Selecting a health insurance plan can be an overwhelming task. There is no shortage of health care options, nor a lack of important considerations in making your selection. To make an informed decision that will provide coverage that fits your lifestyle and needs, consider the following:
- Cost: How much money are you willing and able to spend on monthly or annual premiums?
- In-network vs. out-of-network care: Are you going to use in-network care or does it make more sense to have the flexibility to go out of your plan’s network?
- Pre-approval: Do you have a specific medical condition that may require a pre-approval from a provider to seek treatment or care?
- Primary care physician: Are you okay with having one designated primary care physician, or would you rather seek services on your own from different doctors as needed?
Finding your answers to those factors could help you determine what type of health insurance network would make the most sense for your healthcare needs.
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What Is Included in Health Insurance Networks?
A health insurance network is a group of healthcare providers that have contracted with a health insurance carrier. These can be entire hospitals or individual physicians. Whenever the term “in network” is used, it means all of the healthcare providers who your insurer has contracts with to provide services, whereas “out of network” means the healthcare provider does not have a contract with your insurer.
Although networks can vary, a typical healthcare insurance plan provides members access to:
- Primary care physicians
- Specialty physicians
- Urgent care clinics
- X-ray facilities
- Medical equipment providers
Health insurance companies use their networks to streamline communication and standardize procedure costs and reimbursements. This allows for policyholders to pay less when seeing an in-network provider. For the healthcare provider on the contract, they are provided with policyholder patients who will prioritize their service because they are in network.
What Are the Main Types of Health Insurance?
The four main types of health insurance are:
- Health Maintenance Organization (HMO)
- Exclusive Provider Organization (EPO)
- Point of Service (POS)
- Preferred Provider Organization (PPO)
Each health insurance plan’s objective is to make healthcare more accessible, but the type of health insurance plan that will work best for you depends on things like out-of-pocket costs, copays, and specialty services provided.
Health Maintenance Organization (HMO)
A Health Maintenance Organization (HMO) is a popular health insurance option for consumers. Its structure allows for lower-than-typical premiums when compared to other health coverage types.
Premiums are reduced by limiting the medical coverage provided solely to the HMO’s network of healthcare providers. These providers are under contract with the HMO, which pays them a fixed amount per patient seen, and benefit by having network patients directed to them.
However, HMOs tend to be a narrow network plan, meaning the number of in-network physicians, hospitals, and care centers tends to be smaller than other health plan options. Those considering an HMO plan should ensure their preferred healthcare providers are within network.
Do You Need a Primary Care Physician In an HMO?
Yes, many HMOs require the insured to choose a primary care physician (PCP). The subscriber’s PCP must be chosen from the HMO’s network of healthcare providers. The PCP functions as the policyholder’s key point of contact for all of their health-related needs, including referrals for specialists.
Can You Seek Out-of-Network Care In an HMO?
Out-of-network care is not a financially viable option with an HMO. The biggest subscriber advantage — low-cost monthly or yearly premiums — only applies if patients strictly see in-network providers.
Unless it is deemed as an emergency, which varies based on the state, those who seek care from doctors outside the HMO network will have to pay for all of the services entirely out of pocket, as the HMO will not pay for out-of-network services except in very limited circumstances.
An example of when an HMO may cover out-of-network services is if you require immediate emergency care and hospitalization; even then, once you are stabilized, your HMO plan may require that you transfer to a different care facility that is within the network for the remainder of your recovery.
Do You Need Pre-approval for Medical Services in an HMO?
Yes, there are required pre-approvals for certain medical services within an HMO. The term “pre-approval” is synonymous with pre-certification, pre-authorization, and prior authorization. Pre-approval means that the service you elected to have has been deemed medically necessary by your health care provider. The services that need pre-approval can vary based on the type of coverage you’ve selected, though procedures that commonly require pre-approval include CT, MRI, and PET scans; sleep studies; colonoscopies; and biopsies. Differences in the medical service requirements for pre-authorization can differ depending on which HMO provider you select as well.
