(note, this MAY vary from policy to policy, so it’s recommended you shop around a little)

What is the benefit of this? Well, for one, you can save a ton of money up front. For folks who are self employed, or have to pay their own insurance premiums for another reason, the difference in the monthly cost is significant.

For example, a traditional PPO plan with a $500 deductible would cost me around $300/month, where my HDHP costs me about $50. A dramatic savings, no?

On top of that, you get 100% co-insurance. What does this mean? You know that $300/month PPO plan? That only covers 80% of my medical costs after the deductible (up to a certain amount). This means I might still be on the hook for $500/day if I have to stay in the hospital or have surgery. With the HDHP, the most I will ever have to pay is the deductible – which I can offset by having a tax-deferred HSA!

Now, these plans don’t work for everyone of course – those with medical conditions that require regular care or have a good PPO/HMO plan provided by their employer at a lower cost to them might not need it. But as health care costs continue to rise, you can bet the HDHP will on everyone’s radar for a long time!

HMO – Health Maintenance Organization
An HMO requires you to designate a primary care provider (PCP), who serves as a “gatekeeper,” providing general health care and referrals to in-network providers as needed. It is more restrictive than a PPO in that if you go to a doctor who is not in the network or even see an in-network specialist without a referral, your expenses will not be covered.

PPO (Preferred Provider Organization)/POS (Point of Service)
A PPO or POS plan means you can decide at the point of service–that is, when you need health care–whether to see an in-network provider and receive a higher level of benefits or an out-of-network provider and receive a lower level of benefits. You may see specialists without a referral, and switch between in-network and out-of-network providers. You do not need to designate a PCP.

HDHP (High Deductible Health Plan)
An HDHP is a fast growing option – because it is typically much cheaper than the other health plans.  Just like its name suggests, an HDHP has a much higher deductible (between $1,500 and $5,000).  While this may seem like a lot, it should be noted that often, there is no coninsurance, meaning that once your deductible is paid, your remaining expenses are covered 100%.  In fact, this is a requirement for an HDHP to qualify for an HSA.