What is Health Insurance?
Insurance against loss by illness or bodily injury. Health insurance provides coverage for medicine, visits to the doctor or emergency room, hospital stays and other medical expenses. Policies differ in what they cover, the size of the deductible and/or co-payment, limits of coverage and the options for treatment available to the policyholder. Health insurance can be directly purchased by an individual, or it may be provided through an employer. Medicare and Medicaid are programs which provide health insurance to elderly, disabled, or un-insured individuals
What are the Types of Health Insurance?
Major Medical
In Major Medical Insurance, the insured is responsible for paying a deductible before insurance pays benefits. Then, the insurance companies pay 80% of the medical bills and the insured would be responsible for the remaining 20%. The insured can choose to go to any doctor or hospital to receive services, pay the provider directly, and then be reimbursed 80% of the bill by the insurance company. The insured can sign a release requesting the insurance company pay the health provider directly and would then be responsible for paying the doctor or hospital the remaining 20%. When people speak about “traditional health insurance,” they are referring to Major Medical Health Insurance.
HMO
An HMO, Health Maintenance Organization, is a type of insurance plan that focuses on the long term care of its insured and is normally less expensive than a Major Medical Plan. Each patient has a Primary Care Physician, who is responsible for providing preventive care and coordinating care for the patient if additional specialists or hospitalization is necessary. This keeps costs down. In addition, limiting choices, such as choosing physicians only within a network and not covering services that are deemed unnecessary, controls costs. HMOs are considered “managed health care.”
PPO
A PPO, Preferred Provider Organization, is similar to an HMO as there is a network of physicians, but unlike an HMO in that an insured is not limited to network physicians and can see any doctor they choose. However, co-payments and deductibles will be less for in-network services. In addition, network physicians determine reasonable charges therefore, if an out-of-network physician charges more for services, the insurance company will still pay only 80% of the in-network charges. The insured will often pay higher fees for out-of-network services. Some people prefer the freedom to choose their own doctors and not be limited to a network.
POS
A POS, Point of Service, is considered to be a combination of a PPO and an HMO. The insured chooses a Primary Physician and all health care should start with the patient consulting this physician. This doctor authorizes a referral to a specialist, in or out of the network. (In HMOs, specialists must be within the network for the insured to be covered.) If a patient sees a specialist without a referral, the insurance company may choose not to pay for the services. A POS plan is also considered a managed health care plan, but the insured has more options than in a HMO.
