Everything you need to know about health insurance plans in the United States
The United States has one of the highest healthcare costs in the world, making health insurance plans a must for those who want to ease the financial burdens of getting sick or accessing medical services. The health insurance system in the US can be complex to understand at first, as it is composed of a variety of options that can greatly impact your cost savings and the overall access to healthcare services.
What are health insurance plans?
Health insurance plans provide individuals and families with financial protection, easing the burden from the high cost of healthcare and medical services. In a nutshell, individuals and families can benefit from health insurance plans in two ways: they can protect themselves from financial hardships should they become severely ill, and they can ensure that they have access to medical and health services whenever they need.
Health insurance plans must be compliant with the Affordable Care Act (ACA), which means that they should cover essential service categories such as outpatient care, emergency services, hospitalization, maternity care, mental healthcare, prescription drugs, and rehabilitative and habilitative services for people with disabilities, injuries, or chronic conditions.
Other essential benefits that must be covered are pediatric services, laboratory services, and preventive and wellness services, including HIV screening and counseling.
Common type of health insurance plans
The type of health insurance plan that you should have and get depends on several factors, specifically how much you are willing to spend and what expenses or services you wish to be covered. Here are some of the common types of health insurance plans available in the United States:
Employer-sponsored health insurance
Also known as the preferred provider organization (PPO) plan, this type of insurance is typically the first exposure of working Americans with healthcare plans. PPO plans can vary in terms of deductibles, co-payments, and out-of-pocket maximums. One advantage of an employer-sponsored health insurance plan is the ability of employees to access a wide network of preferred health and medical providers. If you have a PPO plan with your employer, you will have the option to have some out-of-network costs covered. You can also reach out to a specialist without needing any referral from a primary healthcare provider.
One big downside of PPOs, however, is the deductible cost — in some cases, you will have an annual deductible you must meet before the insurance provider begins covering your bills.
Health maintenance organization (HMO) plans
With an HMO plan, you will be required to choose a primary care physician (PCP) who will serve as the point of contact for all your healthcare and medical needs. Under an HMO plan, you are usually required to receive all healthcare services from providers within the HMO network. For instance, in cases when you need to see a specialist, you must first receive a referral from your chosen primary care physician.
HMO plans offer lower out-of-pocket costs for covered services and they do not typically have a deductible. While the costs are lower for HMO plans, they also have limited flexibility when it comes to choosing the medical providers. This means that you will most likely not be covered if you have any services from outside of your HMO network, unless in emergency situations.
Exclusive provider organization (EPO) plans
EPO plans work similarly with HMO plans but with some key differences. While both will require plan holders to choose a primary care physician, EPS plans do not impose a requirement for a referral to see specialists within the network. If you have an EPO plan, you may be covered for out-of-network services, although at a higher cost. A disadvantage of an EPO plan, however, is the often smaller panel of medical providers included in the network.
Point of service (POS) plans
If you want to enjoy the benefits of a PPO and HMO, POS plans would be the right type of health insurance for you. Flexibility is the best feature of POS plans, as you have a wider network of healthcare providers. Similar to an HMO plan, a POS plan may require holders to nominate a primary care physician. However, like PPO, you will have to pay higher costs if you receive medical care outside the POS network.
Health savings account (HSA) plans
All of the other types of health insurance plans can be qualified as an HSA plan provided that the plan has two parts: a high-deductible health plan (HDHP) and a savings account. Take note that the HDHP has a higher deductible than traditional health insurance plans, meaning that you are responsible for paying more out of pocket before coverage kicks in. However, HDHPs typically have lower monthly premiums. The savings account associated with an HSA plan provides an avenue for individuals to contribute money on a tax-free basis, up to certain annual limits set by the Internal Revenue Service. The fund can be used to pay for eligible medical expenses, including deductibles, co-payments, and prescription drugs.
The key benefit of an HSA plan is the opportunity to lower an individual’s taxable income by contributing to the account. On top of this, the funds in an HSA account can be carried over from year to year, and any unused funds can be invested and grow tax-free.
Selecting your health insurance
Now that you know the different health insurance types, it is crucial that you determine which one would be the best for your current circumstances.
1. Assess your needs – One of the very first steps you need to do is to evaluate your healthcare needs. Are you seeing yourself frequently visiting the doctor? Do you have prescription medications? Do you have any chronic conditions? If you are applying for a bundle plan with your family, make sure to have a deep understanding of everyone’s medical needs.
2. Know your options – If you are employed and your employer already has an existing insurance provider, you may choose to consider their services or look for an alternative plan. However, be aware that plans offered externally will cost more. On the other hand, if you are free to choose your health insurance, you should check online for insurance offers or reach out to broker.
3. Check your budget – Knowing how much you can pay for premiums is important especially if you are going for insurance plans other than the one offered by your employer. How much can you set aside to pay for premiums and out-of-pocket expenses? Are you going for insurance plans with deductibles?
4. Compare available plans – Review the health insurance plans offered by your employer, if available, or search for plans on the health insurance marketplace or with private insurance companies. Once you have identified several potential plans, compare them side-by-side by looking at the monthly premiums, deductibles, co-pays, out-of-pocket maximums, and coverage for the specific services you need.
5. Check out additional benefits – If your budget permits, check out plans with inclusions for such as dental and vision coverage, wellness programs, and telemedicine services.
6. Find out which providers are included in the network – See to it that you review the network of healthcare providers and hospitals included in each plan. Do not forget to check your preferred providers.
7. Read the fine print – Make sure that you check the plan details and understand the policy terms, conditions, and restrictions.
What are the top health insurance providers in the US?
According to the latest data from the National Association of Insurance Commissioners, the accident and health insurance industry’s direct written premiums reached $1.35 trillion in 2021. Based on the ratings on Forbes Advisor, here are the best and largest health insurance companies in the United States and the average monthly insurance costs depending on tier and age:
| Healthcare Insurance Company | Availability | Average Monthly Insurance Cost | ||
| Low-tier plan | Mid-tier plan | High-tier plan | ||
| UnitedHealthcare | 49 states and D.C. (New York is excluded) | Age 30: $278
Age 40: $313 Age 50: $437 Age 60: $664 |
Age 30: $398
Age 40: $448 Age 50: $627 Age 60: $952 |
Age 30: $399
Age 40: $449 Age 50: $628 Age 60: $954 |
| Blue Cross Blue Shield | 50 states and D.C. | Age 30: $356
Age 40: $401 Age 50: $560 Age 60: $851 |
Age 30: $501
Age 40: $564 Age 50: $788 Age 60: $1,198 |
Age 30: $461
Age 40: $520 Age 50: $726 Age 60: $1,103 |
| Aetna | 50 states and D.C. | Age 30: $303
Age 40: $341 Age 50: $477 Age 60: $724 |
Age 30: $437
Age 40: $492 Age 50: $687 Age 60: $1,044 |
Age 30: $467
Age 40: $526 Age 50: $735 Age 60: $1,117 |
| Cigna | 13 states | Age 30: $354
Age 40: $399 Age 50: $557 Age 60: $846 |
Age 30: $463
Age 40: $521 Age 50: $728 Age 60: $1,107 |
Age 30: $521
Age 40: $586 Age 50: $819 Age 60: $1,245 |
| Molina Healthcare | 14 states and D.C. | Age 30: $336
Age 40: $379 Age 50: $529 Age 60: $804 |
Age 30: $441
Age 40: $497 Age 50: $694 Age 60: $1,055 |
Age 30: $502
Age 40: $565 Age 50: $790 Age 60: $1,200 |
| Oscar Health | 20 states | Data not available | Age 30: $430
Age 40: $484 Age 50: $677 Age 60: $1,029 |
Age 30: $426
Age 40: $480 Age 50: $670 Age 60: $1,019 |
Frequently asked questions about health insurance plans
Are there health insurance plans for self-employed individuals?
Yes, many insurance providers provide self-employed individuals with options of health plans. If you are self-employed, you may use the individual Health Insurance Marketplace to find providers that can match your healthcare needs. You can also reach out directly to insurance companies and brokers.
What does health insurance deductible mean?
A health insurance deductible is the amount of money you must pay out-of-pocket before the coverage of the insurance company kicks in. Typically set annually, deductibles can vary depending on your health insurance plan. If you have a $1,500 deductible and you receive a medical bill of $2,000, the insurance company would cover the remaining $500, subject to any applicable co-pays or co-insurance.
Is health insurance required for companies in the United States?
Companies with 50 or more full-time employees must provide health insurance coverage to their employees according to the rules set out by the Affordable Care Act. Small businesses with fewer than 50 full-time workers are not required to get insurance plans, but they may still do so as an added benefit to their employees.
What is the difference between healthcare insurance and medical insurance?
Healthcare insurance and medical insurance are often mistaken as the same thing, but they have some differences, particularly in terms of coverage. Healthcare insurance offers a comprehensive coverage for healthcare-related expenses, including hospitalization charges, long-term care, disability, and dental and vision care. On the other hand, medical insurance typically pertains to policies that cover expenses for illnesses and injuries. In essence, medical insurance is under the umbrella of healthcare insurance.
Are HMO and health insurance the same?
No, while the two terms are related, HMO is just one of the many types of health insurance plans available in the market. HMO requires policyholders to choose a primary care physician who will act as the primary point of contact for all their healthcare needs. A distinct feature of HMO plans are the lower out-of-pocket costs.
What is TPA in health insurance?
TPA refers to the third-party administrator — in the health insurance space, TPAs refer to administrative service providers that deliver support for self-insured health plans. Their services include processing claims, managing provider networks, handling customer service inquiries, and providing assistance with policy administration.
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