Types of Health Insurance
“Health is wealth”. Health is usually compared to wealth. Everyone wants to be healthy. This is why people take a health insurance. Health insurance is a promise which an insurance company make to its members to provide health care facilities. There are three main types of health insurance and they are as follows:
- Fee-for-service plans
- Health Maintenance Organizations (HMOs)
- Point-of-service plans (POS)
- Preferred Provider Organizations (PPOs)
1. Fee-for-service plans
Fee-for-service plan is the traditional kind of health insurance. The health insurance company pay the fees for the services provided to the insured people covered by the insurance policy. A fee-for-service plan offers more choices of doctors and hospitals. The insurance holder can choose any doctor or any hospital in any part of the country. The person can also change doctors and hospital at any time. For this type of health insurance, you pay a lower monthly fee compared to other types of insurance policy. The monthly fee which you pay the insurance company is called a premium. Therefore in the Fee-for-service plan, you pay a low premium. Each year, an amount known as deductible is paid by you before the payments begin. You share the bill with the insurance company. You only pay a part of the doctor or hospital bill. For example, it might be that the insurance company pays 75 percent of the bill and you pay the remaining 25 percent.
However, Fee-for-service plan have some drawbacks. You do not get all the services. Some services are limited and some are not covered at all. Members must choose their doctors, hospital, pharmacy or other medical facilities in an approved list. The insurance company do not refund any claim is a person consults a doctor and any other medical facilities outside the approved list. This type of health insurance usually covers preventative medicine. You need to check on preventive health care coverage such as immunizations, well-child care, etc.
2. Health Maintenance Organizations (HMOs)
Health Maintenance Organizations are prepaid health plans. The insurance holder has to pay a monthly premium. This type of insurance usually takes comprehensive care for you and your family. HMO provides doctors visit, hospital stays, emergency care, surgery, laboratory tests and other medical facilities. It has broad hospital coverage, has a vast network of pharmacies. Health Maintenance Organizations arranges for his health care either through its own network or through doctors and other health care professional under contract. You do not have to pay a coinsurance or a deductible. You only have to pay a small copayment for each office visit such as $10 for a doctor’s visit or $25 for a hospital emergency room treatment. With this type of insurance, you do not need to fill claim forms for doctor visits or hospital stays. Instead, you are given a card which you have to present whenever you visit a doctor or a hospital. Health Maintenance Organizations provides several preventive care such as office visits, immunizations, well-baby checkups, mammograms, etc. HMO has an Excellent Accreditation from the Nation Committee for Quality Assurance (NCQA). Since you have to consult doctors or hospitals within its network, you may have to wait longer for an appointment than you would with a fee-for-service health insurance plan.
3. Point – Of – Service plans (POS)
Point – Of – Service plans as the name itself says point of service, requires each covered person to select a Personal Care Physician (PCP) from a network of providers. However, the person can still seek care outside the network of providers but a reduced benefit level will be applied. If the insurance holder selects a personal care physician from the in-network PCP, it is economical for the insurance company as the insurance company pays an amount of money to the PCP. However, if a PCP refers a person out of network care, the care can be covered at the in-network benefit level if it is authorized by a physician care. Usually, it costs lower than the Preferred Provider Organization (PPO) because of higher in-network utilization resulting from the supervision of care by an in-network PCP.4. Preferred Provider Organizations (PPOs)
Preferred Provider Organization is a combination of Fee-for service and Health Maintenance Organizations. Just like HMO, Preferred Provider Organizations also have a limited number of doctors and hospital to choose from an approved list. You do not have to fill forms to claim your money. You only have to present your card and most of the medical bills are covered. Usually, there is a small co-payment for each doctor visit or hospital stay. Like in fee-for – service plan, in PPO also you have to pay deductible and coinsurance. You must choose a doctor to monitor your health care just like it was for HMO. Most Preferred Provider Organizations cover preventive care which includes doctor visits, well-baby, immunizations and mammograms. You can consult doctors who are not part of the plan and still receive some coverage. However, you will have to pay a larger proportion of the bill yourself and to claim the money you will have to fill forms. You must only fill forms to receive claims when you are claiming for medical expense outside the network.
After having seen these four types of health insurance, it is clear that the goal of these types of insurance is to provide a health protection to all us. It can be in different forms, in different ways or they can use different approach. Fee-for-service plan is the most affordable type of health insurance however it has certain limitations. Preferred Provider Organization has got the most options. However, it is the most expensive. Now, depending upon your income, it’s up to you to decide which insurance plan to purchase.
For more info on various types of insurance - the internet has loads and loads of excellent resources!