Health insurance is the primary vehicle most consumers use to pay for medical and hospital bills. There is public health insurance like Medicare and Medicaid, which some may qualify for based on age, income, and family size. there is also a private health insurance. Within the category of private health insurance, there are significant differences between a managed care organization (HMO) plan and a preferred provider organization (PPO) plan. Depending on the type of private health insurance you select, there will be certain benefits and limitations. While most financial planners will encourage you to have a private form of coverage, it can have some drawbacks that need to be considered when purchasing a policy. Here’s a list of the pros and cons of private health insurance you should know about to make the decision that’s right for you.
health managed organization
an hmo provides access to a network of providers who agree to offer their services at a specific rate. hmos often provide access to primary care at a lower rate, assuming the member chooses a provider who is within the network. another feature of an hmo is that referrals are required to access specialists. For example, if you experience headaches, you will first need to make an appointment with your in-network Primary Care Physician (PCP) who will perform an evaluation and determine if you need to see a neurologist. In this way, care is coordinated through your PCP. When considering whether an hmo is right for you, here are some things to think about:
- hmos typically cost less than ppos.
- an hmo may be a good choice if you don’t have many health problems and therefore need few visits to specialists and/or if not you don’t mind coordinating care through your pcp.
- an hmo may be a good option if you don’t care about the health care provider you see and are happy to choose from the network of suppliers.
preferred provider organization (ppo)
a ppo includes a network of health care providers with primary care and specialists. ppos offer more flexibility than hmos because a referral is not required to see a specialist. You can also see providers outside the network, although you will have to pay higher copays to do so. Keep the following in mind when deciding if a ppo is the best option for you.
- ppos offer more control over your own care, allowing you to visit specialists without prior authorization from your pcp.
- ppos are often more expensive than hmos.
- ppos can offer more flexibility if you need specialist care or already have doctors you want to see, even if they’re not in-network.
advantages of private health insurance
disadvantages of private health insurance
Unsurprisingly, the biggest drawback to private health insurance may be cost. This is especially true if you have health problems and don’t have access to group coverage of any kind. many individual policies can cost several hundred dollars a month, and family coverage can be even higher. And even the most comprehensive policies come with deductibles and copays that policyholders must meet before their coverage kicks in. Most health insurance policies do not provide coverage for all types of illnesses and conditions. Those who need care that falls into one of the gaps that are written into these policies are on their own when it comes to paying for certain medical services. Furthermore, the cost of health care has risen much faster than the general rate of inflation, and this trend shows no signs of slowing down. These are just some of the advantages and disadvantages of private health insurance in today’s market. For more information on types of health insurance, contact your employer’s benefits representative or financial professional.
In summary, these are some of the advantages and disadvantages of using private health insurance. advantages
- multiple options so you can choose the best plan to meet your individual needs
- generally offers more flexibility and access to care than public health insurance
- can cover the cost of expensive medical care that can come up unexpectedly
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- expensive with premiums increasing every year
- does not guarantee full access to care
If you want to learn more about saving for health care or how health care can affect your family budget, explore the protection learning center.