Just as in most health plans, the pre-approval process is simplified if you stick to your plan’s providers. Likewise, the pre-approval process can become much more complicated if you decide to seek care out of network. However, pre-approval is not required if you have a life-threatening emergency or you need emergency medication.
Exclusive Provider Organization (EPO)
Like an HMO, an EPO plan allows policyholders to choose from a network of healthcare providers for service. However, these networks tend to be slightly larger than those within an HMO plan. You must stay in network for coverage with an EPO, but you’re usually not required to get a referral to see a specialist. The cost structure is also like an HMO’s.
An EPO’s premium is typically more costly than an HMO because of the larger network of healthcare providers and increased autonomy with seeking specialist care.
With EPOs, out-of-network service is not covered and so will require out-of-pocket payment. An EPO only provides cost-sharing coverage when you use its in-network providers.
Do You Need a Primary Care Physician In an EPO?
EPOs typically do not require a designated PCP, though to be certain, you should check your plan’s details or speak with an insurance agent. However, even if it is not mandatory, having a general practitioner who is familiar with your health history can be beneficial, as they will already have access to your prior visit information, medication list, and test results.
Can You Seek Out-of-Network Care In an EPO?
For the vast majority of healthcare needs, EPO plans do not offer out-of-network coverage. These plans require patients to choose from healthcare professionals within their network. However, if you require immediate emergency care and hospitalization, your care will be covered even if the hospital or doctor is out of network.
It is critical to understand how your specific EPO defines an emergency, though, as it is often open to the interpretation of the insurer. For the most part, if your life is in immediate danger, your care will qualify as covered emergency care, though there may be nuances about whether an ambulance ride is covered or whether your time in the out-of-network facility once you are stabilized is covered.
Do You Need Pre-approval for Medical Services in an EPO?
Similarly to an HMO, with an EPO plan, pre-approval is required since an EPO will only pay for in-network services that are deemed medically necessary. However, note that a pre-approval does not promise payment by your health insurance. You still must submit a claim, which are not guaranteed to be paid. To ensure your care will be covered by your EPO plan, look over your policy’s details for more information.
Preferred Provider Organization (PPO)
But with a PPO, you have the most freedom in terms of which healthcare providers to see. PPO networks tend to be much larger than other health insurance types, allowing you a greater selection of healthcare professionals. As is true with most health insurance coverages, your best bet is to seek health care from within your PPO’s network of providers.
However, unlike HMOs and EPOs, with a PPO you can choose to go out of network and still be eligible for your insurance to cover some or most of those costs. This is a big advantage, especially if you have a strong relationship with your primary care provider and they’re out of network, or if a specialist you need to see is out of network.
Do You Need a Primary Care Physician In a PPO?
Although you don’t need to have a primary care physician with a PPO, it’s still highly recommended. A PCP functions as your foundation for all of your health-related needs. It’s a great idea to have a centralized location where all of your medical information is stored, and a PCP can provide that and offer a continuity of care.
Can You Seek Out-of-Network Care In a PPO?
Yes, you can seek out-of-network care if you choose a PPO health plan. However, like most major medical insurance, you need to be careful when going outside of the plan’s network, as fees and out-of-pocket costs can be significantly higher.
With a PPO, out-of-network care will likely be partially paid by the plan. But a typical coinsurance fee of 50% — which means you will pay half of the medical fee — will be reduced greatly if you stay within the PPO’s provider network.
An additional concern about seeking out-of-network care is the possibility of additional fees. When a member seeks medical care outside of the network, the provider can bill you for whatever is left over after your health insurance company pays its part, which is referred to as “balance billing.” Balance billing can result in fees upwards of thousands of dollars.
Do You Need Pre-approval for Medical Services in a PPO?
The need for medical pre-approvals, also commonly referred to as pre-certifications or prior approvals, varies widely within PPO plans. If you are seeking an insurance plan to help with a pre-existing condition or specific health malady, you should research all of your options carefully before joining a health care network.
Typically, pre-approvals are required for specific medical services within a PPO. The pre-approval process is a way to prevent insurers from paying for healthcare services that aren’t absolutely required. The services, procedures, tests, and treatments that require pre-authorization can vary, though things that commonly require pre-approval include genetic testing, radiological scans such as CT and MRI scans, and inpatient and outpatient surgeries. Check with your plan to ensure whether your procedure requires pre-approval for coverage.
