Even though it's not required by law, health insurance is coverage everyone should have. Often provided by your employer, health insurance covers you when you fall ill and helps off-set your medical costs. Most health insurance plans involve monthly payments which are set based on the type of medical coverage you receive and if the coverage is just for you or for your immediate family. Others involve deductibles and co-payments. So, which is which?

Types of Health Insurance The primary forms of health insurance coverage are Health Maintenance Organizations (HMO), Point-of-Service (POS), Preferred Provider Organizations (PPO), and Indemnity plans. HMO, POS, and PPO are managed care plans. Each type of managed care health plan functions differently and offers medical coverage in diverse ways. The indemnity plan is not considered a managed care plan and is unique in its own way. Here are the differences between the different health plans.

An HMO is a plan where members pay a monthly fee. That fee covers most medical expenses for the month, regardless of how much medical care is needed (if any at all). Often, HMO members are also required to pay a co-payment (also referred to as a co-pay). A co-payment is an amount paid at the time of treatment to offset a portion of the medical costs. The amount of the co-pay varies depending on the specific medical treatment. Medical office visits have a different co-payment rate than prescriptions and more involved medical treatments.

HMOs also have a network of doctors that members can visit for their medical needs. However, they must stay within the HMO network if they want to be covered. Visiting a doctor who is not in the HMO network may result in out-of-pocket expenses.

A PPO is a plan where members pay for medical visits and services on an as-provided basis. Members can only visit doctors within the PPO network and are reimbursed for their medical expenses. Medical expenses and reimbursement amounts are established by the provider and the PPO subsidizer.

A POS is a plan where members pay no deductible. There is, however, normally a small co-payment members must pay when they visit a physician. POS plans require members to select a physician as their primary care physician (PCP). This physician is their primary care giver regarding all health-related issues and must sign off/refer members to other physicians if a specialist is needed. Just like HMOs, members of POS plans must stay within their network of doctors.

An indemnity plan gives plan members more freedom than managed care plans. In an indemnity plan, members can see any doctor they wish. There is no network of physicians involved in an indemnity plan and no restrictions. However, this type of medical plan is significantly more expensive than managed care plans and involve more out-of-pocket expenses.

When it comes to health coverage, you get what you pay for. If you want complete freedom in who you can see for your ailments, expect to pay more than networked managed care plans. However, only you can determine what type of medical plan best fits your health needs. If you need to see health specialists and can't afford to stay within a network, a managed care plan might not be your best choice. When selecting a health care plan, remember that each plan functions differently from the next. If you have preexisting health conditions, use them to determine what type of health insurance coverage is best for you.

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Deciding which individual and family health insurance plan is just right for you and your family can seem as challenging as judging which apple is the very best out of an entire barrel at the supermarket. The apples are all different sizes, shapes and colors, and the health insurance plans all offer different fees, types of benefits, and levels of coverage.

For many people, the group health insurance plan sponsored by their employer offers them the most affordable coverage. Group health insurance is exactly what it sounds like: a health insurance plan or plans offered to groups of people through their employers. Individual and family health insurance, on the other hand, is offered to individuals and families instead of employer groups, and it can be a much more attractive and affordable option than many people believe.

Because individual and family health insurance is not offered through an employer, those who choose this type of insurance will pay the entire cost of the regular premiums. However, there is a wide range of plan types available, allowing smart consumers to maximize the coverage they are receiving for the money they're investing in the plan. In some situations, they may even be able to save money compared to what they would have spent in premiums for an employer's group health insurance plan. Either way, consumers should never forget that the money they're spending each month for health insurance is 100% tax-deductible.

There are two basic types of individual and family health insurance plans: indemnity and managed-care. An indemnity plan gives its policy holders more freedom to choose the source of their health care, allowing them to receive treatment where and from whom they choose. It is also likely to require them to pay out-of-pocket for the services they receive and file the paperwork themselves in order to be reimbursed. Many indemnity plans also require higher deductibles that must be met before the plan coverage will begin, and they also pay claims based on a percentage of the cost for the care. Managed-care plans, on the other hand are usually based on a network of approved health care providers from whom their policy holders can receive treatment. Because this network of providers has, in most cases, agreed to provide the treatment at a pre-set price, the care will cost less out-of-pocket for the consumer. The paperwork is generally taken care of by the health care provider instead of the policy holder, and the care is covered with only a low percentage coinsurance or set co-payment amount required from the policy holder.

There are three types of managed-care plans: HMOs, PPOs, and POS plans. These options are all based on provider networks and require their policy holders to pay for their health care depending on their tendency to seek care from in-network or out-of-network providers.

In each category, there are dozens of available plans offering different levels and types of coverage that allow users to choose based on personal needs. Many plans require a deductible amount to be met for each plan year before coverage begins, and monthly premiums are likely to be lower for plans that have higher deductibles. This along with other factors affects how much the plan will cost the consumer to use.

