All health coverage plans that comply with the Affordable Care Act (also known as Obamacare) are major medical health insurance plans. You must enroll in these health insurance programs because it protects you from tax penalties if you are uninsured or ineligible to sign up during the open enrollment period. Here are a few examples of major medical health insurance plans:
- Obamacare insurance programs for families and individuals
- Employer-sponsored health insurance plan
- Qualified Health Plans (these are Obamacare programs that you can purchase with a premium subsidy)
- Catastrophic coverage (primarily available to individuals under age 30)
- Government-funded health insurance plans (Medicaid, Medicare, etc.)
Other types of health insurance that do not qualify as major medical health insurance are:
- Short-Term Health Coverage
- Gap Insurance (Critical Illness, Telemedicine, Accident, etc.)
Most Americans receive private insurance coverage through their employer or union. Others obtain it from the local state agencies via Medicare or Medicaid. And many people typically purchase their health insurance through a government-run health coverage marketplace, a private online health coverage marketplace like Insurance Shopping, or through a local agent or broker.
Provisions for ACA-Complaint Plans
Obamacare requires everyone to have a major medical insurance plan or pay the tax penalty for being uncovered or uninsured.
Whether you’re purchasing a health plan for the first time, preparing for the next Obamacare open enrollment period, or becoming eligible for the Special Enrollment Period (SEP) because of a significant life change—you’ll want to familiarize yourself with the various types of health insurance available.
Major Medical Health Insurance Plans
Under the Affordable Care Act, medical plans must provide minimum essential benefits, meaning that no one can be denied coverage for medical reasons such as preexisting conditions during the Open Enrollment Period. Furthermore, all health plans must offer specific treatments and medical care services, regardless of the insurance company or location where the program is purchased. The following are the average monthly premiums paid by Insurance Shopping consumers who did not use government subsidies and chose Obamacare plans during the 2020 Obamacare open enrollment period:
- $456 per month for individuals
- $1,152 per month for families
HMO, PPO, EPO plans, and more
Obamacare-compliant major health insurance plans are available in a variety of formats, as described below:
HMO (Health Maintenance Organization) Plans
HMO programs are one of the most common types of health insurance plans that you can purchase. With this program, an entire network of medical providers agrees to provide you with their services. In addition, you must choose a PCP (primary care provider) in your plan’s network to receive healthcare services. It’s important because these medical providers will coordinate all of your medical care needs.
HMOs typically cover preventive care treatments, including specialist visits, but specialists are only covered if your PCP refers you. In addition, you will be charged copayments for each non-preventive medical visit, and annual deductibles may also apply. So, HMOs are best suited for families and individuals who plan to visit their primary care physician for routine check-ups and other health issues. Since 2014, the popularity of HMO plans has grown dramatically.
PPO (Preferred Provider Organization) Plans
A PPO plan entitles you and your family to see any health care provider in the insurance company’s network, including specialists, without the need for a referral. A PPO policy does not require you to designate a primary care physician (PCP) or obtain referrals to visit a doctor’s office. In addition, copayments will be charged for each non-preventive medical visit, and annual deductibles may apply. Individuals who visit professionals regularly are more likely to prefer this type of health insurance. Since 2014, the popularity of PPO programs has declined.
EPO (Exclusive Provider Organization) Plans
With an EPO program, you have access to all healthcare providers in the EPOs network, including medical professionals. Whereas PPO plans may provide some coverage outside of your plan’s network, EPO plans typically do not (except for emergency conditions). Individuals who don’t mind limiting themselves to suppliers within a network and don’t want to coordinate their coverage through a primary care doctor may benefit from EPO plans. Since 2014, the popularity of EPO plans has increased.
POS (Point of Service) Plans
POS programs are a hybrid of HMO plans and PPO plans. A POS plan typically requires choosing a primary care physician for routine check-ups and referrals. However, you can use out-of-network insurers if you can afford to pay more out-of-pocket; you’ll usually have a deductible and copayment as well. Also, this type of plan is adaptable and may be suitable for individuals willing to pay a little more for greater flexibility.
HDHP (Hight Deductible Health Plan) Plans:
High deductible plans fall into more than one category. Some plans are PPOs, while others are EPOs or HMOs. This type of insurance coverage has a high deductible that you must meet before your health coverage plan kicks in. These plans may be appropriate for people who want to save money by paying low monthly premiums but do not plan to use their health coverage regularly. HDHPs are often used in conjunction with a Health Savings Account (HSA). If you already have an HSA, you can purchase an HSA-compatible health plan. Furthermore, money contributed to an HSA can be used to pay for qualifying medical expenses, including copayments and annual deductibles.
Short-Term Health Insurance Coverage
Short-term health insurance policies do not comply with the Affordable Care Act (Obamacare) law. Nevertheless, if you missed the ACA open enrollment period, a short-term health plan can provide you with some amount of coverage in the meantime.
Short-term insurance provides fewer benefits than primary medical insurance, but it can help protect your finances in the event of a covered disease or accident. The disadvantage of this type of coverage is that it does not meet the ACA’s minimum essential coverage requirements, so that you may face a tax penalty.
Furthermore, short-term plans may not cover preexisting medical conditions. Short-term insurance is non-renewable and does not cover preventative care such as physicals, vaccinations, dental care, or vision care. Please note that some states and insurance companies may restrict your ability to apply for short-term plans in a row.
Gap Insurance Plans
Gap insurance policies typically provide a safety net for unexpected medical expenses or other costs. These expenses may arise in the event of a medical emergency or other health conditions. If you don’t purchase a major medical policy, you should consider getting gap insurance to cover you in case of a severe health problem. However, you can get gap insurance coverage even if you have a major medical plan or a short-term plan as a supplement to provide added protection.
Gap insurance plan includes products such as:
- Critical illness coverage, which provides a lump sum payment if you are diagnosed with a stroke, heart attack, cancer, or other serious illness.
- Accidental insurance coverage, which provides a cash payout in the event of a covered accident (separately from your automobile accident coverage)
- Fixed-benefit indemnity medical insurance pays out cash if you suffer from specific injuries illnesses covered by your policy.
Be aware that catastrophic plans do not provide the minimum essential protection required by the ACA. So, even if you have catastrophic coverage, you may still be subject to the annual deductions if you do not simultaneously purchase a major medical insurance plan.
Ancillary Vision and Dental Coverage
The insurance plans explained so far—short-term, major medical, and catastrophic—typically do not cover routine vision or dental care. As a result, separate plans to supplement those types of medical care may be required.
You should consider adding a dental plan to your primary medical coverage if you want coverage for things like dental exams, x-rays, cleanings, and fillings. Dental procedures may also cover more specialized services such as periodontal treatments, orthodontia, bonding, veneers, dentures, etc.
A vision plan will provide coverage for services like eyeglass frames & corrective lenses, contact lenses, vision exams, and other eye-related care. Remember that a vision plan becomes more important as you or a family member gets older, even if you’ve never needed vision care previously.
Do you want to know how much these plans cost every month? Please see the table below for a breakdown of average monthly premiums for accident, short-term, critical illness, and fixed-benefit indemnity plans.
|Average Monthly Premium*
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Precisely, your options for health care coverage are numerous; however, there is only one set of plans that is appropriate for you and your family’s needs and budget. Use Insurance Shopping tools and services to get help finding a health plan that’s right for you.