Basic Health Insurance Information

Obtaining health insurance starts with gaining basic knowledge about medical coverage. Private health insurance coverage comes in a variety of programs, including indemnity and managed care plans. Public programs offer coverage funded by state, federal and local governments and include policies for seniors, children, families, the disabled and veterans of the Armed Forces. Once obtained, health insurance can defray the cost of medical care, paying all or a portion of doctor bills, hospital expenses and prescription medications costs.

Indemnity Plans

• Indemnity health insurance plans allow policyholders to choose the doctor or hospital they want to use. Policyholders pay a monthly premium and the insurance reimburses them or pays the medical provider directly for medical services. Indemnity policies can require the policyholder to pay a deductible before coverage begins, and can limit services covered.

Managed Care Plans

• The most common managed care plans include health maintenance organizations (HMOs) and preferred provider organizations (PPOs). An HMO provides policyholders with lists of doctors and hospitals that make up a network of health care providers. Policyholders must select a primary care physician to oversee all health care needs. HMO plans often require policyholders to pay co-payments for prescriptions and doctor visits. PPO plans do not require policyholders to choose a primary care physician, but do require policyholders to use the services of participating medical care providers, including hospitals and physicians. Participating medical providers agree to render services at a previously negotiated rate. Policyholders can choose to obtain services from nonparticipating (out-of-network) medical care providers, but typically by paying more out-of-pocket costs.

Government-sponsored Health Insurance

• Medicaid, funded by the federal and state governments, offers health insurance for disabled and low-income residents. Each state administers its own Medicaid program, with state-specific program names, such as TennCare in Tennessee and Medi-Cal in California. The federal government offers health insurance for the disabled and people over the age of 65 through the Medicare program. The U.S. Department of Veterans Affairs offers health insurance for veterans through its TRICARE/CHAMPUS and CHAMPVA programs. Persons seeking government-sponsored health insurance can apply through government agencies, such as county social services offices.

Preexisting Conditions

• Health insurance companies can exclude coverage of preexisting conditions, health conditions that existed before obtaining an insurance policy. The Health Insurance Portability and Accountability Act mandates that insurance companies must cover preexisting conditions immediately when a policyholder was insured 12 months prior to obtaining a new plan. For people who were not insured previously, health insurance companies often pay for preexisting conditions 12 months after obtaining a policy. Federal law prohibits insurance companies from excluding children from family insurance policies, based on preexisting conditions. The law will extend the same protections to adults, starting in 2014.

Employer and Individual Health Plans

• Employers can provide health insurance for their employees, including indemnity and managed care plans. Employer-sponsored plans often offer the lowest premiums, since employers often contribute to the cost and receive group rates. Individual plans can offer coverage for individuals, their spouses and dependent children. Sold directly to consumers by health insurance companies and insurance brokers, individual plans can come at a higher cost than employer-sponsored plans and can often include fewer health care services.