Choosing Among Many Types of Health Plans
Health insurance has changed a lot in the last few years. HMOs, PPOs, major medical, fee-for-service, and MSAs - there are a lot of different health plans to choose from, and the differences can be dramatic.
Find out which one fits your needs best.
Explains the many areas of variation between health plans
Describes the two main categories of health care coverage
Outlines the different types of managed-care coverage
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The search for the best coverage at the lowest price starts with comparing as many plans as possible from providers in your area.
To choose among the hundreds of plans available to you, use our fast and free comparison service to get quotes from major insurers in your state:
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Health plans can (and do!) differ widely in all the key areas: coverage, cost, and details of care. This mini-guide explores each major type of health plan in-depth.
How health plans differ
In this section of our site, we will explain in the simplest possible terms how different health plans work, and, most importantly to you, how they affect the health care that you receive.
First of all, it's important to understand that health insurance policies fall into two basic categories:
managed-care health plans and
indemnity health plans (also known as "fee-for-service").
The fundamental differences between these two types of health care plans can be traced back to two different approaches to health care.
Basically, you can either choose to focus on prevention and pay less for coverage (managed health care), or you can pay more for coverage and be completely covered no matter what happens (indemnity or "fee-for-service").
What does this mean for you?
Under the more traditional indemnity health plans, the emphasis is on patient choice, patient responsibility, and immediate patient care, resulting in a more "complete" level of coverage (priced accordingly higher, of course.)
With the somewhat newer managed care plans, specifically HMOs, the emphasis of the health plan is focused on preventative medicine and lower costs.
To further complicate this important issue, today there are many health plans that combine aspects of both "coverage philosophies". The newest options, PPO and POS plans, fall somewhere in between pure indemnity and pure managed care. (These "mixed" types are becoming the most popular health plans and should be explored.)
In addition to the health insurance plans mentioned, MSA plans, or medical savings account plans, are an important means of paying for your health insurance, which is a very important component when shopping for health insurance.
But what exactly do these different approaches mean for you, the patient?
What kind of care do health plans cover?
This seems like a rhetorical question (they cover medical care, right?), but different health plans can have very different approaches to care.
Indemnity insurance, the "original" type of health plan, focuses on the treatment of unexpected illnesses, and frequently allows a patient total control over their choice of physician.
In return, patients often accept responsibility for keeping receipts and medical bills, and for completing the claims procedure, and filling out the necessary paperwork.
Managed care, which is becoming the more well-known category of health plans, has a different focus. Under these health plans, the emphasis is on keeping medical costs low by providing preventative health care (reducing medical costs by keeping you healthy in the first place).
This means that routine check-ups are more likely to be covered, but that patient choice over care givers will be more limited. Additionally with this type of health care, the burden of paperwork generally falls on the insurer.
Is "managed care" a bad word?
Managed health care plans, especially HMOs, have received much media criticism in the past, but they are often considerably less expensive (and therefore can be more appealing) than traditional indemnity health plans. But as with everything else, you get what you pay for...
Oh, yes, health plans cost money. Health insurance is serious business, and if you are serious about acquiring some level of coverage for yourself, your family, or your employees, then get a free health insurance quote at eHealthInsurance, where you can fill out one short form, and gain access to price and feature comparisons from hundreds of health plans.
You should also supplement your search by filling out a
free quote request form at NetQuote, a service that will put you in touch with agents right in your area who can help you design the perfect insurance package to fit your needs.
So which type of plan is "best" for you?
There's no easy answer. Health insurance is always a compromise between cost and protection, and you need to look at both your needs and your financial capabilities when you evaluate a policy.
Unless you already know exactly what coverage you require, we recommend you take a minute to learn about all these different health plans. Each kind suits a certain type of person, and you'll feel more comfortable making this big decision if you've got a handle on your options.
First up, we tackle indemnity policies, then review managed care, looking specifically at the HMO, PPO, POS, and even the MSA.
Do you feel that you already know all the important differences between these policies? Then find tips on finding responsible and affordable health insurance coverage and reasonable deductibles in our Guide to Choosing Health Insurance. Or jump to the end of this exercise and get free online health insurance quotes.
Next: Fee-for-service plans will cover everything - at a price.