How to Compare Health Insurance Plans

We get it. Health insurance is full of weird jargon and acronyms. It’s like trying to do sudoku on the subway—confusing and just a little scary. Well, consider this your health insurance cheat sheet and map all in one, because we’re going to walk you through the different types of health insurance plans and how they actually work—minus the confusing stuff.

First, if you have a job with an employer who provides health insurance, talk to your workplace health insurance administrator. They should be able to explain how to choose between the health insurance options you have at work.

If your company doesn’t offer a health plan or if you’re self-employed, we’re here to explain how to compare health insurance plans. Let’s go over the main types of available health plan networks.

Preferred Provider Organization (PPO)

Preferred Provider Organization—the words get longer as the name unfolds! Let’s just say PPO. These are health plans that contract with hospitals and doctors to create a network of (you guessed it) preferred providers.

PPOs also have coverage for doctors outside of their networks, but there’s a catch for the flexibility. You’ll pay more out of pocket—often a lot more—than if you see the plan’s preferred providers. Emergency care is usually the exception to the rule.

These plans are the most popular for people who get their health insurance through work, with 48% of covered workers enrolled in a PPO.¹

PPO Pros and Cons

Pro: Most PPOs have a decent selection of providers to choose from in your area. Just be sure you know which providers accept your plan before getting any treatment so there are no surprises.

Con: Higher premiums make PPOs more expensive than other types of plans, like HMOs.

Health Maintenance Organization (HMO)

A Health Maintenance Organization (HMO) is a health insurance plan that usually only covers care from doctors who work for (or contract with) that specific plan. So unless there’s an emergency, your plan will not pay for out-of-network care. Another restriction: HMOs often work only in a specific geographic area. Your health care coverage will be defined by either where you live or where you work.

HMO Pros and Cons

Pro: Lower out-of-pocket expenses make HMOs attractive.

Con: There’s not much flexibility. When it comes to choosing providers, it’s like what your teacher told you in preschool: You get what you get, and you don’t throw a fit.

Exclusive Provider Organization (EPO)

Ready for another acronym? An Exclusive Provider Organization (EPO) is another type of managed care plan (like an HMO) where services are only covered if you use doctors, specialists and hospitals in the plan’s network (except in emergencies).

Unlike HMOs however, EPOs do not require a primary care physician (PCP) referral to see a specialist. Sound appealing? This might be the right network plan for you if you want the freedom to see specialists without a referral and you don’t mind being limited to health care providers in your network.

EPO Pros and Cons

Pros: Premiums are usually lower. Plus, there’s no need for a PCP referral to see a specialist.

Cons: You’re limited by a smaller network of health care providers. Most services require preauthorization from the insurance company.

Point of Service (POS)

A Point of Service (POS) plan combines the features of HMOs and PPOs by providing different benefits based on whether you use in-network or out-of-network providers. POSs do provide some coverage for seeing an out-of-network provider, and your PCP will coordinate the care.

POS Pros and Cons

Pros: You’ll find more provider options to choose from. Your PCP will coordinate your specialist care.

Con: Referrals are required.

Cross-eyed yet? To clear things up, we summarized all the features we just discussed in the handy table below.

Network Plan Type	Do you have to stay in network to get coverage?	Do procedures and specialists require a referral?	Summary Snapshot
PPO: Preferred Provider Organization	No, but in-network care is less expensive	No	More provider options and no required referrals, but higher out-of-pocket costs
HMO: Health Maintenance Organization	Yes, except for emergencies	Yes, typically	Lower out-of-pocket costs and a primary doctor who coordinates your care for you, but less freedom to choose providers
EPO: Exclusive Provider Organization	Yes, except for emergencies	No	Lower premiums and no required referrals, but less freedom to choose providers
POS: Point of Service	No, but in-network care is less expensive	Yes	More provider options and a primary doctor who coordinates your care for you, with referrals required

Let’s be real—health insurance isn’t optional. Yes, that includes you self-employed folks too. Self-employed health insurance just means you’re buying an individual plan for yourself and your family instead of getting group coverage through an employer. Here are a few options to get you started:

