Personal Health Insurance Policies

Personal health insurance policies, commonly referred to as private health insurance plans, are bought directly from insurance companies by individuals and families. Private health insurance is obtained through two types of plans: Managed care and indemnity health. Private health insurance plans provide financial assistance to cover some or all of the insureds' medical bills.

Managed Health Care Plans

• Managed health care plans provide affordable coverage by limiting medical options to necessary and preventive care. There are three types of managed health care plans available: health maintenance organizations (HMO), preferred provider organizations (PPO) and point of service plans (POS). Plan members are given provider networks which are groups of doctors who lowered their rates in exchange for patients. Insurers encourage or require members, depending on the plans, to visit doctors in their provider networks to take advantage of discounted rates. Some plans also require members to choose primary care physicians (PCPs) from their provider networks. PCPs control costs by only referring their patients for necessary care.

Indemnity Health Plans

• Indemnity health insurance policies. Unlike managed health care plans, indemnity health plans do not offer provider networks to their members or make them choose PCPs. Members have more control over their health care decisions as they are allowed to seek medical services anywhere. Three types of indemnity plans exist, with two of them being reimbursement plans: one pays a percentage, generally 80 percent of the costs, while the other pays entire medical bills. The third plan pays members specific amounts each day for a maximum number of days.

Benefits

• Individuals have the freedom to choose private health plans that fit their budgets. Policy holders are in control of the terms and conditions of their coverages as well. They are able to add or eliminate policy features, riders and other options to maximize its benefits. These insurance plans are also portable, which means policy holders can take their coverages with them wherever they go.

Disadvantages

• Insurers grant or deny coverage to applicants based on the information submitted on their insurance applications. A primary reason for applicants to be denied private health insurance is having pre-existing conditions, which are medical problems that were present before they applied for coverages. If applicants are accepted for private health insurance but are considered higher risks, insurers will charge them higher premiums.