Health Insurance

Choosing a health care provider can quickly become an overwhelming and exhausting process. Some employers give their workers a choice when it comes to health insurance types, but the options can be difficult to understand. What are your options for health insurance?

Indemnity Plans

An indemnity health care plan is basically set up as a fee-for-service plan. The indemnity health care plan is designed to provide more choices of doctors and hospitals for the subscriber. Referrals are not required to visit specialists.
 
These plans are set up so that the doctor or hospital visit is paid for after the health care provider receives a bill for the service. Indemnity plans require more paperwork and out-of-pocket costs, but they do allow more flexibility for the patient.

Managed Care Plans

Managed care plans are much more common in today's world. They are designed so that the health insurance company has set agreements with certain doctors and hospitals to provide care at a reduced cost. This means fewer out-of-pocket expenses and less paperwork for the subscribers in the long run.

There are three basic categories of managed care health plans:

  • health maintenance organizations (HMOs)
  • point of service (POS)
  • preferred provider organizations (PPOs).

HMOs

Health Maintenance Organizations (HMOs) are one choice for managed health insurance. HMOs are designed so that the patient selects a primary care physician from within a network of approved doctors. In turn, this primary care physician must make referrals for the patient to see any other doctors or specialists.

If the patient receives care, other than emergency care, without a referral or from a non-network doctor, the HMO will not take responsibility for the bill. The plus side of an HMO is that the patient pays nothing, or only a small co-payment, when visiting doctors within the network.

The HMO plans include far fewer expenses but consequently far less flexibility for their patients. Many workplaces offer health insurance to employees in the form of an HMO.

PPOs

Preferred Provider Organizations (PPOs) allow more flexibility for their subscribers. Patients can choose to see doctors within the PPO's approved network of doctors, or they can see a doctor outside the network.
 
The patient will end up paying more to see a doctor outside the network. PPOs do not require patients to have a referral to see a specialist, which again makes this health care plan a more flexible choice. Patients are required to make a co-payment for all medical services and are also responsible for an annual deductible. While HMOs often less costly, they are also less flexible than PPOs.

POS Plans

A Point of Service plan (POS) is a type of health care plan that is a combination of an HMO and PPO. POS is a managed care plan that allows the subscriber to choose from a network doctor or a non-network doctor. The subscribers who choose a network doctor pay a flat fee and those who choose a non-network doctor are responsible for a deductible.

Resources

Quick Quote (2007). Types of Health Insurance. Retrieved October 16, 2007, from the Quick Quote Web site: http://www.quickquote.com/hitypes.html.