Common types of health insurance plans

What are the main types of health insurance plans?

Health plans fall into two categories: individual coverage and employer-sponsored coverage. The primary difference is who chooses and pays for the policies. Essentially, individuals buy their own plans, which aren’t tied to employment, while employers offer employees health coverage through group plans.

Here are more details:

1. Individual health insurance plans. As the name suggests, individual consumers can buy this type of coverage for themselves or their families on the individual market, which includes the federal Marketplace, state-based exchanges, or private exchanges. These plans aren’t dependent on employment, making them ideal for those who are self-employed, between jobs, or whose employer doesn’t offer coverage. If an employer offers a stand-alone HRA, employees will enroll in this type of plan. Unless they experience a qualifying life event mid-year, individuals can only enroll in or change their individual health plan during the annual Open Enrollment Period.
2. Fully insured group health plans. Better known as traditional group health insurance, this is the most popular form of coverage. Group plans are employer-sponsored, meaning the employer selects a group policy from an insurance company to offer to employees and their dependents. The insurer manages the plan and assumes the financial risk of covering employees’ claims in exchange for the employer and enrolled employees paying a fixed monthly premium. However, coverage is often expensive, requires a minimum percentage of employees to participate, and may offer limited policy options or terms.
3. Self-insured group health plans. While this is also employer-sponsored coverage, it differs from fully-insured group health insurance. Self-insured plans involve the employer designing and offering their own group health benefit to their employees, rather than paying a premium to an insurance carrier. However, the employer must pay employees’ medical claims directly, which can make the plan financially risky and time-consuming to administer. Level-funded plans are another variant of a self-insured plan with a stop-loss policy in place. With level-funded plans, a third-party administrator (TPA) handles the self-funded claims.

What types of health insurance plans are available?

Within each of the three main insurance options listed above, you can choose from various policy types. Before choosing a health insurance plan for yourself, your family, or your employees, you must know how each type works and what benefits they usually cover.

Some popular health insurance policy options are:

• Preferred provider organization (PPO) plans
• Health maintenance organization (HMO) plans
• Point of service (POS) plans
• Exclusive provider organization (EPO) plans
• High deductible health plans (HDHPs)
• Health savings account (HSA)-qualified plans
• Indemnity plans
• Catastrophic health plans

According to HealthCare.gov, the most common plans you’ll see on the Marketplace for individual and small group plans are PPOs, EPOs, HMOs, and POSs¹. However, the best health insurance policy for you depends on your specific medical needs, budget, preferred provider network, and the plan’s covered services.

We'll cover each plan type in the following sections.

Preferred provider organization (PPO) plans

The preferred provider organization (PPO) plan is the most common type of health plan, particularly among group plans. According to KFF’s 2025 Employer Health Benefits Survey, 46% of individuals with an employer-sponsored plan have a PPO². By contrast, only 13% of Marketplace enrollees were in PPO networks in 2024.³

PPO plans encourage participants to use a preferred provider network for healthcare services in exchange for discounted rates. These plans generally don’t require employees to select a primary care provider (PCP). Instead, they can visit any doctor within their larger network.

Employees must meet an annual deductible before their health insurer will cover their medical bills. Their plan may also require cost sharing, like a copayment or coinsurance, for certain items and services. PPOs even allow some out-of-network care, although it can result in higher out-of-pocket medical costs.

A PPO plan may be right for you or your employees if:

• You want to choose any primary care physician (PCP) and healthcare facility within your insurance company's network.
• You want to have some coverage for out-of-network costs.
• You want the convenience of seeing a specialist without a referral from a PCP.

Some disadvantages of a PPO plan are:

• You’ll pay higher monthly premiums.
• The average annual premiums for employer-sponsored health insurance in 2025 were $9,325 for single coverage and $26,993 for family coverage. However, the average premiums were $9,818 for a self-only PPO plan and $28,272 for a family policy⁴.
• Your employees must meet an annual deductible.
• The average deductible for workers with a PPO plan was $1,337 in 2025⁵.
• If you receive out-of-network care, you must file the claim with your health insurance company yourself. Claim forms can be tricky to complete if you’re not used to them. It can also be time-consuming if you need frequent care from various medical providers.

Health maintenance organization (HMO) plans

Next up is the health maintenance organization (HMO) plan. These policies offer participants a wide range of medical services through a network of providers that contract exclusively with the HMO and agree to provide healthcare to its members. This is the most popular type of health plan on the ACA individual market³.

