Types of Health Care Plans for Groups & Individuals

Health insurance is designed to control the financing and delivery of health care to those enrolled in specific plans. It is supposed to control healthcare costs, while still delivering the most appropriate care in as unrestricted an environment as possible. Health insurance is divided into three types: Health Maintenance Organizations, Preferred Provider Organizations and Point of Service plans. These types of insurance are purchased by groups and individuals.

Health Maintenance Organizations

• Health Maintenance Organizations are the most restrictive of all the insurance types in that you have the least amount of options when choosing healthcare providers. HMOs enter into contracts with healthcare providers such as hospitals, doctors, labs and pharmacies. This creates a provider network for you to use for your healthcare needs. As a member you can only see providers outside the network if it is an emergency or if you have the have prior authorization to do so.

  If you are a member of an HMO you will select a primary care provider. This is usually an internist or a doctor of general or family medicine. This doctor arranges the care you need with other special healthcare providers by giving you a referral to someone in network. Although you are limited in your choice of providers, HMOs tend to offer the greatest amount of benefits for the least amount of out-of-pocket cost.

Preferred Provider Organizations

• Preferred Provider Organizations also form a provider network by entering into contracts with healthcare providers such as hospitals, pharmacies, doctors and labs. However, PPO members do not have to choose a primary care provider. As a member of a PPO, you are simply encouraged to use providers that are in network. This usually comes in the form of lower co-pays and deductibles for in network providers versus out of network provider. Likewise, you do not need to get referrals when you have a PPO. Generally, PPOs carry a larger out-of-pocket expense for members than HMOs.

Point-Of-Service Plans

• Point-Of-Service plans are a combination of the HMO and PPO health insurance plans. If you have POS plan, you are allowed to choose whether you are using a PPO or HMO each time you receive care. Members are encouraged to pick a primary care provider, but you do not have to use them for your care. As a member of a POS, your costs are lower when you use your primary care provider and obtain referrals for service. That being said, you are within your right to seek out-of-network care at any time at a increased cost. This type of plan is preferred by many because it offers more flexibility and freedom than the standard HMO or PPO.