Learn About Healthcare Coverage Options

Understanding the Different Types of Health Insurance Plans

Health insurance comes in several basic types, each with different ways of paying for medical care. Learning about these options helps you understand what coverage might work for your situation.

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Health Maintenance Organizations (HMOs) typically require you to choose a primary care doctor who coordinates your medical care. If you need to see a specialist, your primary care doctor usually must refer you first. HMOs generally have lower monthly costs but require you to use doctors within their network. Going to an out-of-network provider usually costs much more or isn't covered at all.

Preferred Provider Organizations (PPOs) offer more flexibility than HMOs. You can see any doctor without a referral, though you'll pay less if you use doctors in the plan's network. PPOs have higher monthly costs than HMOs but lower out-of-pocket costs when you use in-network providers.

Exclusive Provider Organizations (EPOs) fall between HMOs and PPOs. Like HMOs, they usually require you to use in-network doctors. Like PPOs, you don't need referrals to see specialists. Emergency care is usually covered even outside the network.

High Deductible Health Plans (HDHPs) have lower monthly premiums but higher deductibles—the amount you pay before insurance starts covering costs. These plans often pair with Health Savings Accounts (HSAs), which let you set aside pre-tax money for medical expenses. According to the Kaiser Family Foundation, about 21% of people with employer coverage had an HDHP in 2022.

Practical takeaway: Write down the types of plans your employer offers or that you find when shopping. For each one, note the monthly cost, deductible, and whether your current doctors are in-network. This comparison makes the options clearer.

How Employer-Sponsored Coverage Works

Most Americans under age 65 get health insurance through their job. Employer-sponsored coverage typically costs less than buying insurance on your own because employers contribute toward the premium—the monthly cost of insurance. The employer's contribution is usually substantial; according to the Kaiser Family Foundation 2023 data, employers paid about 83% of premiums for individual coverage on average.

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When you start a new job, you usually get information about the health plans the company offers during the enrollment period. This is your chance to choose which plan you want. Some employers offer one plan, while larger companies offer several options. You generally can only change plans during open enrollment, which happens once a year, unless you have a life change like getting married, having a baby, or losing other coverage.

Your employer takes the monthly premium from your paycheck before taxes are calculated, meaning you save on income taxes. This is called a pre-tax contribution. You also typically pay deductibles, copayments (fixed amounts you pay for visits), and coinsurance (a percentage of costs you share with insurance).

If you lose your job, you may be able to continue employer coverage for a limited time through COBRA (Consolidated Omnibus Budget Reconciliation Act). This allows you to stay on your employer's plan for up to 18 months, though you pay the full premium plus an administrative fee. This option can be expensive but might be worth exploring if you have ongoing medical needs.

Practical takeaway: Keep enrollment documents from your employer and mark your calendar for open enrollment dates. Compare the plans offered by looking at monthly costs, deductibles, and which doctors and hospitals are in-network for your family.

Exploring Individual and Marketplace Insurance Options

If you don't have employer coverage, you can purchase health insurance on your own through the Health Insurance Marketplace, also called the Exchange. The Marketplace operates in every state and lets you compare plans side-by-side. You can search for plans at Healthcare.gov or your state's marketplace website. The Marketplace is open for enrollment from November 1 through January 15 each year, with some exceptions for life changes.

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Plans sold through the Marketplace are divided into four levels based on how costs are shared between you and insurance: Bronze, Silver, Gold, and Platinum. Bronze plans have the lowest monthly premiums but higher deductibles and out-of-pocket costs. Platinum plans have the highest monthly premiums but lower deductibles and out-of-pocket costs. Silver and Gold plans fall in between. You can compare these plans before making a choice.

When you shop on the Marketplace, you enter information about your income and family size. Based on this, you may be offered tax credits that lower your monthly premium. You don't need to wait to file taxes to receive these credits—they can be applied to your premium immediately. If your income changes during the year, you should report it so your tax credit adjusts accordingly.

You can also purchase health insurance directly from insurance companies outside of the Marketplace, though you won't have access to tax credits. These off-Marketplace plans may have different coverage rules and costs. Some states also offer programs for people with low incomes or existing health conditions; information about these programs is available on state health department websites.

Practical takeaway: Visit Healthcare.gov or your state's website and create an account during open enrollment. Enter your information to see what plans are available and whether you might receive premium tax credits. Even if you don't purchase right away, seeing your options helps you understand the landscape.

Understanding Public Programs: Medicaid and Medicare

Medicaid and Medicare are government health programs, but they serve different groups of people and work differently. Understanding which program applies to you is important.

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Medicaid is a joint federal and state program that provides coverage to people with low incomes and certain other circumstances. Income limits and coverage rules vary significantly by state. Some states have expanded Medicaid to cover more adults; others have not. Medicaid covers services like doctor visits, hospital care, and prescription drugs. Most Medicaid services have little or no cost to the person receiving care. You can learn about your state's Medicaid program through your state health department or at Medicaid.gov.

Medicare is a federal program primarily for people age 65 and older, regardless of income. Medicare also covers some younger people with disabilities or end-stage renal disease. Medicare has different parts: Part A covers hospital care, Part B covers doctors and outpatient services, Part D covers prescription drugs, and Part C (Medicare Advantage) is an alternative way to receive Medicare benefits through a private insurance company. Most people pay a monthly premium for Part B and may pay premiums for Part D or Part C.

The Children's Health Insurance Program (CHIP) covers uninsured children in families with incomes too high for Medicaid but too low to afford private insurance. In 2021, CHIP covered about 9.4 million children according to the Centers for Medicare and Medicaid Services. Like Medicaid, CHIP is state-administered, so benefits and income limits vary by location.

If you think you might be covered by these programs, contact your state health department or visit Healthcare.gov to learn about programs in your area. Each program has specific rules about who can receive coverage based on age, income, disability status, and citizenship.

Practical takeaway: Write down your age, approximate household income, and any disabilities in your family. Then visit your state health department website or Medicaid.gov to see which public programs might be available to your household.

Comparing Costs: Premiums, Deductibles, and Out-of-Pocket Maximums

Health insurance costs have multiple parts, and understanding each one helps you choose the right plan for your budget. The premium is the monthly cost of having insurance. This is the amount you pay (or your employer pays) regardless of whether you use medical care. Premiums vary widely based on age, location, and plan type.

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The deductible is the amount you must pay out of your own pocket before insurance starts covering costs. For example, if your plan has a $1,500 deductible, you pay the first $1,500 of medical costs each year. After that, insurance shares costs with you. Some plans have lower deductibles but higher premiums, while others have higher deductibles but lower premiums.

Copayments and coinsurance are costs you pay each time you use healthcare. A copayment is a fixed amount, like $30 for a doctor visit. Coinsurance is a percentage—for example, you might pay