When selling health insurance, it’s important to remember that different types of plans meet different needs. Plans types vary when it comes to cost, providers, and payment. You’ll want to understand each type, so you can find the plan that best fits your clients’ budget and health requirements.
Let’s start with one of the most popular types of health plan, the Health Maintenance Organization, or HMO. HMOs may limit your clients’ coverage to providers inside their network. A network includes a list of doctors, hospitals and other health care providers who give care to members of a specific health plan. These “in-network” providers have agreed by contract to treat patients at a negotiated rate, in exchange for a steady stream of customers. HMOs usually won’t cover out-of-network doctors, except in the case of an emergency. If your client uses a provider who isn’t in the network, they may have to pay the full cost. HMOs often require members to live or work within its service area to qualify.
An Exclusive Provider Organization is similar to an HMO, but HMO members generally have a primary care doctor, and must get referrals to see a specialist. This is usually not true for EPOs.
Another popular type of health plan is a Preferred Provider Organization, or PPO. PPOs give your clients a choice of getting care in or out of network. Clients can use out-of-network providers, but they’ll pay more than for in-network providers. Individuals can also visit any doctor without a referral when using a PPO.
A Point-of-Service plan is similar to a PPO, except clients can visit any provider in-network, but they’ll need a referral to go to an out-of-network provider.
A Catastrophic Health Insurance Plan is similar to a HDHP in that it has a very high deductible. A catastrophic plan covers essential health benefits, so it providers a kind of safety net in case of an accident or serious illness. Premiums for catastrophic plans are usually lower than traditional health insurance plans, but deductibles are much higher. In the federal Marketplaces, catastrophic plans are available only to people under 30 years old and to some low-income people who are exempt from paying fees because other insurance is considered unaffordable for them. Marketplace catastrophic plans cover 3 annual doctor visits and preventive services at no cost. After the deductible is met, they cover the same set of essential health benefits as other Marketplace plans.
A High Deductible Health Plan (HDHP) usually features exactly what it says: high deductibles, but lower premiums than normal insurance plans. That means individuals pay less each month, but when they need health care, they face higher out-of-pocket costs. However, there is a cap to an individuals out-of-pocket spending. Once they reach the cap, the HDHP pays 100% of care, and the totals include the deductible.
HDHP sometimes have a Health Savings Account option. HSAs were created in 2003 so individuals enrolled in HDHPs could receive tax-preferred treatment of money saved for medical expenses. The funds contributed to the account aren’t subject to federal income tax at the time of deposit. HAS funds may be used to pay for qualified medical expenses at any time without federal tax liability or penalty. Withdrawals for non-medical expenses may incur penalties. Funds roll over year to year if they’re not used.
A Flexible Spending Account is somewhat similar to an HSA, except it’s only available with job-based health plans. A FSA is a special account individuals put money into, to pay for out-of-pocket health care costs. They don’t pay taxes on that money, so they’ll save an equal amount to the taxes they would have paid on the money they put aside. Clients can use an FSA to pay for copayments, deductibles, some prescriptions, and other health care costs, but they can’t use it to pay insurance premiums. Employers can make contributions to FSAs, and they generally must use the money you contribute to the account within the plan year. At the end of the year, individuals lose any money left in the account. FSAs are limited to $2500 per year.
Helping your clients choose a health care plan for themselves and their family can be a daunting task for a new agent. But armed with an education on health insurance options, you can help your clients make smart choices that benefit their families’ health and budgets. Remember to always read all the options associated with a health plan before you discuss it with your client. If you’re uncertain about any of the benefits, be sure to ask your sales manager, the broker support team, or carrier representative, so all of your clients’ questions are covered. Generally, once you sell a plan and a client commits to it, you’ll be unable to change that plan for them until the following Open Enrollment season.
