What are the main types of health insurance?

Health insurance coverage can be public or private and also categorized by plan type.

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Elissa SuhSenior Editor & Disability Insurance ExpertElissa Suh is a disability insurance expert and a former senior editor at Policygenius, where she also covered wills, trusts, and advance planning. Her work has appeared in MarketWatch, CNBC, PBS, Inverse, The Philadelphia Inquirer, and more.

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Key takeaways

  • The two main types of health insurance are private and public

  • Public health insurance, like Medicare, is provided through the government, while private health insurance include plans you get through an employer or the marketplace

  • You can further categorize health insurance by the plan type, like PPO, HMO, EPO or POS

  • Short-term health insurance plans do not provide full health benefits and are not considered a form of major medical insurance

There are many different health plans out there, but once you understand the main types of health insurance and everything will be less overwhelming. Understanding the different types of health insurance is the first step to finding an affordable health plan. The first way you can define a type of health insurance is based on whether it’s public or private, like whether the coverage comes from a government-funded program or is partially paid for through your employer.

The next most common way to categorize a health insurance coverage is plan type — how its structured and how its provider network is run. For example, an HMO plan doesn't cover health care costs from out-of-network providers and requires referral from a primary care physician to see a specialist.

Whether you have a bronze health plan, a high-deductible health plan, or a Medicare Part C plan, they will all fall under these basic categories first. We’ll explain the main types of health insurance and examples.

What is public health insurance coverage?

One of two main types of health insurance, public health insurance is provided through a government program, like Medicare, Medicaid, or CHIP. Public health insurance programs are funded and run by the government, but are not necessarily free, although the cost at point of service will be heavily reduced. Just like private health insurance plans, which we’ll talk about next, federal health insurance programs try to manage quality and costs of care, in an effort to provide reduced costs to the insured. All health insurance plans are designed to help you save money on health care costs.

People with this type of insurance are still responsible for costs of care, like premiums, deductibles, and other out-of-pocket expenses — but they may not be as high as with other types of insurance.

Medicare is a federal health insurance program for people over age 65. There are four different parts to Medicare with varying premiums and even different enrollment periods.

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Medicaid is a federal health insurance program for low-income and vulnerable Americans. It provides health care at a very low cost for those who cannot afford it. It can also pay for long-term care, like nursing homes. CHIP or the Children’s Health Insurance Program is similar to Medicaid and is designed to provide health coverage for people under age 18.

Medicaid and CHIP are run by each state. While there is no enrollment period, there are financial requirements to qualify. You can get started with this state-by-state guide to Medicaid.

Learn more about how health insurance works.

What are private health insurance plans?

Any health coverage that’s not received through a government program is considered private health insurance, the other main type of health insurance.

Many people get health insurance through a group plan from their workplace. This employer-sponsored health insurance is also a type of private health insurance. With a workplace health plan, your employer pays part of the cost, giving you lower premiums. (When employer-sponsored health insurance ends, you can extend coverage through COBRA.)

An individual health plan purchased on healthcare.gov, the health insurance marketplace, or outside of it — like directly from an insurer's website or through an insurance broker — is also a form of private health insurance coverage.

Regardless of where you get private health insurance, the plan must provide the insured with ten essential health benefits, like preventive care and ambulatory services, as set out in the Affordable Care Act, which we’ll discuss more later.

If you’re buying health insurance through the Obamacare marketplace, you may need to buy during the open enrollment period. There are different enrollment periods for buying a public health plan, depending on the program.

Outside of the open enrollment period, you’ll need to have a qualifying life event to initiate a special enrollment period to buy a marketplace health insurance plan.

Check out your private health insurance options.

Four common types of health insurance plans

After you’ve determined the main type of health insurance based on its source, you can further categorize your coverage by the type of plan.

Most health insurance policies are managed care plans, which simply means the insurance companies work with different medical providers to establish and negotiate costs and quality of care.

The difference between HMO, PPO, EPO, and POS plans are largely based on the size of preferred provider network, whether out-of-network providers are covered, and whether you need a referral to see specialists.

Here is a brief overview:

  1. An HMO, or health maintenance organization, uses a primary care provider as the touch point of your care, and you’ll need to see them first before you see a specialist. Learn more about HMO plans.

  2. PPO, or preferred provider organization, doesn’t require you to name a primary care physician or get a referral, and may cover out-of-network care at a higher cost. Learn more about PPO plans.

  3. EPO, or exclusive provider plans, only cover doctors within your network, but you won’t need a referral to see them. Learn more about EPO plans.

  4. POS, or point-of-service plans, require you to select a primary care physician and seek one out for referrals. You may also need to get preauthorization from the insurer before you get certain medical procedures with POS plans.

In general, monthly premiums for HMO plans tend to be lower, while PPO plans have higher premiums. But the deductibles, and other out-of-pocket costs like copayments and coinsurance for a health plan will vary based on your insurer and how much care you seek. A high-deductible health plan (HDHP), which enables the insured person to open an HSA account, may be an HMO with one insurer, and an EPO with another.

If you want to find affordable care, a better way to determine health care costs would be based on the health insurance metal tiers.

Non-ACA compliant health insurance

Some types of health insurance, like short-term plans, do not provide comprehensive coverage as detailed by the Affordable Care Act and thus are not regulated by it either. Short term health insurance is not considered a form of major medical insurance, but only a stopgap measure meant to cover a few, but not all, medical expenses. It can be useful for people who aren’t able to buy a health plan on the exchange because they don’t qualify for an enrollment period.

Health care sharing ministries are another unofficial type of health insurance provided through religious organizations that are not compliant with the ACA.

Supplemental health insurance

Supplemental health insurance provides coverage where your usual health insurance plan does not. Some examples include dental and vision coverage, but other supplement health plans cover specific medical conditions.

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