Types of Policy

There are many different health insurance policies to choose from, but they all tend to fall into the following major categories:

Health Maintenance Organization (HMO)

An HMO is a type of managed health care system in which a group of doctors and other medical professionals offer certain health care services for a flat monthly rate with no deductibles. Typical HMO coverages include access to a primary care physician (who will handle referrals), emergency care and specialists when needed. On average, an HMO costs less than comparable traditional health insurance, although this comes with a trade-off of limitations on the range of treatments available. Only visits to professionals within the HMO network are covered by the policy and all visits, prescriptions and other care must be cleared by the HMO in order to be covered.

HMOs are able to offer cheaper insurance as deal with large quantities of patients and are thus able to negotiate for more affordable health care than the patients would otherwise receive. In addition, this type of policy usually denies treatments they deem as unnecessary, thereby reducing overall costs.

Anyone joining an HMO is required to choose a primary care physician, who will then act as the HMO's agent in determining what treatments the patient does (or does not) need. If necessary, they will give a referral to a specialist that can address the patient's concerns. Emergency visits are exempt from this referral limitation.

HMOs are valuable in providing good care for many members; however, critics address concerns as to a lack of selection of primary care physicians and the denial of certain claims, claiming that decisions are made on a profitability standpoint rather than providing the best level of care for its patients

Preferred Provider Organization (PPO)

A PPO is similar to an HMO, but care is paid for as it is received instead of in advance in the form of a scheduled fee. In addition, patients may see any doctor they choose, or visit any hospital, usually within a preferred network of providers. PPOs may also offer more flexibility by allowing for visits to out-of-network professionals at a greater expense to the policy holder. Policy holders do not have to designate a primary care physician, and they can usually see any specialist without referral. The PPO offers choice and flexibility, but is often more expensive.

Visits within the network require only the payment of a small fee. There is often a deductible for out-of-network expenses and a higher co-payment. After any visit, policy holders must submit a claim and they will be reimbursed for their visit minus their co-payment.

Depending upon your health needs and income level, a PPO may be a better choice as it provides access to a greater number of doctors and facilities. However, it is a good idea to find out the number of network physicians and facilities offered in PPO plans, as some HMO plans may offer more providers than a PPO.

Fee-For-Service (FFS)

Also known as indemnity plans, FFS plans are extremely flexible, allowing visits to any medical professional and leaving the policy holder to make most of the decisions about their medical care. The policy holder pays the bills and submits a claim to the insurance company for reimbursement. The only limitations are that any services must be specified in the policy in order for a claim to be accepted. These plans have higher deductibles and co-payments than managed health care (HMOs and PPOs).

Medicare

Medicare is a federal program that provides health insurance for individuals over the age of 65, or who are disabled. Qualified individuals must pay co-payments and deductibles, but much of their medical costs are covered by the program.

Medicare is divided into four parts: