Health Insurance Programs Explained

As the times change, so does healthcare. In the past families were able to afford healthcare on their own. Family doctors often stayed with a family for an entire generation and the costs were minimal, even for house calls. These days, rising expenses have made it a necessity for a family or individual to have solid healthcare coverage in the form of health insurance. There are four basic types of health insurance programs.

HMO Health Plans

A Health Maintenance Organization (HMO) Plan requires that you receive your medical care through a doctor or hospital that is pre-approved by your health insurance provider. There is a monthly premium and in return you will have your medical, dental, and eye care expenses covered when the need arises. Normally there will be a co-payment when visiting a medical professional or having a procedure. When you sign up for an HMO plan you will receive a list of all the in-network healthcare providers in the area.  A primary care physician will be in charge of coordinating your healthcare.

POS Health Insurance Plans

Point of Service (POS) Plans are very similar to Health Maintenance Organization plans, with the sole difference that you are able to make more choices regarding your healthcare options. There are basically three ways that you can handle your healthcare. First, you may utilize HMO procedures and have a primary care provider. Second, you can opt to use a third party healthcare provider outside of either PPO or HMO networks, in which case you would be subject to special rules. Lastly, you can receive healthcare from a PPO provider, which would make you subject to PPO rules.

PPO Network

A Preferred Provider Organization (PPO) Plan gives you several options for your healthcare. They provide a network of clinics, doctors, and hospitals that are affiliated with the PPO network from which you are free to choose. You also have the option of seeing a healthcare provider outside of the network for a lower percentage of reimbursement from your health insurance provider. For example, you may be covered for 95% of your clinic costs with a PPO provider, but you will be eligible for 75% reimbursement if you choose to use a provider that is not in the PPO network.

Indemnity Plans

Also known as Fee for Service Plans, indemnity plans give you the freedom to work with any doctor or healthcare provider that you choose, pay the required fee at the time of service and your medical costs will be reimbursed by the insurer afterward. This type of health insurance program requires no monthly premium, but you will be required to pay for a yearly deductible before you can be paid back for medical services. These plans are often good for young, healthy people with no dependents since they have fewer health issues and less accountability to others for health care.

The types of health insurance programs are varied, with HMOs falling on one side of the spectrum and Fee for Service Plans sitting on the other side. The important thing is to understand what each program offers so that you can make the best decision for your own life and budget.