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Comparing Insurance Types

No particular plan will cover all costs related with medical care, but some cover more than others. The two types of health insurance coverage are:

Fee-for-Service or Indemnity Plans - Appointment can be set with almost any medical provider with this traditional plan. You or your provider then forwards your claim to the insurance company after your visit. When deductible for the year is met, the Fee-for-Service plan will pay a proportion of the bill, which is usually 80%. You pay for the other 20%, which is known as coinsurance. Only a few purchase this type of plan because it is expensive.

Managed Care - This refers to types of health insurance plans that offer health care services at a lower cost. This is because members of managed care plans must abide to certain rules intended to lower the cost of medical care.

Types of Managed Care include:

Health Maintenance Organizations (HMOs)

You receive a variety of health benefits for a set fee with an HMO. Usually there are no deductibles, but most plans involve a small copay per office visit. You must select a primary care physician from the plan's listing, who becomes your porter for all your medical needs. This is the one doctor you call or see when you are ill, and he can refer you to other specialists or providers within the HMO network. You will not receive benefits if you go out-of-network with most HMOs, except for emergency care. HMOs may be classified into Staff Model HMO wherein physicians are employees of the HMO and they can be seen at a central medical facility, whereas Individual Practice Associations (IPAs) deals with outside physician groups or individual doctors with private practices. Hence, the HMO network includes doctors in different areas rather than only at a central facility.

Preferred Provider Organization (PPO)

This is another type of managed care whereby you may request treatment from an approved network of providers or may see other providers outside the network. This usually involves a small copay and a deductible before benefits get paid, and you will have to pay a set coinsurance amount. It is less costly to visit one of the providers in the plan's list. You may go outside the plan's list; however, your share of the bill will be higher.

Point of Service (POS)

A hybrid of the HMO and PPO, this plan allows PCPs to make referrals to other providers within the plan like a standard HMO. However, if you want to go to a doctor outside the network without consulting your PCP, this will pay a fixed amount of the bill and your share of the bill will be higher than it would if you stay in-network. These plans give you the flexibility to call any doctor but usually charge more in monthly premiums than straight HMOs.

When comparing health plans, first determine what features are most important to you. If choosing your own physician is of utmost importance, then waste no time looking at an HMO. However, if you are more concerned about price, the HMO may be the top choice.