HMOs typically require employees to choose a primary care physician before receiving medical care. However, they tend to have lower out-of-pocket costs for covered services. Employees may have a deductible only after coverage starts and usually have low copay amounts.

With an HMO, employees must have a referral from their PCP to see a specialist. Additionally, most HMO plans cover employees’ out-of-network costs only for emergency services.

An HMO plan may be right for you or your employees if:

• You want a plan with a lower premium and deductible.
• In 2025, the average annual deductible for a self-only HMO plan was $1,649 compared to $1,337 for PPOs, $2,122 for POS plans, and $2,609 for HDHPs with a savings option⁵.
• You want lower copay for doctor visits and prescription drugs.
• You want a primary care provider to coordinate your care, manage your treatment, and refer you to specialists.

Some disadvantages of an HMO plan are:

• A limited network of physicians can make it challenging for some individuals to receive necessary care.
• If you visit a specialist without a referral from your PCP, you must pay the entire cost of your medical bill yourself.
• While your HMO will cover some medical emergencies, it won’t cover everything. Your policy will outline acceptable medical emergencies in the plan details. If your emergency doesn’t meet the criteria, you must pay the bill yourself.

Point of service (POS) plans

A POS health policy combines the features of an HMO and a PPO plan. Participants can choose whether to receive in- or out-of-network care at each point of service. But they may have to select a PCP from the plan's network providers. This is the least common type of plan on the ACA individual market, with only 4% of enrollees having one³.

POS plans typically have copays for office visits and prescription medications. They also have deductibles and coinsurance for other health services. Generally, PCP services, like routine or preventive care, aren't subject to the deductible.

Employees who receive services from their primary care doctor will have greater coverage. If they visit an out-of-network doctor, they may experience lower coverage and higher out-of-pocket expenses. They may also have to submit a claim for reimbursement.

A POS plan may be right for you or your employees if:

• You want greater flexibility when choosing physicians and other network providers.
• You want a primary care physician to help you coordinate your medical care.
• You want a plan with a lower monthly premium than a PPO.
• You want to see out-of-network doctors, even if it costs more.
• You want a better selection of in-network providers than HMO plans.

Some disadvantages of a POS plan are:

• Monthly premiums cost as much as or more than EPOs and HMOs.
• Seeing an out-of-network provider can result in paying your medical bills upfront at a higher cost.
• You have to submit medical claims to your insurance company for reimbursement.
• They require referrals to see a network specialist.

Exclusive provider organization (EPO) plans

An exclusive provider organization (EPO) policy combines some aspects of an HMO and a PPO. Like HMOs, members must receive medical services and items from in-network healthcare providers. EPOs are the second most popular type of network on the ACA individual market³.

An EPO plan offers a good mix of affordability and flexibility. For example, these plans don’t require members to choose a PCP. Participants can see a specialist without a referral. EPOs typically have a set deductible and coinsurance amount. But the copay amounts are usually small.

An EPO plan may be right for you or your employees if:

• You like the trade-off of fewer provider choices for lower premiums.
• You believe a smaller network can provide more streamlined, coordinated healthcare.
• You want to avoid choosing a primary care doctor or getting a referral to see a specialist.
• You can pay higher costs for unplanned medical events.

A few downsides of EPOs are:

• Depending on your plan and location, you may have limited in-network provider options.
• Some EPO plans can have high out-of-pocket costs due to their deductibles and coinsurance requirements.
• EPOs only cover out-of-network care for emergencies. You must pay the entire bill if you receive ineligible out-of-network care.
• EPO plans usually serve only specific regions or locations. So they may not meet every employee’s needs.

High deductible health plans (HDHPs)

You may also have a choice between a low or high deductible health plan. As the name suggests, HDHPs have higher deductibles than other plans.

PPOs, HMOs, POSs, and EPOs can be HDHPs if their annual deductibles and out-of-pocket maximums meet the annual IRS thresholds.

The 2027 thresholds for HDHPs are⁶:

Because of their higher deductibles, HDHPs have lower monthly premiums. This makes them a great option for those who want to save money while still having coverage for medical emergencies.

Health savings account-qualified plans

A health savings account (HSA) is a tax-advantaged account that individuals can use to save and pay for qualifying medical expenses outlined in IRS Publication 502⁷. An employer can offer an HSA to their employees, or an individual can open one on their own. However, these accounts only work if you have an HSA-qualified high deductible health plan (HDHP). As of 2026, Bronze individual health plans on the public exchanges now count as HSA-qualified HDHPs.

Both employees and employers can contribute to an HSA up to the maximum annual limit, which is $4,500 for individuals and $9,000 for families in 2027.⁶ Unused HSA funds roll over each year and earn interest tax-free.

