Private Health Insurance You Need to Know

Health insurance refers to financing medical charges whereby individuals contribute to a common fund to pay part or all of their health services depending on the insurance policy. According to the Centers for Disease Control and Prevention (CDC), it’s estimated that an average American visits a doctor about four times a year, most of the time being for a routine checkup.

In the case of a severe illness, a person may have to pay a considerable amount for medical charges. Research published by the Commonwealth Fund confirms that medical bills are a leading driver of personal financial hardship and bankruptcy in the United States. This is one of the reasons why the government has historically encouraged all eligible citizens to buy health insurance coverage.

Firstly, the ACA (Affordable Care Act) required that each eligible citizen purchase health insurance or pay a tax penalty. However, in 2017, Congress reduced this penalty to $0, effectively abolishing the individual mandate at the federal level, as confirmed by the IRS. Note that some states, including California, Massachusetts, and New Jersey, maintain their own individual mandate penalties.

When to Apply for a Health Insurance

Health insurance helps you manage your health care costs and needs. Thus, it’s essential to buy health insurance if you aren’t under someone else’s health cover, such as a parent or a partner. Health insurance costs depend on several things, such as your age, where you live, income, and work. The Open Enrollment Period on Healthcare.gov typically runs from November 1 through January 15, and missing it means you’ll need a qualifying life event to enroll outside that window.

Health plans are organized depending on the benefit they offer. They include bronze, silver, gold, and platinum metal tiers. Bronze has the least coverage (lowest premiums, highest out-of-pocket costs), while platinum has the highest coverage (highest premiums, lowest out-of-pocket costs). Also, other insurance brands predicate their cost depending on the level of care.

Health insurance covers are categorized into four main plans: Health Maintenance Organizations (HMOs), Exclusive Provider Organizations (EPOs), Preferred Provider Organizations (PPOs), and Point-of-Service (POS) plans. Additional plans include the Catastrophic plan and High-Deductible Health Plans (HDHPs). The latter is similar to Health Savings Accounts (HSAs). In this blog, we shall discuss each of these plans so that you can choose the most suitable one for you.

Health Maintenance Organization (HMO)

This plan provides you with a local network of health care professionals, participating doctors, hospitals, and facilities to choose from. According to the Kaiser Family Foundation (KFF), HMOs consistently offer some of the lowest monthly premiums among plan types. In this plan, you have the least freedom to choose your healthcare providers, and there are no claim forms to fill.

Paperwork is the least as compared to other plans. You’re also provided with a primary care doctor (PCP) to help manage your health and refer you to a specialist if a need arises. In most HMOs, you must have a referral to see a specialist.

Doctor That You Can See

You can only see a doctor within your HMO’s network. If you go to a doctor who is out of your network, you may have to cover the entire bill yourself. If you happen to go for emergency service at an out-of-network hospital, your bills get covered at an in-network rate, which is a protection reinforced by the No Surprises Act enforced by the Centers for Medicare and Medicaid Services (CMS). However, non-participating doctors involved in your treatment at the hospital can bill you.

Payments at HMOs Plan

There are three modes of paying for the HMO plan.

· Premium: this refers to the monthly amount you pay for your insurance

· Deductible: The amount paid before your plan can cover full health care costs.

· Copay and coinsurance for every type of care received.

Sources: KFF Employer Health Benefits Survey 2024; Healthcare.gov Glossary. Premium figures are national averages and will vary by age, location, and insurer.

Preferred Provider Organization (PPO) 

The PPO plan is the most commonly offered plan type among large U.S. employers, according to the KFF 2024 Employer Health Benefits Survey. It offers the following:

· Moderate freedom in choosing your health care providers. A referral is not required to see a specialist.

· Out-of-pocket cost for seeing an out-of-network doctor is much higher than seeing in-network providers.

· If you see an out-of-network doctor, the paperwork involved is more than other plans.

Doctors That You Can See

You can see any doctor in your PPO’s network; your pay increases if you see an out-of-network doctor. Major insurers offering PPO networks include UnitedHealthcare, Anthem Blue Cross Blue Shield, Aetna, Cigna, and Humana — each maintaining broad national networks that vary significantly by region.

Payments at PPO

Payments include a monthly premium depending on the policy; the deductible amount is higher if you see an out-of-network doctor. You may also incur additional costs if the out-of-network doctors charge more than the Usual, Customary, and Reasonable (UCR) rate in your area. The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) provides guidance on understanding your plan’s cost-sharing obligations.

Paper Work Involved

If you see an in-network provider, the paperwork involved is little. However, if you see an out-of-network doctor, you will have first to pay the bill and then file a claim to the PPO to pay you back.

Exclusive Provider Organization (EPO) 

The EPO offers the same freedom as PPO in choosing your healthcare providers within the network. Also, you do not need a referral from your primary care doctor to see a specialist. The Health Insurance Resource Center notes that EPOs have grown in popularity on the ACA marketplace because they balance lower premiums with reasonable network access.

Except for emergency services, the plan does not cover costs for out-of-network doctors. The monthly premium is less compared to PPO. You can see any doctor within the EPO’s network.

Point-of-Service Plan (POS) 

This plan combines the features of a PPO and HMO. It offers the following:

· Freedom to choose your healthcare providers

· If you see an out-of-network provider, the paperwork involved is moderate. You will have to pay the out-of-network provider and then submit a claim to POS to pay you back.

· You get a primary care doctor who takes care of your health and refers you to a specialist.

