Healthcare coverage reduces out-of-pocket costs when you need medical treatment. However, health insurance is never one-size-fits-all. The main types of health insurance plans are:
- Health maintenance organization (HMO)
- Preferred provider organization (PPO)
- Point-of-service (POS)
- Exclusive provider organization (EPO)
The federal Health Insurance Marketplace further categorizes plans by metal levels: Platinum, Gold, Silver, or Bronze. Your plan category determines how you split the cost of care with your insurer.
Understanding the different types of healthcare coverage can help you choose the right insurance for your needs.
Key Takeaways
- The four main health insurance plan types are HMO, PPO, POS, and EPO.
- Your health insurance plan category determines how you share costs with your insurer.
- If you’re shopping the Health Insurance Marketplace, you’ll also need to choose a level of coverage: Bronze, Silver, Gold, or Platinum.
- High-deductible health plans can include a tax-advantaged Health Savings Account (HSA).
- Compare premium costs and coverage to choose the right health insurance plan.
Types of Health Insurance Plans
Distinguishing between the different health insurance plans means understanding how they work and what they’ll cost. It’s also helpful to know the pros and cons of each health insurance option.
Health Maintenance Organization (HMO)
An HMO allows you to get healthcare services from an approved network of providers. Out-of-network care typically isn’t covered unless it’s an emergency.
You may be required to live or work in the HMO’s service area to get covered. You’ll typically need to choose a primary care provider (PCP), and referrals may be necessary to see a specialist.
HMOs offer comprehensive coverage in terms of the care received. Visiting your PCP or a specialist may require a co-pay. There may be no co-insurance or deductible for in-hospital care.
Your insurance company should provide you with a summary of benefits and coverage explaining what is or isn’t covered by your health plan.
Preferred Provider Organization (PPO)
PPO plans allow you to visit out-of-network providers, but you save the most when staying in network. You don’t have to choose a primary care provider and may not need a referral to see a specialist if you’re going out of network.
A PPO can be more expensive than other plans in terms of premiums, co-pays, co-insurance, and deductibles. However, you might consider that a tradeoff worth making if you would like more flexibility in choosing your care provider.
Point-of-Service (POS)
A POS plan shares some features of an HMO and a PPO. You can choose a primary care provider from the plan’s network. But you can also go out of network to seek care, either by choice or out of necessity. You may also need to choose a primary care provider and get referrals for care.
You’ll generally pay most out-of-network costs unless your primary care provider refers you to another doctor. Referrals are required to see a specialist.
Exclusive Provider Organization (EPO)
An EPO is a type of managed care plan similar to HMO and PPO plans in certain regards. You’re only covered when you see in-network providers. However, you don’t have to choose a primary care provider, and you don’t need a referral to see a specialist.
There is one exception to the in-network rule: Emergency services are always covered, whether you see a provider in or out of network.
| Plan | How It Works | What You Pay | Pros | Cons |
| Health Maintenance Organization (HMO) | Provides care through a network of approved providers. Referrals required to see a specialist. | Co-pays for primary and specialist care, usually. There may be no deductible or co-insurance for in-hospital care. | Coverage may be cheaper than other options. | You may bear the full cost of out-of-network care unless it’s an emergency. Limited freedom to choose providers. |
| Preferred Provider Organization (PPO) | Lets you visit in-network or out-of-network providers and choose a primary care provider. | Co-pays, co-insurance, and deductibles. In-network care is usually cheaper. | Greater freedom of choice than HMOs allow. You may not need a referral to see a specialist. | Coverage may be more expensive than an HMO plan. |
| Point-of-Service (POS) | You get to choose a primary care provider, and can go out of network for care if needed. | Co-pays, co-insurance, and deductibles. In-network care is typically cheaper. | You don’t have to stay in network if you’d prefer to see another provider. | Referrals are required to see a specialist. |
| Exclusive Provider Organization (EPO) | Limits coverage to in-network providers, except in emergencies. | Co-pays, co-insurance, and deductibles. You pay out-of-network costs in full unless it’s an emergency. | No need to choose a primary care provider. Referrals not required for specialists. | Less common than other types of health insurance plans. |
High-Deductible Health Plans (HDHPs)
Any of these types of health insurance plans can be a high-deductible health plan (HDHP). HDHPs do have high deductibles, as the name implies. The deductible is the amount you pay for healthcare items and services before your plan starts to pay.
But HDHPs also typically have lower premiums and make you eligible for a Health Savings Account (HSA), a tax-advantaged account that helps you save for medical expenses not covered by your insurance.
Here are the minimum deductibles required for an HDHP in 2023, although the deductible that a particular plan requires can be significantly higher.
| Minimum deductible | Maximum out-of-pocket costs | |
| Individual plan | $1,500 | $7,500 |
| Family plan | $3,000 | $15,000 |
An HDHP can also include an HSA. Tax benefits of a Health Savings Account include:
- Tax-deductible contributions
- Tax-deferred growth
- Tax-free withdrawals when used for eligible medical expenses
For 2023, you can contribute up to $3,850 to your HSA if you have an individual health plan. The contribution limit for family plans is $7,750.