Lastly, HSAs are employee-owned. This means that once an employee leaves your company, the account and all its money go with them. All contributions will stay in the HSA until the account holder withdraws them.

An HSA-qualified plan may be right for you or your employees if:

• You want to offer an HDHP to save on premium costs.
• In 2025, the average annual premiums for HSA-qualified HDHPs were $8,620 for self-only coverage and $25,379 for family coverage⁸.
• You want to provide employees with financial assistance to pay for their current and future medical expenses.
• You like the appeal of a portable account that employees can keep even if they leave your company.
• You want to make tax-free contributions to an account that will roll over from year to year.

Some disadvantages of an HSA-qualified plan are:

• You or your employees will have a high deductible and out-of-pocket maximum.
• The average annual deductible for a self-only HSA-qualified HDHP was $2,578. The average aggregate deductible for family coverage was $4,932⁹.
• If you’re younger than 65 and withdraw HSA funds to pay for non-healthcare items, you must pay a 20% penalty.
• HSAs have an annual maximum contribution limit that employees and employers must follow.
• Employers must pre-fund HSAs, regardless of whether the employee spends the money.

Indemnity plans

The health insurance industry refers to indemnity plans as “fee-for-service plans.” With these policies, an insurance company pays a predetermined percentage of the typical charge (or the average fee within a specific location) for a medical service. The plan participant then pays the rest.

Indemnity plans have no provider network limitations, meaning patients can choose their preferred doctors and hospitals. However, providers determine their fees for health services. Depending on what the provider charges, members may receive a large, unexpected medical bill.

Lastly, indemnity plans are a type of supplemental health coverage. This means the Affordable Care Act (ACA) doesn’t consider them minimum essential coverage (MEC).

An indemnity plan may be right for you or your employees if:

• You don't want to commit to one specific primary care physician or facility.
• You want flexibility when choosing which doctors and healthcare centers to visit.
• You want to see a specialist without a referral from a primary care provider.

Some disadvantages of an indemnity plan are:

• Indemnity plans tend to be one of the most expensive. Medical costs vary widely depending on location, age, and the benefits you want to include.
• Predetermined payouts for healthcare services may be less than the actual costs. This could leave patients with unpredictable medical bills.
• Indemnity plans may limit how often you can access a particular service each year. They can also restrict the total amount of benefits you can receive in a year. So, these plans may not provide enough coverage if you have a severe health condition.
• Because indemnity plans aren’t ACA policies, your insurer can decline to enroll you in one if you have a pre-existing condition. If they let you enroll, they can choose not to cover treatment for your pre-existing illness.
• Indemnity plans aren’t a substitute for qualified health plans with MEC.

Catastrophic health plans

A catastrophic health plan provides eligible individuals and families with coverage for serious and costly medical events. These policies are best for people who are generally healthy and don’t need frequent healthcare.

These plans have high deductibles and maximum out-of-pocket limits. As a result, participants must pay a large amount before coverage kicks in. However, once you meet the deductible, the plan usually covers the total cost of essential health benefits.

Catastrophic policies have specific eligibility requirements. For example, they’re available to people younger than 30 because they're less likely to have chronic conditions. Those who qualify for a financial hardship or affordability exemption may also enroll. You can also qualify if only one or no insurers are available on the individual health insurance market in your area.

A catastrophic plan may be right for you or your employees if:

• You want lower monthly premium payments.
• You meet the age, income, or hardship eligibility requirements.
• You don’t use many healthcare services, but you want coverage in case of an emergency.
• You only need access to routine or preventive services.
• You want to open an HSA.
• Under the One Big Beautiful Bill Act, the federal government now considers all catastrophic individual health insurance plans HSA-qualified coverage.

Some downsides to catastrophic health plans are:

• They don’t work with HSAs because they aren’t HSA-qualified.
• They have high annual deductibles and out-of-pocket maximums, also known as a catastrophic limit.
• According to the Centers for Medicare & Medicaid Services, catastrophic plans will have an annual deductible of $12,000 for self-only plans and $24,000 for family coverage, which is a 13.2% increase from 2026 limits¹⁰.
• This type of plan won’t provide enough coverage for people with chronic diseases.

Marketplace plans comparison chart

The comparison chart below will summarize the information above for the four most common ACA Marketplace plans so you can make an informed decision when shopping for health insurance.

Note: Exact premiums, deductibles, provider networks, and referral rules vary by plan. Always check the plan's Summary of Benefits and Coverage (SBC) and provider information before enrolling.

