Health insurance is a type of insurance that pays for medical expenses in exchange for premiums. Your health insurance policy is an agreement between you and your insurance company. The policy lists a package of medical benefits such as tests, drugs and treatment services. The insurance company agrees to cover the cost of certain benefits listed in your policy. These are called "covered services."
The range of coverage for expenses as well as the restrictions varies depending on the type of plan. You can purchase the insurance directly from the insurance company, an agent or an independent broker, but most people get their insurance coverage through employer-sponsored programs.
Indemnity Plan
This plan is a type of insurance that compensates your medical expenses according to a schedule, regardless of who provides the service. This plan covers things such as hospital stays, surgical expenses, and major medical coverage.
Under these plans, the insurer pays a specific amount per day for a specific number of days. The amount paid can be calculated either as a percentage or for actual expenses.
Health Maintenance Organizations
It is the most common type of insurance policy people own and the one most frequently provided by employers. HMOs provide a wide range of healthcare services to a group of subscribers in return for a fixed periodic payment. With this plan, you select a primary care physician that is responsible for determining what care is required and when a patient should be referred to a specialist.
This plan is considered to be the least expensive form of health insurance, but is includes annoying restrictions. You can only select doctors and hospitals approved in the insurance carrier's network. This becomes a problem if you already have a great relationship with a doctor who is not in the network. If you use a non-network provider, your HMO will not cover the costs unless it's for an emergency. Except for this, most preventive care services are covered.
Preferred Provider Organization
It’s a group of healthcare providers that contract with an insurance company to provide medical care services at a reduced fee. The healthcare providers in the PPO are generally paid on a fee-for-service basis as their services are needed. You are not required to use the PPO's healthcare providers or facilities - you can go outside the network. But going outside the network usually means paying a higher co-payment or deductible.
Point of Service
A POS plan is a hybrid plan that combines aspects of an HMO, PPO and indemnity plan. This type of plan is more flexible, because it allows you to decide at the time you need medical care whether to use the POS plan's physician to arrange in-network care, or to go outside the network or hospital and pay a higher portion of the cost.
Private Health Insurance
Private health insurance is sometimes required if you are unemployed, part-time employee, employer or retired. Also, if you have serious medical problems, a private health insurance with a plan developed specifically for your medical condition is preferable.