Therefore, a person who expects to seek health care only a few times a year will likely benefit by choosing a plan with a lower monthly premium. On the other hand, those who seek routine care and have a history of more physician visits, and/or who regularly fills expensive prescriptions, can best serve their medical needs with a plan requiring a higher monthly premium and low or no deductible.

These are not the only factors that should be considered when choosing a plan. Someone who travels often may want to consider the possibility of needing to seek care while far from home and the advantages of an indemnity or a more flexible managed-care plan, so that unexpected out-of-network expenses can be covered. Women who expect to become pregnant during their plan year must carefully study the coverage offered to them during pregnancy and delivery. No plan is right for everyone; that's part of the reason there are so many from which to choose.

Making a smart choice requires thorough study of the plans available. The needs of every person who will be covered by the plan should be taken into account. With careful consideration and planning, those needs can all be met affordably through family and individual health insurance. 

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At first glance, an indemnity health insurance plan may seem to hand policy holders the short end of the stick. After all, this type of insurance tends to pay less toward health care claims than a managed-care plan. Additionally, the policy holder generally pays more out-of-pocket and has to deal with more paperwork when it comes time to file a claim

However, for a great number of people, indemnity is the undeniable way to go. Individuals may choose indemnity plans because they have favored health care providers who are not part of a managed-care network, or because they travel a lot and need the flexibility to seek care away from home, or for any number of other reasons. What makes an indemnity plan the right choice is different from one consumer to the next.

What primarily separates an indemnity plan from a managed-care plan is the presence or absence of a provider network. A managed-care plan comes with a network of health care providers who have arranged with the insurance company to provide their services at an agreed-upon rate. This allows the insurance company to know how much to expect to pay for any given service. It also allows the provider to know to some extent which services will be covered and the corresponding level of coverage. Because the insurance company has made prior arrangements with these providers, paperwork can be filed directly between the provider and the insurance company. The insurance company pays the provider directly for care, requiring the policy holder to pay only a small percentage of coinsurance or minimal co-pay amount out-of-pocket.

With an indemnity plan, on the other hand, there is no network of pre-approved providers. This means the insurance company is taking a greater risk when it comes to a policy holder's choices of health care providers. The policy holder may choose a provider that charges more than the insurance company expected to pay for a particular service.

For this and other reasons, insurance companies offering indemnity plans give themselves some protection from the choices their policy holders may make. They typically charge a higher annual deductible that must be met before coverage begins. They often require policy holders to pay the full cost for the service out-of-pocket and then to file the paperwork of the claim themselves to seek reimbursement for the care. This protects the insurance company from paying for services that are not covered under their plans and also from paying more than what is reasonable for the care their policy holders are claiming. The insurance company may determine a reasonable charge for a service by referring to a table of UCR (usual, customary, and reasonable) figures determined by the average cost billed by providers in a particular area.

An indemnity plan may sound like a poor choice for a consumer to make, but for the reasons mentioned earlier as well as others, an indemnity plan can be the best choice for some consumers. An indemnity plan does not require its policy holders to choose a primary care physician (PCP) or obtain a referral to receive care. In this way, it's one of the easiest plans to use. Policy holders seek their health care whenever and from whomever they choose.

Deciding between an indemnity and a managed-care plan is an individual choice. Like all decisions pertaining to health care and health insurance, the options should be thoroughly researched and carefully considered. Under the right circumstances, an indemnity plan can offer the greatest flexibility in obtaining health care and provide its policy holders the opportunity to be in maximum control of their health care choices.

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A Health Maintenance Organization (also called an HMO) is one of three managed care health insurance systems in the United States. An HMO is designed to offer financial support and medical treatment to plan members. Some managed care systems don't offer medical treatment themselves. Rather, they offer different levels of financial coverage based on whether you visit in-network or out-of-network care providers. HMOs, on the other hand, have a system of physicians and hospitals that are involved in a specific coverage structure. If you're part of a Health Maintenance Organization, you are only covered if you go to a physician within the HMO network.

HMO members pay monthly fees that cover most of the medical expenses they may or may not incur during the month. Often, they are also required to pay a co-payment (also referred to as a co-pay). A co-payment is an amount paid at the time of treatment to offset a portion of the medical costs. The amount of the co-pay varies depending on the specific medical treatment. Medical office visits have a different co-payment rate than prescriptions and more involved medical treatments.

Health Maintenance Organization plans also require members to select a physician as there primary care physician (PCP). This physician is the member's primary care giver regarding all health-related issues and must refer them to other physicians if a specialist is needed. Members cannot go directly to a specialist on their own accord. Not all managed care providers have this requirement.

A preferred provider organization (also known as a PPO) does not require a PCP.

Why a Health Maintenance Organization?
Health Maintenance Organizations are generally more affordable than other managed care insurance systems. The monthly fees and co-payments are usually not high and are an affordable alternative to paying a percentage of the bill like other managed care providers require.

HMOs are also very "prevention" focused. That means they promote ways to stay healthy rather than ways to treat illness. Health Maintenance Organizations provide their members with a wealth of medical information on how to prevent illness and disease. They often distribute health guides and informative handbooks on how to stay healthy and avoid getting sick. This strategy helps HMO members avoid multiple visits to the doctor for illnesses that could have been easily avoided.

Why Not a Health Maintenance Organization?
HMOs are more restrictive than other managed care providers.

HMOs only cover members if they visit doctors within the HMO insurer network. If there's a specialist a member wants to see for a specific ailment and the physician is not in the HMO network, the member will have to pay out-of-pocket expenses.

Also, since members have to initially establish a primary care physician, all medical treatments and referrals need to go through their PCP. Even if a specialist is in the HMO network, members still need to get approval from their PCP before they visit the specialist if they want to be covered by their HMO.

A health maintenance organization is a practical solution for health care coverage. Monthly fees and co-payments are often minor and cover members regardless of how often they visit their physician each month. However, HMO members do have restrictions that could hinder specialized treatment if needed.

Before you decide on an HMO, read all the facts. Base you decision on your typical medical needs and whether or not an HMO will be able to provide you with the medical care you need.

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A Preferred Provider Organization (also known as a PPO) is a managed care system that offers members health benefits and medical coverage based on a specific structure and network of medical professionals and facilities. PPOs are commonly sponsored by employers or insurance companies and help subsidize member medical costs. All doctors, hospitals, and health care providers involved in the network are selected by the preferred provider Organization to provide medical assistance and health care coverage to its members. PPOs encourage members to utilize the doctors and hospitals within the PPO network but do allow members to visit out-of-network medical services providers. PPOs cover more of your medical costs if you visit an in-network provider. However, if a member visits a doctor or medical facility that is not within the PPO network, he/she is not covered at the level the member would be if he/she visited an in-network provider.

The member costs involved in a Preferred Provider Organization are specific to the member's medical needs. Unlike an HMO where members pay a monthly fee for coverage, PPO members pay for their medical coverage based on the individual medical services used. But like an HMO, PPO members are often required pay a co-payment. A co-payment is an amount paid at the time of treatment to offset a portion of the medical costs. The amount of the co-pay varies depending on the specific medical treatment. Medical office visits have a different co-payment rate than prescriptions and more involved medical treatments.

In addition to a co-payment, and unlike an HMO, PPO members may be required to meet a deductible. A deductible is a dollar amount the Preferred Provider Organization requires a member to pay out-of-pocket before the member can begin to be reimbursed for his/her medical expenses. The deductible amount is normally an annual sum. If within six months of a year a member pays enough out-of-pocket expenses that equate the deductible amount, the PPO sponsor will start reimbursing the member for future medical expenses.

However, if within a year, the deductible amount is not met, the out-of-pocket expenses do not carry over into the next year. The member's out-of-pocket expenditure amount is set back to zero and the member must start over at the beginning of each year. However, some Preferred Provider Organizations have exceptions and offer carry-over deductible features.

Why a Preferred Provider Organization?
Preferred Provider Organizations offer more freedom and choices than other managed care insurance systems. Even if members go out-of-network for their medical needs, they are still covered to a certain degree. HMOs, for example, do not cover members if they go outside of the HMO network of providers. At least with a PPO, members get some coverage. Also with a Preferred Provider Organization, there is no need to establish and then have all medical treatment approved by a primary care physician (also known as a PCP). HMO plans also require members to select a physician as there primary care physician (PCP). This physician is the member's primary care giver regarding all health-related issues and must sign off/refer members to other physicians if a specialist is needed. This limits the freedom a member has within the HMO network to visit an in-network doctor.

Why Not a Preferred Provider Organization?
Preferred Provider Organizations can be more costly to plan members. Since PPOs involve a deductible, PPO members often pay more out-of-pocket expenses for their coverage, depending on the specific medical services a member needs throughout the year.

Also, even though members have the freedom to visit an out-of-network provider, the cost to do so will most-likely be significant. Preferred Provider Organizations strongly recommend members to use in-network physicians and hospitals. To strengthen their recommendation, PPOs often pay noticeably less for out-of-network care than they do for in-network coverage.

A Preferred Provider Organization is a beneficial health plan for those seeking a wide range of medical coverage possibility. PPOs cover members even when they go out-of-network for their medical needs. However, PPO members do have added costs to going out of the PPO network for medical care.

Before you decide on a Preferred Provider Organization, read all the facts. Base you decision on your typical medical needs, your budget, and whether or not a PPO will be able to provide you with the medical care you need for the funds you have available for medical coverage.

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