Which health insurance plan type fits your situation?

The right plan depends on how much provider choice, predictable costs, and monthly premiums matter to you.

Here are a few common situations that may impact your decision when choosing a health plan:

• If you travel frequently or want the most provider flexibility, a PPO may be a better fit because it generally covers some out-of-network care.
• An HMO may be a good option if you need lower premiums and don't mind a narrower network as long as you're comfortable choosing a PCP and getting referrals for specialists.
• If you want in-network flexibility without specialist referrals, an EPO can balance affordability with the freedom to see specialists without a referral.
• A POS plan can be a flexible choice if you want a combination of in- and out-of-network coverage and you're comfortable coordinating care through a PCP.

Your health needs and budget should ultimately guide your decision. Before enrolling, check whether your preferred doctors, hospitals, prescriptions, and other healthcare services are covered by the specific plan you're considering.

What is an alternative health benefit option to traditional health insurance?

Employers aren’t limited to traditional group health coverage. Suppose you want to avoid the premium rate hikes, minimum participation limits, and carrier negotiations that come with group plans. In that case, you should consider offering your employees a stand-alone health reimbursement arrangement (HRA).

HRAs are IRS-approved, employer-funded health benefits that allow you to reimburse your employees for their qualifying medical expenses, including individual health insurance premiums and out-of-pocket costs, on a tax-free basis.

With an HRA, you set a monthly allowance that works for your company’s benefits budget. Instead of enrolling in a one-size-fits-all group plan, your employees buy individual health insurance and other eligible medical services and items. Once employees make an approved purchase, you reimburse them tax-free up to their allowance amount. Unused HRA funds stay with you at the end of the plan year or if an employee leaves your company.

The following are three types of HRAs that you can offer with PeopleKeep:

1. The CHOICE Arrangement, formerly known as the individual coverage HRA (ICHRA), is for organizations of all sizes. CHOICE Arrangements have no contribution limitations, and you can use factors such as family status, age, or employee classes to vary eligibility and allowance amounts. This type of HRA can also satisfy the ACA's employer mandate for applicable large employers (ALEs). To do this, your employees must have qualified individual health insurance, and your allowance must be affordable.
2. The qualified small employer HRA (QSEHRA) is specifically for organizations with fewer than 50 full-time equivalent employees (FTEs) that don’t offer a traditional group health insurance plan or ancillary coverage. Employers must offer the QSEHRA to all full-time workers; however, they can allow part-time employees to join the benefit, as long as they receive the same allowance amount. Employees are eligible to participate in the QSEHRA if they have a health plan that provides MEC.
3. The group coverage HRA (GCHRA) is for employers of any size that offer group health insurance. Like the CHOICE Arrangement, the GCHRA has no minimum or maximum contribution limits and allows for customization using employee classes. Employees can use their GCHRA funds to pay for qualified medical costs that their group plan doesn’t fully cover. However, premiums are ineligible for reimbursement. Only employees enrolled in your employer-sponsored health plan can participate in the benefit.

Because of its flexibility, offering an HRA instead of group health insurance is a surefire way for employers of all sizes, locations, and budgets to attract and retain talented workers.

Conclusion

No matter where you live, what type of business you run, or your employees’ medical needs, you have comprehensive coverage options. Reviewing your available health insurance plans will help you make the right choice for your family or organization during Open Enrollment.

If you're an employer looking to provide personalized health benefits, PeopleKeep by Remodel Health can help. Our HRA administration software makes it easy for business owners of all sizes to set up and manage a cost-effective QSEHRA, CHOICE Arrangement, or GCHRA. Schedule a call with an HRA specialist to learn how we can help you improve your benefits package!

This blog article was originally published on July 29, 2013. It was last updated on September 15, 2026.

References

1. HealthCare.gov - How to pick a health insurance plan
2. 2025 Employer Health Benefits Survey - Market shares of health plans
3. KFF - How Narrow or Broad Are ACA Marketplace Physician Networks
4. 2025 Employer Health Benefits Survey - Health insurance premiums and worker contributions
5. 2025 Employer Health Benefits Survey - Employee cost sharing
6. IRS 26 CFR 601.602
7. IRS Publication 502
8. 2025 Employer Benefits Survey - Cost of health insurance
9. 2025 Employer Benefits Survey - High deductible health plans with savings option
10. CMS - Premium Adjustment Percentage, Maximum Annual Limitation on Cost Sharing, Reduced Maximum Annual Limitation on Cost Sharing, and Required Contribution Percentage for the 2027 Benefit Year