Health Insurance: Types of Plans Available
Health insurance has become a virtual necessity of life. Without health insurance, a lengthy or life-threatening illness could signal a serious financial crisis for many people. But even if you have health insurance, there could be limitations or gaps in your coverage that you're not even aware of. Many people find out too late that their health insurance coverage is inadequate. This article contains some basic information about health insurance that everyone should know.
There are four major types of health insurance plans: indemnity, PPO, HMO and POS.
A good indemnity health insurance plan is usually quite flexible and covers most medical expenses like hospital bills and doctor visits. The plan's flexibility allows members to choose where and from whom they receive treatment. The best indemnity plans also cover prescription drugs. There is a price to pay for this top-shelf health insurance, though. Most indemnity plans have a deductible that can be quite high. What this means is that you will have to pay a fixed amount out-of-pocket before an indemnity plan begins picking up your costs.
PPO stands for preferred provider organization. PPOs have agreements with doctors, hospitals and other health care providers. Under these contracts, providers agree that their services will be charged at a discounted rate. PPO health insurance plans often have deductibles or copays. A copay is a fixed amount that a PPO member pays to help defray the cost of medical services. For example, a PPO may require a member to pay a $10 or $20 copy for a doctor visit. For hospitalizations, the copay is usually higher. A typical PPO copay for hospital services is $75. Although PPO members can elect to seek medical services outside the contracted network, it's possible for the copay or deductible to be higher.
HMO stands for health maintenance organization. In an HMO health insurance plan, you choose a doctor who's designated as your "primary care physician" from a list of providers approved by the HMO. In some HMOs, in order to see a specialist, members must obtain a referral from their primary care physician. In other words, the primary care physician is required to certify the member's need to see the specialist. Many HMOs have copays. Members who seek medical care without a referral or outside the HMO's list of providers may find that expenses incurred by such care are not covered.
POS stands for point of service plans, which have a combination of PPO and HMO features. While being more flexible than HMOs, they still require members to choose a primary care physician. Like PPOs, you can choose to seek treatment outside the network but will be required to pay out of pocket for such treatment.
In addition to the 4 major types of health insurance, there are limited benefit plans that cover expenses related to a specific health care setting like a hospital or a combination of hospital/surgical services. There's also accident coverage for medical expenses incurred as a result of an accident. Accident coverage includes death, dismemberment and disability as well as hospital and medical care. Specific disease coverage covers the diagnosis and treatment of a specific disease, such as cancer. Specialize coverage has an equally narrow scope, like dental or vision care.
Consumers need to be careful about the types of health insurance offers they receive, since these may be either fraudulent or so limited in scope that benefits are severely curtailed. These offers usually charge a monthly fee and are not licensed like the more traditional health insurance providers. Most state's oversight entities warn consumers to avoid these discount plans.
Another type mechanism for defraying health care expenses is the non-licensed risk-sharing plan. In this scenario, members pay monthly premiums to a group or association. All members' payments are then combined into a pool from which health expenses of members are paid. Since there is no Federal or state oversight of the monies in the pool, members who might lose their money have little legal or civil recourse to recover it.
Regardless of what type of health insurance coverage you choose, be sure to check it out thoroughly. The potential always exists for gaps in your coverage, high copays and high deductibles. Some people feel that if health insurance is offered as a benefit by their employer, that the coverage must be good. In point of fact, this isn't always the case - more and more employers who find themselves hampered by benefits costs are reducing or cutting benefits in an effort to remain fiscally stable. Some employees who develop major health problems like cancer may find themselves fighting an economic battle to pay for their treatment in addition to the medical battle to treat the disease.
