Open Enrollment Guide: Health Insurance Plan Types

11/2/18
WRITTEN BY: Greg Brown
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Choosing a health insurance plan doesn’t have to make you shake with fright.

As we launch into another open enrollment season for both Affordable Care Act Marketplace plans and Medicare, Beyond Type 1 is here to help you navigate the glut of overwhelming options.

HMO versus PPO. High deductible versus low deductible. First, what do these acronyms even mean? Next, how do you know what’s best for you and your family’s health needs?

The Marketplace

Open enrollment is the yearly period where people can openly enroll in health insurance plan on the Affordable Care Act marketplace for the upcoming year. The enrollment period opens on Thursday, November 1 and closes on Saturday, December 15, 2018.

That’s basically a six-week window to secure health care for the upcoming year.

If you don’t act by December 15, you’ll only be able to get 2019 coverage if you qualify for one of the marketplace’s Special Enrollment Periods, such as a life event like losing job-based health insurance, getting married, having a baby, or losing insurance in a divorce or separation. Those who qualify for Medicaid or the Children’s Health Insurance Program (CHIP) can apply for coverage at any time.

Plans bought during open enrollment begin on January 1, 2019. You can preview 2019 plans and price here, and enroll here starting on Thursday, November 1.

So what are the prevailing options and differences?

HMO Plans

HMO stands for “health maintenance organization.” These plans provide access to doctors and hospitals that are within a network established by your insurance plan. The networks consist of providers that have agreed to provide their health services at prices they’ve negotiated with the insurance company.

This often means that providers are paid less but the insurer than they might get normally. They make this concession because of the large and easy access to patients the plans provide them.

Lower costs sound great, right? Well, they are. In exchange for accepting the limitations of an HMO (we’ll get to that next), patients usually pay lower monthly insurance payment premiums (your monthly fee for having insurance). Deductibles (the amount you pay out of pocket before your insurer starts picking up your healthcare costs) tend to be lower as well.

The largest drawback of HMO plans is that they only contract with a certain number of doctors and hospitals in an area. Insurers won’t pay for healthcare received at out-of-network providers. So, if you veer out of your network, you’re suddenly looking at huge health care costs.

When you enroll in an HMO plan, you have to choose a primary care doctor when you sign up. You then have to get a referral from your primary care doctor before seeing any specialist. It’s important to note that some health services, like yearly screening mammograms, don’t require a referral. Generally, though, you’ll need a referral, which often means an office visit before the office visit you’re searching for.

Other HMO drawbacks include an annual limit on the number of office visits, tests, and certain treatments.

Choose an HMO plan if lower healthcare costs are your biggest priority. While you will face limits on who you can see based on your plan’s network, your monthly premiums and deductibles will be lower. Be aware, though, that you’ll need to get referrals for specialist services and that there may be yearly plan limits on office visits and certain health services.

PPO Plans

PPO stands for preferred provider organization. These plans offer much more leniency when it comes to seeing out-of-network health care providers without a referral. Generally, you can see who you want when you want. The rub: that freedom and flexibility usually comes with increased costs.

Like their counterparts, PPO plans also establish provider networks. The plans simply have fewer restrictions about going out of network. With most PPO plans, you can also bypass the referral process and simply make an appointment with a specialist (an endocrinologist, for instance, for those with T1D). You don’t have to go through the step of seeing your primary care physician, and wracking up another office visit, first.

But it’s important to be aware of the cost consequences of stepping out of network and remember that seeing an out-of-network provider will generally be more expensive than staying in network. While PPO plans include an out-of-pocket maximum for in-network care, money spent out of pocket outside the network doesn’t generally count against that limit. That means you can simply pay, and pay, and pay for health care services. PPOs also generally carry higher premiums and higher deductibles as well.

Choose a PPO plan if you want the flexibility to go out of network and avoid referrals and are the type of patient who uses your health care services regularly and has a need to see specialists.

Medicare Plans

For most people, Medicare eligibility is based on age. You can sign up during a window starting three months before the month you turn 65 and ending three months following your birthday month.

During that initial eligibility window, you can sign up for traditional Medicare, which is the fee-for-service government health plan with two parts (A for hospital insurance and B for medical insurance) or Medicare Advantage, a Medicare health plan offered by a private company that contracts with Medicare and offers Parts A and B. You can also enroll in supplemental coverage or choose a drug plan.  Under the Affordable Care Act, having Medicare Part A is enough to meet the law’s requirements for minimum essential coverage.

If you have health coverage through Medicare, the upcoming marketplace open enrollment period won’t have any effect on your coverage.

Medicare Open Enrollment, on the other hand, runs from October 15 to December 7. During this period, the government recommends all people who have Medicare review their current health and prescription drug coverage, including any changes in costs, coverage, or benefits that will take effect next year. The Medicare Open Enrollment Period is the time to change your coverage. If you’re satisfied with your current coverage, however, you don’t have to do anything.

You can sign up for Medicare online, via phone, or by visiting your local Social Security office. Medicare Advantage plans are sold through private insurers. To review Medicare plans, use the Plan Finder.

 



Greg Brown

Greg Brown is a freelance health, finance, and environmental writer living in the mountains of western Maine. He has written for Consumer Reports Magazine, Consumer Reports Online, The New York Times, and The Chicago Tribune, among other publications. He holds an MFA in Fiction Writing from the University of Iowa Writers’ Workshop and an MS in Journalism from Columbia University.