Health Insurance Overview - Even though law does not require it, health insurance is coverage everyone should have. Often provided by your employer, health insurance covers you when you fall ill and helps off-set your medical costs. Most health insurance plans involve monthly payments, which are set based on the type of medical coverage you receive and if the coverage is just for you or for your immediate family. Others involve deductibles and co-payments. So, which is which?Types of Health InsuranceThe primary forms of health insurance coverage are Health Maintenance Organizations (HMO), Point-of-Service (POS), Preferred Provider Organizations (PPO), and Indemnity plans. HMO, POS, and PPO are managed care plans. Each type of managed care health plan functions differently and offers medical coverage in diverse ways. The indemnity plan is not considered a managed care plan and is unique in its own way. Here are the differences between the different health plans.
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| Health Insurance Overview |
An HMO is a plan where members pay a monthly fee. That fee covers most medical expenses for the month, regardless of how much medical care is needed (if any at all). Often, HMO members are also required to pay a co-payment (also referred to as a co-pay). A co-payment is an amount paid at the time of treatment to offset a portion of the medical costs. The amount of the co-pay varies depending on the specific medical treatment. Medical office visits have a different co-payment rate than prescriptions and more involved medical treatments.
HMOs also have a network of doctors that members can visit for their medical needs. However, they must stay within the HMO network if they want to be covered. Visiting a doctor who is not in the HMO network may result in out-of-pocket expenses.
A PPO is a plan where members pay for medical visits and services on an as-provided basis. Members can only visit doctors within the PPO network and are reimbursed for their medical expenses. Medical expenses and reimbursement amounts are established by the provider and the PPO subsidizer.
A POS is a plan where members pay no deductible. There is, however, normally a small co-payment members must pay when they visit a physician. POS plans require members to select a physician as their primary care physician (PCP). This physician is their primary care giver regarding all health-related issues and must sign off/refer members to other physicians if a specialist is needed. Just like HMOs, members of POS plans must stay within their network of doctors.
An indemnity plan gives plan members more freedom than managed care plans. In an indemnity plan, members can see any doctor they wish. There is no network of physicians involved in an indemnity plan and no restrictions. However, this type of medical plan is significantly more expensive than managed care plans and involves more out-of-pocket expenses.
When it comes to health coverage, you get what you pay for. If you want complete freedom in who you can see for your ailments, expect to pay more than networked managed care plans. However, only you can determine what type of medical plan best fits your health needs. If you need to see health specialists and can’t afford to stay within a network, a managed care plan might not be your best choice. When selecting a health care plan, remember that each plan functions differently from the next. If you have preexisting health conditions, use them to determine what type of health insurance coverage is best for you.
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