Managed health care plans are a type of health insurance that contracts with healthcare providers and medical facilities. These contracts allow you to pay a reduced cost for services. Healthcare providers and medical facilities are part of a network, and the extent of your plan’s coverage depends on whether you stay within the network or seek services outside the network.
Types of Managed Health Care Plans
The main types of managed health care plans include:
- Health Maintenance Organization (HMO): Provides a way to care for all health care needs of employees or members at reduced costs by negotiating with specific doctors, hospitals, and clinics. You must use these designated providers to access reduced fees within the health insurance plan. In an HMO plan, you have less flexibility but are more likely to have easier claims experiences since the network handles claims on your behalf.
- Preferred Provider Organization (PPO): Offers reduced costs if you use a network of doctors and providers. You can go to an out-of-network provider, but you will pay more.
- Point of Service (POS): Typically, you pay less when using providers who are in the network. In a POS plan, you are required to get a referral from a primary care doctor before seeing a specialist.
- Exclusive Provider Organization (EPO): You can choose providers within the network and are not required to work with a primary care doctor. However, no out-of-network service may be covered at all.
Cost Comparison Between HMO, PPO, POS, and EPO Health Plans
In 2021, employer-sponsored health insurance plans had an average annual premium of $22,221, with an average employee contribution of $5,969 for family coverage, according to the Kaiser Family Foundation’s 2021 Health Benefits Survey. The cost of individual coverage was $1,299 per year for employees (across all plans). The Kaiser Family Foundation also found that 46% of employees surveyed were enrolled in a PPO plan, 16% in an HMO plan, and 9% in a POS plan.
Among all plans, HMO plans tend to have the lowest employee contribution for family plans and one of the lowest options for individual employee coverage. According to the Kaiser Family Foundation’s survey, employees paid an annual premium of $5,254 for HMO plans with family coverage in 2021.
The survey did not break down the costs related to EPO plans, but the Kaiser Family Foundation estimated EPO and HMO plans as a single HMO plan. EPO plans can be cost-effective as long as you stay within the network. If you obtain services outside of the EPO network or member hospitals, you may pay the costs entirely out of pocket.
Although it was the most common plan in 2021, according to the Kaiser Family Foundation, PPO plans may be more expensive than other types of plans since you will pay more out-of-network costs, like a higher monthly premium. The survey found that employees paid an average annual premium of $1,389 for individual coverage in 2021.
POS plans offer the most flexibility, but this also makes them more expensive than HMO and EPO plans. These plans may provide the greatest flexibility, but are likely to be more costly due to the lack of pre-negotiated arrangements with providers in the network. The Kaiser Family Foundation found that employees with family coverage in 2021 paid an average annual premium of $7,512 for POS plans.
While you can choose a PPO, HMO, POS, or EPO plan, you will also want to consider the amount you will pay as out-of-pocket expenses. A high-deductible health plan (HDHP) can save you money in premium payments. The Kaiser Family Foundation’s survey found that HDHPs were the most expensive in 2021 for family coverage, with an average annual premium cost of $5,129.
Which
Which Plan is Better: HMO, PPO, POS, or EPO?
Managed care plans vary significantly in benefits and out-of-pocket expenses, so it’s important to try to find the best policy that suits your circumstances.
If you prefer having a primary care physician manage your care, you might want to look into an HMO or EPO plan.
If you see many specialists but don’t want to always go through a primary care physician, PPO or POS plans may work better for you.
You should keep in mind that PPO or POS plans may have higher costs than HMO and EPO plans due to greater flexibility, and the more you see specialists or receive out-of-network care, the more likely you are to pay more.
Frequently Asked Questions (FAQs)
Which type of managed care plan typically has the lowest out-of-pocket costs?
A Health Maintenance Organization (HMO) plan from a large company typically has the lowest out-of-pocket costs. A 2021 study by the Kaiser Family Foundation found that the minimum annual deductible for individual HMO coverage with a large company was around $847. However, the minimum deductible in HMO plans with a small company increases to $2,256. Across all company sizes, HMO and PPO plans have similar average minimum deductibles.
How long does health insurance coverage last after you leave your job?
You can expect to lose your health insurance coverage as soon as you leave your job. Employers may extend coverage until the end of the month in which you leave, but employers are not required to offer this type of coverage extension. You may lose coverage on the same day you leave.
Source: https://www.thebalancemoney.com/health-and-medical-insurance-2645378
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