Doctor That You Can See

You can visit any in-network provider so long as you have a referral from your primary care doctor. You can also see an out-of-network provider for an extra cost. Payment includes the monthly premium, deductibles, and copays or coinsurance. For a side-by-side breakdown of how cost-sharing works across plan types, the Centers for Medicare and Medicaid Services (CMS) offers plain-language consumer tools.

Catastrophic Plan

This plan is more suitable for persons under the age of 30 or those who qualify for a hardship exemption. According to Healthcare.gov, it offers the following:

· Lower premium

· The preventive care is free of charge

· You get three initial primary care visits

· For an individual, the out-of-pocket maximum (deductible) is $9,450 in 2025, and $18,900 for a family, per IRS annual adjustments

High-Deductible Health Plan (HDHP) 

The amount payable as a monthly premium is less, similar to a Catastrophic plan. For 2025, the IRS defines an HDHP as any plan with a minimum deductible of $1,650 for individuals or $3,300 for families, per IRS Publication 969. It offers the following:

· A Health Savings Account (HSA) that assists in paying for your care. Money saved in an HSA is not taxed and can cover qualified medical expenses. For 2025, the HSA contribution limit is $4,300 for individuals and $8,550 for families, as set by the IRS.

· You have to choose one of the health plans: HMO, PPO, EPO, or POS as your underlying HDHP structure

· Similar to other plans, if you reach the maximum out-of-pocket deductibles, the plan pays for your full healthcare

· Free preventive care

· Payments are in premium, deductibles, and copays or coinsurance

· It is necessary to record your withdrawals from HSA to know when you have completed paying your deductibles. The IRS requires that HSA withdrawals be used for qualified medical expenses to avoid taxes and a 20% penalty.

Conclusion

Understanding your specific healthcare needs is essential when looking for health insurance. If you require more preventive care, choose plans with lower deductibles and coinsurance for a better cost. Use resources like the Healthcare.gov Plan Finder or consult a licensed broker registered with the National Association of Insurance Commissioners (NAIC) to compare your options before the next Open Enrollment Period.

Frequently Asked Questions

What is the difference between an HMO and a PPO?

An HMO requires you to use in-network providers and get a referral from your primary care doctor to see a specialist, while a PPO lets you see any provider — in or out of network — without a referral. HMOs generally have lower monthly premiums; PPOs offer more flexibility at a higher cost.

Is health insurance mandatory in 2026?

There is no federal penalty for being uninsured in 2026 — the federal individual mandate penalty was reduced to $0 in 2019. However, states including California, Massachusetts, New Jersey, Rhode Island, and Vermont maintain their own individual mandate penalties that can result in tax fines.

What does an out-of-pocket maximum mean in health insurance?

The out-of-pocket maximum is the most you will pay for covered services in a plan year. Once you hit this limit, your insurer pays 100% of covered costs for the remainder of the year. For 2025, the ACA caps this at $9,450 for individuals and $18,900 for families on marketplace plans, per the Centers for Medicare and Medicaid Services (CMS).

What is a Health Savings Account (HSA) and who qualifies?

An HSA is a tax-advantaged savings account available to people enrolled in a qualifying High-Deductible Health Plan (HDHP). Contributions are pre-tax, growth is tax-free, and withdrawals for qualified medical expenses are also tax-free. For 2025, the IRS sets contribution limits at $4,300 for individuals and $8,550 for families.

Can I keep my doctor if I switch health insurance plans?

Not necessarily. Each plan maintains its own provider network. Before switching plans, verify that your current primary care doctor and any specialists you see regularly are listed in the new plan’s network directory. This is especially important with HMO and EPO plans, which generally provide no coverage for out-of-network care.

What is a deductible in health insurance?

A deductible is the amount you pay for covered health services before your insurance begins to share costs. For example, if your deductible is $1,800, you pay the first $1,800 of covered medical bills each year. After that, cost-sharing (coinsurance or copays) kicks in until you reach your out-of-pocket maximum.

What is the difference between coinsurance and a copay?

A copay is a fixed dollar amount you pay for a specific service (e.g., $30 per primary care visit). Coinsurance is a percentage of the cost you share with your insurer after meeting your deductible (e.g., you pay 20%, insurer pays 80%). Plans often use both — copays for routine visits and coinsurance for more complex services like surgery or hospitalization.

Who qualifies for a Catastrophic health plan?

Catastrophic plans are available to adults under age 30, or those 30 and older who qualify for a hardship or affordability exemption. These plans carry very low premiums but very high deductibles — $9,450 for individuals in 2025 — and cover three primary care visits per year before the deductible applies, plus free preventive care.

What is the No Surprises Act and how does it protect me?

The No Surprises Act, enforced by the Centers for Medicare and Medicaid Services (CMS) since January 2022, protects patients from unexpected bills when they receive care from out-of-network providers at in-network facilities, or during emergency care. Under this law, your cost-sharing is generally limited to your in-network rate, and providers must give you a good-faith estimate of costs before scheduled services.

How do the ACA metal tiers (bronze, silver, gold, platinum) differ?

ACA metal tiers describe how costs are split between you and your insurer. Bronze plans cover roughly 60% of costs (you pay 40%); silver covers 70%; gold covers 80%; and platinum covers 90% (you pay 10%). Lower-tier plans have lower premiums but higher out-of-pocket costs when you need care. Silver plans are notable because income-based cost-sharing reductions are only available through silver plans on the ACA marketplace.