The Different Types of Health Insurance Plans You Should Know About
Health insurance comes in many shapes and sizes with several different types of covers to select from. Once you have gauged your needs and you are aware of what you are looking for, the next step is to familiarize yourself with the types of plans available before even looking at the list of providers.
All health insurance providers offer healthcare insurance plans that belong to one of the below groups, and here we take some time to take a look at how each plan functions and get a general idea of how they are different from one another:
This type of health insurance has been the norm for many years and generally referred to when speaking of traditional health insurance. With this type of coverage, you have the reins in your hands which means you call the shots when it comes to which doctors, facilities, health institutions, and health care providers you select. This option allows you to be referred to any specialist and requires no permission from the insurance company or any investigations into whether the visit was a necessary one or not. You may need clearance in some instances as will be described by your specific provider.
The downside to having such comprehensive cover and enjoying plenty of control is that the out-of-pocket expenses are generally steeper. The insurance provider generally pays for about 80% of your bill, and on some occasions, you may need to pay upfront and then request a reimbursement afterward. This means you do need to have emergency cash funds to dip into should this event arise.
This is a form of health insurance coverage that has been around in some or other form since way back in the 30s. In the last decade, insurance has really taken off and evolved immensely. All plans of this nature involve specific arrangements between a selected group of health care providers called a network and the insurer. Policyholders then benefit by obtaining discounted rates when using health care providers from the network.
Preferred Provider Organizations (PPO)
This form of health insurance cover also involves a network of pre-selected healthcare providers with a financial incentive scheme that encourages policyholders to remain within the network — much like the managed care coverage plans. However, here, you have the option of visiting providers out of the network and then request reimbursement from the insurer either for a percentage of the bill or the amount that you would have been covered for if you had seen an in-network provider.
This plan is one that is also similar to the Preferred Provider Organization plan except that there is a gatekeeper involved. For POS, there is a network of doctors from which the policyholder selects a Primary Care Physician or PCP. The policyholder then may visit out-of-network specialists and be covered much like the conditions of a PPO. But the referral has to be made by a PCP that was selected from the network. It may be possible to receive a reimbursement if you were referred by a doctor out of the network, but usually, the amount is very small. POS plans may have more to offer in terms of preventative care services like programs or courses to improve on your health and some health-related discounts.
Health Maintenance Organizations (HMOs)
HMOs are usually closed panel plans that offer the lowest premiums but also the least flexibility as a trade-off. These plans are designed in a way where policyholders may only visit doctors within the network scheme, and the referral to a specialist is only made by the PCP that has been selected from the network. Any cost incurred aside from these will have to come from your pocket without reimbursement from your insurer. On the plus side, HMOs are reputable for covering health improvement programs and having excellent preventative care services.
It is best to mention at this point that there is no single specific type of health insurance cover that is better than the rest. You cannot compare insurance covers or plans to one another without taking into account the needs as well as the preferences of the insured. Think about how important autonomy is in terms of your health plan or whether you prioritize a low premium over flexibility. These are just examples of some of the many questions you need to answer before deciding on a plan that is best for you.
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