Selecting Health Insurance to Meet Your Needs

Understanding what type of health insurance coverage fits your needs is important because it will determine access to care and coverage costs. Generally, health plans provide coverage for preventive care, diagnostic tests, injuries and illnesses. However, there are differences among the plans. The differences are found in how you pay for services, the benefits offered, and if and how you see different health professionals such as specialists and pharmacists. Also, the amount that you pay and the amount the health plan pays for specific services vary among health plans.

Health Insurance Coverage Options

The following are examples of health insurance coverage options:

Traditional Health Insurance (also known as Fee-For-Service Plans)

• Generally, the most flexible type of health plan
• Patients can choose any doctor or specialist without getting approval first
• Type of payment used by some health insurers that pays providers for each service after it has been delivered
• Deductibles and co-insurance apply
• Patient and the insurer pay for part of the costs for the health care services received

Health Maintenance Organization (HMO)

• A health insurer that contracts with or employs a network of doctors, hospitals and other types of providers
• Patients must visit a provider within the HMO network
• Some require a primary care physician to coordinate care and need a referral from a primary care physician before seeing an in-network specialist, entering a hospital or receiving some types of non-emergency care
• Co-payments required for provider visits

Preferred Provider Organization (PPO)

• A health plan with a network of providers whose services are available to enrollees at lower cost than the services of non-network providers. PPO enrollees may self-refer to any network provider at any time without a referral.
• Similar to an HMO plan except you do not have to choose a physician to coordinate your care
• Patients can see any provider they choose but higher co-insurance can apply if the provider chosen is not a provider within the network

Point of Service Plans (POS)

• A health plan in which enrollees select providers either within or outside of a preferred network, with co-payment or deductibles higher for out-of-network providers.
• Similar to an HMO plan but patients can also see providers not in the network and pay a percentage of the charge after the deductible is met.
• A referral is needed for in-network specialists, and no referral needed for out-of-network specialists but co-payments or coinsurance are required
• Restrictions may apply to the services patients receive outside the network

Exclusive Provider Organizations (EPO)

• Similar to HMOs but patients generally are not reimbursed for care from providers not in the network, except in emergency situations.
• Require a primary care physician to coordinate care and need a referral from a primary care physician before seeing an in-network specialist, entering a hospital or receiving some types of non-emergency care.

High-Deductible Health Plans (HDHP)

• A health plan with a minimum deductible of $1,050 for individual coverage and $2,100 for family coverage. The maximum in-network out-of-pocket limits for allowed costs must be no more than $5,000 for individual coverage and no more than $10,000 for family coverage.
• Enrollee pays higher deductibles compared to other types of health insurance coverage
• Services may be delivered through PPO, HMO or POS plans.
• HDHP are partnered with a Health Savings Account (in PDF) (HSA) or a Health Reimbursement Arrangement (in PDF) (HRA) that allows you to make tax-deductible contributions for future medical expenses.
• Ineligible for HSA if enrolled in any other health insurance plan, Medicare, or are receiving Veteran’s benefits. HRAs are available with an HDHP for those not eligible for an HSA.

Fees and Costs

There are a number of ways that a health insurer may require you to pay for the cost of receiving medical benefits:

• Premiums: A premium is a fee you pay the insurer during a specified period in order to receive health insurance benefits.
• Deductible: Some plans require you to pay a set amount each year, called the deductible, before the plan starts paying. Deductibles are common in traditional coverage and PPOs.
• Coinsurance: Some plans make you pay a percentage of the cost of services, usually 20-30 percent. For example, you pay 20 percent of the cost, and your insurance pays 80 percent of the cost. Your portion is the coinsurance.
• Co-payment: Some plans require you to pay a flat fee for medical services or prescription drugs. For example, you pay a $10 co-payment for a doctor visit or a $50 co-payment for a hospital stay.
• Maximum out-of-pocket: Some plans limit the total amount of money you will have to pay in the event of major health problems called the maximum out-of-pocket expense.
• Lifetime maximum: Some plans may limit the total amount of benefits it will pay, often referred to as a lifetime maximum.

If you’re an employer, you may offer to pay premium costs for your employees, or you may ask them to make contributions to the cost of care. Many employers use cost-sharing strategies that base employee contributions on a fixed percentage of the cost or sometimes at a rate connected with salary level. Other employers pay the full costs for their employees but require contributions for the costs of the employee’s dependents. A working individual or sole proprietor will be responsible for all health coverage care costs.

Many factors affect the cost of the premium that your insurer will require you to pay. In New York State, the premiums for health insurance are community rated. This means the price of health insurance is based on the average cost offered to all individuals seeking the same coverage from the same insurer in the same geographic area. The premium for all person covered by the policy or contract is determined without regard to experience, age, sex, health status or occupation.

Health Insurance Search Checklist

Before purchasing a health plan, we recommend that you take the following steps:

		Determine the type of health coverage that best fits your needs and budget.
		Compare the costs. Compare the monthly premiums as well as the out-of-pocket expenses such as deductibles, coinsurance and co-payments of different insurance plans.
		Have a basic understanding of special programs offered to New Yorkers and compare them to plans offered by other companies. A Guide to Health Insurance Options for New York City's Small Businesses, Sole Proprietors, and Working Individuals provides an overview of these special options. This Guide also summarizes some of the tips on important items to consider in selecting a health insurance option.
		Research individual plan options available in New York.
		Decide which health insurer offers the benefits you want. If you are a working individual or a sole proprietor, think about your health care needs. For a small business owner, determine your family's health care needs and those of your employees' families and choose an insurer that best covers the services that are needed most.