Your guide to common health insurance programs and plans

If you don’t know an HMO from a PPO, you’re not alone. When you’re shopping for coverage, understanding all the options can be confusing.

Here’s a primer on some of the common types.

COBRA

This program was created by the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) to cut back on health coverage gaps. You may qualify after losing your job or your hours were reduced.

COBRA lets individuals continue the same coverage they had while employed. Medical, dental, and vision plans are included.

HMO

Health maintenance organizations (HMOs) are a network of healthcare professionals that accept a reduced payment for medical services. This arrangement lowers costs for HMO members.

HMOs typically have low copayments and coinsurance. HMOs are good options for people who need to cover health basics like annual exams or immunizations. Payments to providers outside of the HMO aren’t covered, except in emergencies.

Individual and family health insurance plans

Suppose you and/or your partner don’t have health coverage through your jobs. In that case, chances are you’ll sign up for an individual or family policy. These are often regulated by the state you live in. 

You can sign up for one of these plans during the open enrollment period. This is a time when people can enroll in a health insurance plan each year. 

You may be able to sign up for a plan at other times of the year if you lose coverage, get married, move, have a baby, or adopt a child. 

Medicaid

Medicaid helps low-income families, seniors, and people with mental or physical disabilities pay for health coverage. It’s funded by federal and state subsidies. 

The program is run by individual states, so it might have a different name where you live. In Minnesota, for example, it’s called Medical Assistance. In California, it’s called Medi-Cal.

Medicare

This is another federally-funded health insurance program. It was designed for people aged 65 and up but was expanded to include people with disabilities and those under 65. It’s divided into Medicare Parts A, B, C, and D.

A and B are the original Medicare plans. Part A covers hospital stays, while Part B pays for doctor visits.

Part C offers the benefits of Parts A and B. It also includes prescription benefits.

Part D helps cover prescriptions. It can be combined with Parts A and B or used along with other Medicare supplemental plans.

Supplemental plans cover services not paid by insurance. An example is transportation fees for getting to and from doctor’s appointments.

PPO

Like an HMO, a preferred provider organization (PPO) is a healthcare provider network. These providers have agreed to take specific fees from insurers.

PPO plans usually offer more providers and cover more services than HMOs. They also tend to cost more.

Short-term health insurance

This is a temporary health insurance plan designed to bridge gaps in insurance coverage. A 26-year-old no longer covered under a parent’s insurance plan may purchase it. A 64-year-old not eligible for Medicare might also buy this plan.