If you are like me, this decision can feel slightly rushed, since you are scrambling to learn a new job and adjust to a new way of life.
However, similar to deciding which 401k mutual funds/investments you will invest in, choosing which type of health coverage you will go with is a very important decision as well. Unfortunately, many new employees use the technique of asking/following what their cubicle mates use (see Cubicle Copying post for more information).
In this post, we’ll try to sort through the positive and negative aspects of each type of coverage generally offered by employer-sponsored plans, and I’ll try to share my experiences, when possible, to provide some life to the subject.
Let’s get started!
What are the three types of health insurance managed care plans?
The three types of coverage available from most employers are 1) health maintenance organizations (HMO) ,2) preferred-provider organizations (PPO), and 3) point-of-service (POS) plans.
Will HMO’s cover you if you have to go to the emergency room?
As I was writing the description above about HMO’s, I began to wonder if emergency visits were covered by HMO insurance.
In reading more on this subject, I learned that emergency room visits/emergency care is covered by HMO insurance, with a $50 co-pay. However, what makes me very uneasy is this clause: “Out-of-network emergency room visit are covered for serious or life threatening emergency care treated in an emergency room.”
Personally, I read this as the insurance company being able to determine what is an emergency or serious injury, and what is not.
For example, what if you are up in the middle of the night with a horrible stomach pain from a flu virus and decide to go to the ER?
Now, while that may be an emergency to you, will it be considered as such by your insurance company? Personally, I would not want to take that chance.
How do you determine which coverage is best for you?
In David Bach’s book, Smart Couples Finish Rich, he recommends to always steer clear of HMO’s and to generally take the most expensive policy your employer offers (because it will give you the most flexibility).
I tend to agree with the HMO avoidance piece of this advice. However, since PPO’s provide a good bit of flexibility and save you money compared to the POS plans, I have found PPO’s to be best suited to my needs.
My employer offers 3 options for health insurance coverage:
I hope this post has helped you sort through some of the confusion surrounding the different health coverage plans available.
Keep on learning!
Hi folks! My name is Jacob. I am the owner and operator of My Personal Finance Journey. I started this blog in January of 2010 and have enjoyed the journey ever since. Since finishing up graduate school in Virginia in 2014, I have been working in biopharmaceutical development in Colorado. You can read more about me and this site here. Please contact me if you have any questions!
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