• Federal and state health insurance marketplaces: A great place to start shopping for self-employed health insurance is the federal marketplace at healthcare.gov. Here, you can compare and enroll in private health insurance plans—unless you live in a state with its own marketplace (like California, Massachusetts or Colorado). In that case, you’ll use your state’s site instead.
• Medicaid and Medicare: Medicaid is a federal program that provides free insurance for low-income folks. Medicare, on the other hand, offers government-sponsored health care for people over 65. If you’re 65 or over and don’t have health insurance through an employer (or you’re retired), this is a solid option.
• TRICARE: Are you self-employed military vet? TRICARE provides coverage for active-duty service members, military retirees and their families, and survivors. Vets can also apply for VA coverage.
• Membership organizations: If you’re part of a freelancer’s union or membership group, you may have access to discounted, industry-specific health insurance. Just be sure to compare the details here—some of these plans can cost more and cover less than you’d find on the marketplace. A solid one to check out is the National Association for the Self-Employed.
• Direct enrollment or private exchanges: Some insurance companies will let you purchase a plan directly—skipping the federal or state marketplace. Just be cautious here. These plans often offer fewer options, and you could end up feeling pushed into a plan that’s not the best fit.

These are just a handful of health insurance options for self-employed folks. If you feel like you need an extra hand here, be sure to get in touch with an independent insurance pro. They’ll help you navigate the marketplace and pick the best health coverage for you.

Lost your job? Yeah, it stinks. And adding health insurance stress on top of it doesn’t help. But take a breath—you still have options for health coverage (many of which overlap with self-employed health insurance, so you’re in good company here). The key is to act quickly, understand your eligibility, and compare costs so you don’t end up uninsured.

Here are eight solid ways to get health insurance without a job:

• Short-term health insurance: temporary coverage between jobs
• COBRA: allows you to keep your employer plan temporarily (but at full cost)
• Marketplace plans: government-run plans with possible subsidies (financial assistance)
• Medicaid or CHIP: income-based coverage for individuals and families
• Medicare: for those 65 and over or with qualifying disabilities
• Private individual plans: bought directly from an insurer or agent
• Health cost sharing: nontraditional coverage through community sharing (more on this in a minute)
• Spouse’s or parent’s plan: joining a family member’s coverage if eligible (this could be the easiest route to take if it’s available)

Like we said, time is key—but there’s no need to panic. Start as soon as you can, gather all the important details and paperwork, get guidance from an independent insurance agent, and lean on your emergency fund if you need to (that’s exactly what it’s there for!).

Next, let’s talk about health coverage for those with special needs. Basically, Special Needs Plans (SNPs) are designed for individuals with chronic or disabling conditions. They often offer more specialized health coverage through Medicare (and sometimes Medicaid). Dual Eligible Special Needs Plans (D-SNPs) combine both Medicare and Medicaid programs for those who qualify, providing broader support for medical costs.

If you or a loved one falls into either of these categories, taking the time to understand how these options work can bring you a lot of peace now and down the line.

When you’re shopping for a plan on healthcare.gov or your state exchange, the plans are shown in four “metal” categories (no, not like Mötley Crüe). The plans are tiered according to how much they cost and what they cover: Bronze, Silver, Gold and Platinum.

Key fact: If you’re eligible for “cost sharing reductions” under the Affordable Care Act, you must pick a Silver plan or better to get those reductions.²

Plans in every category provide some types of free preventive care, and some offer free or discounted health care services before you meet your deductible. The way it basically works is this: Bronze plans have the lowest monthly premiums but the highest out-of-pocket costs. As you work your way up through the Silver, Gold and Platinum categories, you pay more in premiums, but less in deductibles and coinsurance.

But as we mentioned before, the extra costs in the Silver category can be minimized if you qualify for the cost sharing reductions. So you’ll want to make sure you’re getting the maximum value of those reductions when you’re shopping for health plans. Reductions can lower your out-of-pocket health care costs a lot, so get with a health insurance pro through our friends at Health Trust Financial, who can help you find out what you may be eligible for.

The table below shows the percentage that the insurance company pays—and what you pay—for covered expenses after you meet your deductible in each plan category.

Plan Category	How Much the Insurance Company Pays After Deductible	How Much You Pay	Premium	Deductible
Bronze	60%	40%	Lowest	Can be thousands of dollars annually
Silver	70%	30%	Low	Lower than bronze
Gold	80%	20%	High	Low
Platinum	90%	10%	Highest	Very low

 

When you choose your health insurance plan, here’s something to pay close attention to: extra costs beyond your monthly premium.

