Health Insurance Explained
has changed since the days of family doctors and house calls. Today
the rising cost of everything from prescription drugs to diagnostic
treatments has us turning to managed care networks for workable
health care solutions.
Times may have changed, but there are still a number of good alternative
insurance options to consider. Health plans can be broken down
into four basic categories, HMOs, POSs, PPOs and Fee-for-Service
The Four Basic Health Plans
Health Maintenance Organizations: By choosing
an HMO Plan, you’ll be paying for your coverage in advance,
rather than paying for each health related service separately.
For the price of a monthly premium, your HMO will offer you a range
of benefits from preventative care to dental or vision coverage.
When it comes to your doctors, more often than not they will be
employees of your health plan. You will need to choose what’s
known as a “primary care giver,” who will be responsible
for coordinating your care—your HMO will provide you with
a list of providers. The majority of HMO plans require a co-payment
for an office visit, a hospital stay, or specialist health service.
For a better picture of how
an HMO works, check out the article here.
Point of Service Plans: POS plans are HMO’s
that allow you to control your own health care, rather than insisting
on referrals from your primary care physician. Whenever you have
a medical need, you’ll have three “point of service” choices.
- Go through your primary care physician, and receive coverage
under HMO guidelines.
- Get your care through a PPO provider and receive coverage under
PPO’s in-network rules.
- Choose the services of a healthcare professional outside of
the HMO or PPO networks, and receive coverage under out-of-network
For a better
understanding of how a POS Plan works, check out our article
Preferred Provider Organizations: Your PPO Plan
negotiates lower overall fee arrangements with an assortment of
doctors, hospitals, clinics, and other health providers. Your cost-sharing
rate will be lower in-network than out, but you still have the
freedom to step out of the network for treatment if you prefer.
For example . . . Your PPO may cover 90% of costs when you receive
care from an in-network provider. If you decide to see an out-of-network
care provider, your PPO might only reimburse you for 70% percent
of your costs. You may also have to cover any difference between
what the physician charges and your PPO’s negotiated fees.
For more on the ins and outs
of PPO Organizations, read our article here.
Fee-for-Service Plans (Indemnity): These traditional
plans are as simple as they sound. Your Fee-for-Service plan reimburses
medical providers for each service you receive on a case by case
For example, if you’ve had to have and an emergency-room
x-ray, the hospital will submit a claim to your insurance carrier,
who then pays the hospital’s fee.
Your Fee-for-Service plan requires you to pay an annual deductible
before it begins to reimburse you for covered services. It also
gives your family the freedom to seek whichever doctors, hospitals
and clinics you prefer.
For more information
on how Fee-for-Service plans work, read our article here.
HMOs and Fee-for-Service Plans are on opposite sides of your health
insurance spectrum, while POS and PPO plans fall somewhere in between
them. HMO’s offer the least freedom, followed in order by
the POS, the PPO and Fee-for-Service plans. Cost-wise, an HMO is
usually the least expensive option, followed by POS plans, PPO
plans and finally Fee-for-Service Plans.