With a well-picked medical insurance policy, your out-of-pocket medical expenses should be at a minimum. However, a lot of insurance enrollees overlook important policy options and guidelines that end up costing them more money. If you struggle to make ends meet because your medical costs are too high despite insurance, it may be time for a bit of guidance. Here on our blog, we cover the bases to help people just like you get the most from their medical insurance policy. We discuss things like finding the most affordable in-network providers, keeping co-pay costs as low as possible, and how to save on prescriptions.
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5 Acronyms To Know For Individual Health Insurance
June Robertson
When it comes to individual health insurance, there are a lot of acronyms to know and understand, which can be confusing. PPO, HMO, HDHP, FSA, and HSA are key terms that refer to different types of plans and their associated benefits. It is important to understand each acronym to make an informed choice when selecting an individual health insurance plan. Knowing the difference between these acronyms can help you make sure you are properly covered with the right plan for your needs. Here's what you need to know.
PPO: Preferred Provider Organization
A PPO is a type of health insurance plan that allows its members to choose from a network of providers operated by the plan's insurer. Members are also allowed to receive care from out-of-network providers but may be subject to higher costs or reduced benefits if they do so. A PPO offers flexibility in provider selection but typically charges higher premiums than other plans.
HMO: Health Maintenance Organization
An HMO is a type of health insurance plan requiring its members to use only healthcare providers within its network of doctors and hospitals for services to be covered. This type of plan typically has lower premiums but offers limited, if any, coverage outside of the network.
HDHP: High Deductible Health Plan
An HDHP is a type of health insurance plan with high deductible requirements, meaning you must pay a certain amount before your insurance kicks in and covers expenses. In turn, you often have lower monthly premiums than other plans. The Internal Revenue Service defines an HDHP as any individual health insurance plan "with a deductible of at least $1,400 for an individual or $2,800 for a family."
FSA: Flexible Spending Account
An FSA allows employees to contribute pre-tax dollars into an employer-sponsored account which can be used for eligible medical expenses like doctor visits and prescription drugs. However, any unused funds at the end of the year will be forfeited. An FSA can be used with any individual health insurance policy.
HSA: Health Savings Account
Similar to an FSA, an HSA allows you to put money aside each year for medical expenses not covered by insurance. Unlike an FSA, these pre-tax funds can 'roll over' year after year and become an investment vehicle for future medical expenses. An HSA must be paired with an HDHP plan, however.
With so many different options for individual health insurance plans available today, it's important to understand all the acronyms associated with them so you can make an informed decision about which one might fit your needs best. By understanding what it all means, you'll have more confidence when choosing an individual health insurance policy that fits both your budget and needs.
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