Catastrophic plans, which have very high deductibles but low premiums, can cover people under age 30 or those 30 and older who have a financial hardship or cannot afford regular insurance.
Obamacare Health Plan Categories
If you’re purchasing any of the health insurance plans listed above through the federal Health Insurance Marketplace, you’ll also have to choose which plan tier or category you’d like. The Marketplace was established following the passage of the Affordable Care Act (ACA), and plans listed there must meet certain basic requirements.
The four plan categories are Bronze, Silver, Gold, and Platinum. Which type of Marketplace plan you choose determines what you pay in premiums and your out-of-pocket costs for care.
All plan categories are required to offer essential healthcare benefits, including a wide variety of preventive services.
Bronze
With a Bronze category plan, you’ll pay the least amount for premiums. However, this plan category has the highest costs when you need care since deductibles can easily run into the thousands of dollars.
You may also pay more out of pocket for co-pays or co-insurance. A Bronze plan may be best suited for people who don’t visit the doctor often and can afford a higher deductible in exchange for worst-case-scenario healthcare.
Silver
Silver plans have a moderate monthly premium and moderate out-of-pocket costs if you need care. Deductibles are usually lower than what you’d pay for a Bronze plan, though more expensive than Gold or Platinum plans.
Enrolling in a Silver plan could help you qualify for cost-sharing reductions. Those reductions can translate to lower co-pays, co-insurance, and deductibles.
The Premium Tax Credit can help to offset some of your costs when paying health insurance premiums if you buy coverage through the Marketplace.
Gold
Gold plans have a high monthly premium but offer lower costs on a routine basis. Deductibles are usually low, and you may pay less for co-pays or co-insurance as well.
A Gold plan could be a good option if you visit the doctor regularly. It may not take you as long to reach the deductible, and once you do, your insurer can pick up the rest of your costs.
Platinum
Platinum plans have the highest premiums overall but cost you the least out of pocket when you need care.
Platinum plan deductibles are the lowest of any plan tier, so your insurance company starts shouldering more of the costs of care faster. You might choose a Platinum plan with higher premiums if you want to reduce your other out-of-pocket costs as much as possible.
Here are the average amounts you’ll pay at each plan tier.
| Plan category | Insurance company pays | You pay |
| Bronze | 60% | 40% |
| Silver | 70% | 30% |
| Gold | 80% | 20% |
| Platinum | 90% | 10% |
How to Choose the Right Health Insurance Coverage
Choosing the right health insurance coverage begins with understanding what options you have. Once you’re familiar with the different types of health insurance plans, you can take a closer look at your health and finances to decide which one might work best.
For example, you might ask yourself these questions:
- How is my health overall?
- Do I have any chronic conditions, or could I develop any conditions requiring regular treatment?
- What monthly premiums can I afford?
- Do I have sufficient savings to cover deductibles, if choosing a higher deductible plan?
- Am I comfortable being locked into a specific provider network?
- Will I, or anyone else covered by my plan, need to see a specialist?
- Do I need extra benefits such as vision or dental benefits?
Also, consider how valuable a Health Savings Account might be. As mentioned, HSAs can yield numerous tax benefits, and you can roll the money over from year to year.
Once you turn 65, you can withdraw money from an HSA for any reason without a tax penalty. You would just need to pay income taxes on the distribution. That might appeal to you if you’re looking for an additional way to save for retirement.
What Are Medicare and Medicaid?
Medicare is government-sponsored health insurance for seniors ages 65 and older, and people under 65 with specific disabilities and conditions. Medicaid is a state-administered government program providing affordable healthcare to low-income individuals and families. Eligibility for Medicare is based on age, while Medicaid eligibility is typically dependent on income, assets, and household size—but varies by state.
What Is Short-Term Health Insurance?
Short-term health insurance covers you for a limited time period, ranging from a few months to a year or so. For example, you might get short-term health insurance if you get laid off and don’t want to pay for COBRA insurance until you find new employment. However, these plans are often medically underwritten, so you’ll have to qualify. Short-term health insurance may not be required to provide the same essential health benefits coverage as an Affordable Care Act (ACA)-compliant plan.
What Is COBRA Insurance?
COBRA insurance allows you to maintain your employer’s health insurance for a specified period of time if you lose your group health benefits. For example, if you get laid off, quit, or retire, you may be able to maintain the same health plan through COBRA coverage. However, it’s generally not as inexpensive as an employer-subsidized plan. You pay the premiums, and your employer can tack on an additional administrative charge—you could end up paying 102% of the plan’s cost.
The Bottom Line
Having health insurance can give you peace of mind if you or one of your family members gets sick or injured. Navigating the different plan types and policy options can be overwhelming, but research thoroughly to know what you’re getting. Comparing different health insurance companies can help you select a policy aligning with your needs and budget.