Insurance Education
Learn the basics in minutes
Health insurance is full of terms designed to confuse. Here are the ones that actually decide what you pay, explained the way I explain them on a call.
Networks
PPO vs HMO
The letters describe how a plan's provider network works, and the network decides which doctors you can see and what you pay.
PPO (Preferred Provider Organization). You can see doctors and specialists without a referral, and you have coverage both in and out of network, though in-network care costs less. PPO networks tend to be larger, often nationwide, which matters if you travel or split time between states.
HMO (Health Maintenance Organization). You pick a primary care doctor who coordinates your care, and you usually need a referral to see a specialist. Care is generally limited to the plan's local network, and out-of-network care is often not covered except in emergencies. Premiums can be lower in exchange for those limits.
Before you choose either one, check whether your own doctors are in the network. A low premium means very little if your doctor is not in it.
Costs
Deductibles, Explained
Your deductible is the amount you pay for covered care in a year before your plan starts sharing the cost. If your deductible is $3,000, you pay the first $3,000 of covered bills yourself.
Here is the part people miss: a plan with a low monthly premium often carries a high deductible, so the cheap plan can end up costing more the first time you actually use it. Some plans, including many private PPO plans, have no deductible at all, which means cost sharing starts right away.
The number that ties it together is the max out-of-pocket: the most you would pay in a year for covered care. When we compare plans, I always show the premium and the max out-of-pocket together.
Costs
Copays and Coinsurance
After the deductible, you and your plan split costs in one of two ways.
Copay. A flat fee you pay at the time of service, like $35 for a doctor visit or $15 for a generic prescription. Predictable, and easy to budget for.
Coinsurance. A percentage of the bill instead of a flat fee. At 20 percent coinsurance on a $1,000 procedure, you owe $200 and the plan pays $800. Percentages are where big bills hide, so we always translate them into real dollars before you enroll.
ACA Marketplace
ACA Subsidies
Marketplace plans come with premium tax credits, often called subsidies, that lower your monthly premium based on your household income and family size. The credit is estimated from the income you expect for the coverage year, and many households qualify for more help than they expect.
Two things to know. First, the estimate matters: report income as accurately as you can, because the credit is reconciled on your taxes. Second, some households also qualify for extra savings on deductibles and copays with Silver tier plans. I run the numbers with you so there are no surprises in either direction.
Comparing Options
Private vs Marketplace
Both routes can be the right answer. Which one fits depends on your health, income, doctors, and how you work.
- Marketplace (ACA) plans cannot turn you down for pre-existing conditions, and income-based tax credits can lower the premium. Networks are usually regional, and deductibles can be high.
- Private plans are medically underwritten, so approval and pricing depend on health. In return, they can offer nationwide PPO networks, no deductibles on many plans, and lower max out-of-pocket costs for people who qualify.
If you are self-employed and healthy, a private plan often wins on total cost. If you have ongoing conditions or qualify for a large subsidy, the Marketplace often wins. My job is to price both honestly and show you the comparison.
Compare Health Insurance Plans
