Types of Health Insurance Coverage
Health insurance coverage has changed over years, and it is usually a challenge choosing the right type of health insurance coverage. Having background knowledge about it can save someone a lot of money and time. There are four types of health insurance coverage: Health Maintenance Organization, Preferred Provider Organization, Point of Service Health Insurance Plan, and Fee-for-Service (Indemnity) Health Insurance Plan. The first three types are called managed care, because they all influence the amount of healthcare services one use.
Health Maintenance Organization (HMO)
This is a type of health insurance plan that involves paying for the health service in advance; this payment is a monthly premium. It may also involves a small deductible or no deductable at all, and it usually involve small copayment as well. A deductible is a payment someone makes out-of-pocket before the plan starts, while copayment is an amount someone pays per care obtained. In exchange, the HMO provides comprehensive health care for the insured party, including doctors' visits, hospital stays, surgery, laboratory (lab) tests, and therapy.
HMO provides healthcare services through doctors, hospitals, and other healthcare providers that are in its network. HMO may provide the healthcare providers through staff model (The HMO itself employs doctors to cater for their client), IPA model (HMO contract with an independent group of doctors called individual practice associations in order to cater for their client), or Network model (this involves the combination of staff model and IPA model). Primary care physician is choosing from this
HMO involves selecting a primary care physician from its network of doctors. These primary care physicians serve as the first point of call for healthcare issues and they are responsible for referring the insured individual to a specialist, when the need arises. Some HMOs offer the opportunity for women to select gynaecologist as their primary care physician. Selecting primary care physician is an important decision, and one should take proper care when selecting HMO plan.
Important advantage of HMO is that it is the least expensive compared to POS, PPO or Fee-for-Service (Indemnity) Health Insurance Plan. HMO also does not involve feeling of forms to get reimbursement. However, it offers the least freedom when compared to others, and if one seeks healthcare outside the network, one may not be covered at all. The problem of queuing to see doctor constitutes another problem of this type.
Preferred Provider Organization (PPO)
This is a form of managed care and it is similar to HMO, it is a is a combination of Fee-for-Service (Indemnity) Health Insurance Plan and HMO. The most distinguishing factor between PPO and HMO lies in the degree of freedom it offers: one does not have to choose a primary care physician in PPO. Insured party can step out of the network to choose a healthcare provider; however, the cost is usually high as compared to using in-network healthcare providers. Premiums are generally higher in PPO than in HMO. Deductibles are also usually present in PPO.
Report on PPO Plan (pdf version) – This explains in detail various aspects of PPO. Brief notes on PPO – This gives a succinct explanation of PPO. Questions to ask about PPO – This gives examples of various questions to ask when seeking to get PPO.
Point of Service Health Insurance Plan (POS)
Point of service health insurance scheme is also similar to HMS. It involves primary care physician (making it different from PPO, and more restrictive), but insured individual has the option of contacting the healthcare providers outside the network. The primary care physician co-ordinates the insured party care, and refers the insured party to a specialist when the need arises. POS is less restrictive compared to HMS and more restrictive compared to PPO.
UnitedHealthcare Choice Plus Point of Service Plan (POS) – This discuss in details the various benefits of POS. POS explained(a pdf version) – It explains in details various aspect of POS.
Fee-for-Service (Indemnity) Health Insurance Plan
This type of health insurance plan is associated with high level of freedom. One is chanced to choose any doctor, surgeon, clinic, or hospital: you never need a referral or pre-approval. However, this does not mean that there is no restriction; for example, preventive care may not be covered under the indemnity health insurance plan.
One of the disadvantages of fee-for-service plan is the cost. It is usually associated with high premiums and deductibles, and the insured party is usually expected to pay coinsurance (this is the amount the insured party is expected to pay in addition to copayment). Although, doctor’s office may assist, sometimes one may have to fill out forms and send them to health insurer to claim reimbursement. Also keeping track of one’s own medical expenses is crucial under this plan. All types of health insurance coverage have both advantages and disadvantages, and taking time to know them is usually crucial for someone seeking health insurance plan.
Medical Plan Comparison Chart (a pdf version) – This compares the various health insurance coverage available. Health Insurance Coverage (a pdf version) – This health insurance coverage discuss in details various types of health insurance plan available.
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