Point of Service (POS)
A Point-of-Service health insurance plan features key components of a PPO and an HMO. Policyholders can decide to stay in network or venture outside of the insurer’s network for more health care options. However, staying within the POS network allows for the most service coverage.
A downside of the POS plan is that the network may be relatively limited, making it potentially difficult to stay exclusively within network for your care. While a POS may be more flexible when it comes to out-of-network care for this reason, that care can still become more complicated in determining coverage and filing claims. Out-of-pocket costs can also add up.
Do You Need a Primary Care Physician In a POS?
Yes, selecting a PCP is a requirement with a POS plan. Just like in an HMO, a PCP is necessary for referrals for any necessary services within the network. With a POS, specialist care will only be covered if the patient’s PCP has provided a referral for the specialist’s services. Essentially, your PCP acts as the point of contact for all of your medical needs at the time of service. This is why the health care plan is known as “Point-of-Service.”
Can You Seek Out-of-Network Care In a POS?
Yes, out-of-network care is an option with a POS plan.
However, plan members must be aware of their plan’s deductibles and out-of-pocket expenses. When you choose to go out of the POS network, you won’t need to go through a PCP, but the care will be much more expensive than seeking care within the network. Another consideration for going out of network with a POS is that you’ll likely be tasked with filing all claims and other associated paperwork, whereas if you stay within network, this will often be handled on your behalf.
Additionally, the cost of copayments are higher when selecting out-of-network service, and there is usually a deductible that needs to be met prior to the start of covered out-of-network care.
Do You Need Pre-approval for Medical Services in a POS?
Yes, there are some health care services that will require pre-approval within a POS plan. Your PCP will often help you with the pre-approval process. In general, procedures that require pre-approval will vary depending on your plan structure and insurer.
Some POS plans require pre-approval only for services utilizing in-network providers, but not for out-of-network care. Common medical procedures that require pre-approval include high-end imaging scans such as CT and PET scans, mental health services, and genetic testing.
Filing Claims In Your Health Insurance Type
A claim is a request for payment submitted to your health insurer when you receive a covered service. When you receive service from an in-network provider, that provider will submit your health insurance claim on your behalf. However, if you received service from an out-of-network provider, such as if you saw a specialist outside of your insurance plan’s network, you will have to file the claim yourself.
The process for filing a claim varies by insurer and plan type, but it typically involves filling out a templated claim form, providing details of the service you received, and providing receipts for the service. You can usually find claim forms online at your insurer’s website, or you could print out the form and submit the claim by mail if preferred.
It is best to submit claims as early as possible to avoid delays in reimbursement. However, keep in mind that submitting a claim does not guarantee approval and payment. Make sure that the service is covered and that you have provided thorough and accurate information.
What to Consider When Choosing Types of Health Insurance Coverage
Here are some important items to consider as you make your ultimate health network plan selection.
- Do you currently have a PCP? If so, are you willing to switch to a different primary provider if it’s necessitated by an insurance plan? An EPO may suit you if you have a PCP who is not in network, but who you would like to retain.
- How much do you have budgeted to spend on your health insurance premiums? There is no health coverage plan that can be defined as universally affordable. However, there are some plans that are more affordable than others. If you’re on a strict budget, an HMO may suit your needs. EPO and POS plans are within a mid-level pricing tier. PPO plans tend to be the most expensive option.
- Are you okay with the possibility of additional out-of-pocket costs? Do you want your copayment to be low, and your deductible high, or do you prefer the reverse? In most situations, the more affordable health insurance plans off-set discounted copays by making the deductible higher. For example, with an HMO, your copayments will be lower, but your deductible might be high.
- Do your health care needs require a specialist? If so, are you okay with a referral or would you prefer this decision be solely yours alone? If you want to have more control of what doctors you visit, a PPO allows the most options and freedom of choice. If you want maximum freedom, though, an EPO might suit you better because it offers more extensive out-of-network coverage options.