What Kind of Health Plan Should You Choose?
What does HMO, PPO, POS, and FFS mean?
These letters are initials for different kinds of health insurance plans. Let’s take a look at what each one stands for, and what kind of coverage they offer.
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Types of Health Plans
- PPO Plans — Preferred Provider Organization plans have networks of doctors, hospitals, and other health care providers. PPO plans have two levels of coverage: in-network and out-of-network. In-network care will cost less than out-of-network care.
- HMO Plans — Health Maintenance Organization plans also have networks of providers. In an HMO plan, you’ll only have coverage with providers in the network. You’ll also choose a primary care physician who will give you a referral when you need specialist or hospital care. HMOs offer less flexibility than PPOs, but they’re also usually more affordable.
- POS Plans — Point of Service plans are like a cross between an HMO and a PPO. With a POS plan, you’ll choose a primary care physician and see that doctor for specialist referrals. But you’ll also have coverage for doctors and hospitals outside your plan’s provider network.
- FFS Plans — Fee For Service plans are the most traditional form of health insurance. And these days, they’re also the least common. An FFS plan doesn’t have a network of providers. Instead, it covers specific health care services. Your plan will pay for those services no matter which health care provider you choose. While these plans are the most flexible, they’re also the most expensive.
What About Health Savings Accounts?
Health Savings Accounts (HSAs) were introduced a few years ago, and they’ve slowly been gaining popularity. An HSA isn’t a health plan — it’s a bank account where you can save money to pay for your health care expenses. With an HSA, you save money tax-free. You can use the money in your HSA to pay for nearly any medical expense.
To open an HSA, you need to enroll in a “high-deductible health plan.” For individuals, a “high-deductible” is considered $1,100. For families, it’s $2,200. That may seem like a lot of money, but you can use the funds in your HSA to pay that deductible. And because of the tax benefits, using HSA money means that the federal government is picking up part of the bill.
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