How to choose a health plan

The type of health insurance you have affects your out-of-pocket costs, your freedom of choice, and potentially the quality of your care. Here's what to consider:

HMO, PPO, or high-deductible?

Health maintenance organization

In an HMO, you must get care from providers in the plan's network, often restricted to a certain geographical area. A primary-care doctor will coordinate your care and control referrals to specialists. You'll have to pay the full cost of care outside the network, except for emergencies.

Preferred provider organization

PPOs also have provider networks, but you can see any in-network specialist you choose without a referral. You can also get care outside the network, though you will pay a higher portion of the bill.

Point of service

POS plans are a hybrid of an HMO and a PPO. You choose a primary-care doctor and need a referral to see a specialist. But as with a PPO, there's coverage for out-of-network providers.

High-deductible plans

To lower premiums, consumers can choose plans with high deductibles, usually designed to be paired with a health savings account (HSA) or health reimbursement arrangement (HRA). The money put in an HSA or HRA—by your employer, you, or both—can be withdrawn tax free to pay for certain qualified medical expenses such as deductibles, co-pays, and items that insurance might not cover, such as hearing aids or eyeglasses. Investments in HSAs can grow over time.

What's your priority?

Lower premiums

High-deductible plans have lower premiums because you'll pay for a larger portion of your care before the insurance kicks in. But if you have high health-care costs, your savings from the lower premium might not offset the higher deductible. An analysis for Consumer Reports by eHealthInsurance.com, an insurance shopping website, found that a healthy 55-year-old man would save an average of $2,040 in premiums a year by choosing a $5,000 deductible over a $500 deductible. And if you can't afford to put money into your HSA, as many people cannot, you will face very high out-of-pocket costs if you ever get seriously ill.

Less paperwork

In an HMO your share of medical costs comes mainly as up-front co-pays, for which you probably won't have to file a claim or pay a balance due. With a PPO, cost-sharing is more complicated.

More choice of providers

A PPO or POS plan will allow you broader access to specialists and out-of-network care. PPOs generally have larger networks of doctors than HMOs do, but HMO doctors are more likely than PPO doctors to be held accountable for quality of care. Check network lists and ask doctors you trust which insurance plans have better networks.

More care coordination

In an HMO, your primary-care doctor will help you manage your care, including preventive services and screening tests.

Disease management and wellness programs

Most health plans have those types of programs. If you have a chronic condition or are looking for weight and diet management or fitness programs, it might be a feature you care about. Programs and eligibility requirements vary, so get details.