Personal Health Insurance Explained

You don’t need to be told how much healthcare has changed since there were family doctors who regularly made house calls; it’s a part of your everyday life. Not so long ago, both you and I would have had relatively easy access to a wide open health insurance plan. Both of us would have been able to visit any doctor, hospital or specialist we choose to. These days, the rising cost of everything from prescription drugs to diagnostic treatments has driven most of us into the hands of managed care networks.

But that doesn’t mean that there aren’t a number of good alternative insurance options that you may want to be considering. In general, health plans can be broken down into four basic categories . . . HMOs, POSs, PPO’s and Fee-for-Service (Indemnity) Plans.

HMOs and Fee-for-Service Plans occupy opposite ends of your health insurance alternatives, while POS and PPO plans are somewhere between them. Just generally speaking, HMOs offer us the least freedom followed in order by the POS, the PPO then the old fashioned “Indemnity” Plan. When it comes to costs, however, the HMO isusually going to be your least expensive option, followed by POS plans, PPO plans and finally Fee-for-Service Plans. We’ve come up with the following descriptions to help give you a workable idea of what the specifics of those plans can mean to your family’s health care.

Health Maintenance Organizations

If you choose an HMO Plan, rather than paying for each health related service separately, you’ll be paying for your coverage in advance. For the price of a monthly premium, your HMO will be offering 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-so, your HMO will be providing you with a list of providers. Finally, the majority of HMO plans will require a co-payment for an office visit, a hospital stay, or specialist health service.


Point of Service Plans


There are HMO’s that will offer you the option of controlling your own health care, rather than insist that you get a referral from your primary care physician and these are known as point-of-service or POS plan.

Your Point of Service Plan will function depending on what you decide to do at your “point-of-service.” Meaning that whenever you have a medical need, you’ll have three choices.


  1. Go through your primary care physician, and receive coverage under HMO guidelines.
  2. Get your care through a PPO provider; in which case your services will be covered under a PPO’s in-network rules.
  3. Choose to use the services of a healthcare professional outside of the HMO or PPO networks, in which case the services will be covered by out-of-network rules.


Preferred Provider Organizations

Your PPO Plan will work for you by negotiating lower fee arrangements with an assortment of doctors, hospitals, clinics, and other health providers. That means that your cost sharing rate will be lower in-network than out but that you will still have the freedom to step out of the network for treatment if you prefer.


For example . . . Your PPO may cover 90% of your costs when you receive care from an in-network provider. If you decide to see an out-of-network care provider however, 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 PPOs negotiated fees.


Fee-for-Service Plans


You’ll probably find that most of these traditional indemnity plans are as simple as they sound. Your Fee-for-Service plan will reimburse medical providers for each service you receive on a case by case basis.

For example, If you’ve had to have and an emergency-room x-ray, the hospital will be submitting a claim for it to your insurance carrier who then pays the hospital’s fee.

Your Fee-for-Service plan will require that you pay an annual deductible before it begins to reimburse you for covered services. It will also give your family the freedom to seek out whichever doctors, hospitals and clinics you prefer.

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