referred by a primary care physician to see a specialist.

Participating in a PPO insurance plan has more options for doctors and hospitals, but the premiums for PPOs are usually higher than for HMOs.

Designated Medical Service Organization (Exclusive Provider Organization, EPO)

Designated health service provider EPO insurance plans generally require members to seek medical care within the insurance company’s designated health service network.

Insurance does not reimburse members for out-of-network medical care. Some EPO plans may reimburse emergency emergencies in special circumstances on a case-by-case basis, but reimbursement is not guaranteed.

After participating in the EPO insurance plan, there is generally no need for a designated primary care physician (Primary Care Physician), and a referral to a specialist is not required.

The EPO insurance plan has lower premiums and medical expenses (out-of-pocket, coinsurance, etc.) shared by the patient, making it a cheaper insurance plan. However, the EPO insurance plan only reimburses medical expenses within its medical service network and does not reimburse medical expenses incurred outside the service network. Patients should check with the relevant hospitals, clinics, laboratories, etc. whether they belong to the medical service network specified by the insurance plan when seeing a doctor or doing an examination.

Some of the cheaper EPO plans have a smaller network of medical services, with limited choices of medical facilities such as hospitals and clinics.

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Point-of-Service (POS)

Point-of-service (POS) is a form of insurance that combines HMO and PPO. It has more options than HMO while also being less expensive than PPO.

POS also has its healthcare network. Like HMOs, POS members need to appoint a Primary Care Physician. When needed, you must be referred by your primary care physician to a specialist within the insurance company’s designated network, which ensures lower medical costs.

If you seek medical treatment within the POS network, you pay a lower proportion of the medical expenses personally, and the insurance company will cover most of the expenses.

Unlike HMOs, POS members can also go directly to specialist clinics outside the POS network themselves. In this case, the POS insurance company will also reimburse you for a portion of your medical expenses, but the deductible and co-payment portion that the patient needs to pay for themselves is relatively high.

Therefore, POS has the advantage of lower insurance premiums of HMOs but also gives members more choices for self-medication.

Health Saving Account (HSA)

The main feature of Health Saving Account (HSA) insurance is that you must enroll in a health insurance plan with a high copayment. This allows you to pay for medical expenses with the funds in your health savings account, tax-free.

A requirement for setting up a health savings account is that you must purchase a High Deductible Health Plan for an individual or family.

Under the 2022 standard, the out-of-pocket requirement for individual insurance is a minimum of $1,400, while the annual out-of-pocket and other out-of-pocket costs for individuals are capped at $7,050. The minimum out-of-pocket requirement for home insurance is $2,800, and the maximum annual family out-of-pocket and other self-care expenses are $14,100.

Under the 2021 standard, the out-of-pocket requirement for individual insurance is a minimum of $1,400, while an individual’s annual out-of-pocket and other out-of-pocket costs are capped at a maximum of $7,000. The minimum out-of-pocket requirement for family insurance is $2,800, and the maximum annual family out-of-pocket and other self-care expenses are $14,000.

Funds you put into a health savings account are deductible when calculating your income tax and are 100 % tax-deductible. There are also limits to the amount of money that can be put into a health savings account each year.

Under the 2022 standard, it will be capped at $3,650 for individual accounts and$7,300 for family accounts. Those over 55 can deposit an additional $1,000 per year.

Under the 2021 standard, it is limited to$3,600 for personal accounts and $7,200 for family accounts. Those over 55 can deposit an additional $1,000 per year.

You can withdraw funds from your health savings account to pay for your medical expenses such as deductibles, co-payments, clinic bills, prescription drug bills, and more.

If the funds you put into the health savings account are not used up during the year, the remaining funds in the account can be accumulated into the new insurance year. After retirement, you can also withdraw all accumulated funds for other purposes.

It’s important to note that premiums for high-deductible plans are generally lower. However, this kind of plan is more suitable for serious illness insurance, and usually, individuals have to share more expenses when they visit a doctor for common diseases.

Impact of the Affordable Care Act (Obamacare) on Native Americans

The United States fully implements the Patient Rights and Affordable Care Act (Patient Rights and Affordable Care Act), which is commonly referred to as Obamacare. According to this medical law, US citizens, immigrants, and legal residents living in the United States must participate in medical insurance. Under the latest health care regulations, the US federal government will no longer impose fines on individuals without health insurance.

The largest private health insurance website in the United States, health insurance, cooperates with the government health insurance market, and residents of the United States can apply for medical insurance that meets the standards of the Affordable Care Act on health insurance. Eligible citizens and immigrants can purchase insurance and apply for government health insurance benefits here.

US residents are required to apply for health insurance in 2022 during the open application period for the insurance market (November 1, 2021, to January 15, 2022). After the open application period, you can apply for insurance in the event of a specially approved life change events such as marriage/divorce, the birth of a newborn, loss of insurance for a job change, moving to a new area, etc.

By aamritri

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