Other costs, often called “out-of-pocket” costs, can add up quickly. Things like your deductible, your copay, your coinsurance amount and your out-of-pocket maximum can have a big impact on the total cost. Here are some expenses to keep close tabs on:

• Deductible: the amount you pay before your insurance company pays anything (except for free preventative care)
• Copay: a set amount you pay each time for things like doctor visits or other services
• Coinsurance: the percentage of health care costs you’re responsible for paying after you’ve hit your deductible for the year
• Out-of-pocket maximum: the annual limit on what you’re responsible for paying on your own

One of the best ways to save money on health insurance is to use a high-deductible health plan (HDHP), especially if you don’t expect to regularly use medical services. Just like the name says, these are health plans with high deductibles. You’ll pay a lot more out of pocket for health care costs before your plan kicks in, but these plans also have lower monthly premiums.

You can apply this high deductible/low premium strategy to any of the health insurance network plans we discussed earlier (HMOs, PPOs, EPOs or POSs).

Here’s the thing that makes HDHPs truly awesome—they can be combined with a Health Savings Account (HSA). That’s an account that lets you set aside money tax-free to pay for qualified medical expenses.

You may be asking yourself, Wait a minute—who determines what they mean by “high” deductible?

That’s a great question. The IRS does. And for 2025, the IRS defines a high-deductible health plan as any plan with a deductible of at least $1,650 for an individual or $3,300 for a family. An HDHP’s total yearly out-of-pocket expenses (including deductibles, copayments and coinsurance) can’t be more than $8,300 for an individual or $16,600 for a family.³ (This limit doesn't apply to out-of-network services.)

And the HSA is a great feature of HDHPs because you can contribute up to $4,300 for an individual and $8,550 for a family tax-free for 2025.⁴

Even better, this money rolls over if you don’t use it, and you can even invest the money in your HSA so that it grows tax-free. That’s awesome! Being able to open an HSA is great for your future.

Another way to save money on health insurance? Skipping cancer insurance. Now, that sounds scary. But here’s the deal—you don’t pay extra for heart attack insurance, right? That’s because a solid health insurance plan covers heart attacks. Same principle applies here. What you do need is a good health insurance plan that covers cancer treatments (most do), long-term disability insurance, and a fully funded emergency fund. That’s it!

At the end of the day, health insurance can be costly. There’s just no way around it.

Or is there? Okay, we’re not saying you don’t need health coverage at all. In fact, that’s a really bad idea. But, if you’d rather go a nontraditional route, here are some solid health insurance alternatives you can check out:

• Primary care memberships: Like joining a gym for medical care, you pay a monthly fee to an independent primary care physician or medical practice, and they agree to take care of some needs. This is great for basic needs, but not for things like surgery, hospitalization or specialist visits. That’s why some pair this with a high-deductible, low-premium health plan.
• Discount cards: Basically, discount cards are a nifty way to get big discounts on things like prescriptions, dentistry or chiropractic care. But they won’t help much with primary care services. And they should never be used as your only health care coverage.
• Fixed indemnity insurance: This type of insurance is designed to help offset some of the costs for medical care. For example, if you go to the doctor four times a year, fixed indemnity insurance will give you $50 per visit to help out. You still have to pay out-of-pocket, but you get some help. Again, don’t rely on this as your only form of health coverage.
• Self-insurance: Honestly, just don’t do this. Yes, if you have a high (like, sky-high) net worth, you could get away with covering your own medical costs to a point, but you’ll always be one bad medical event away from emotional and financial disaster. Paying out of pocket is always a risk, no matter how much you have in the bank.

These are all options worth looking into (well, except that last one). But there’s another alternative that we’ve only touched on so far—health care cost sharing programs.

Seriously, don’t forget about health care cost sharing programs. These work pretty much like the other health insurance programs we’ve described already—but technically, they’re not a form of insurance. Allow us to explain:

Health care cost sharing programs are often nonprofit alternatives to traditional insurance. The biggest difference? Here, members pool monthly contributions to help cover each other’s medical expenses (hence the sharing part).

You pay a set monthly amount, cover your own bills, and receive reimbursement directly from the program for a portion of the costs if approved—rather than having an insurance company pay your providers. It can be a more affordable health insurance option, but coverage isn’t guaranteed, so carefully review the program details before signing up. (Hint: We have a RamseyTrusted^® partner for this that we highly recommend!)

Choosing the best health insurance plan for you is a crucial part of your overall financial plan. The two biggest factors to consider are getting enough coverage to cover a big chunk of your medical expenses and making sure you’re not paying for more coverage than you need. After all, health care needs can vary a ton based on everything from your age to marital status and even the size of your family.

If you’re not getting health insurance through your employer currently, we have some great ideas on what to do next.