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Different Types of Health Care Policies

When you are shopping for health insurance policies, you may hear different acronyms bounced around like PPO and HMO. While decoding the advantages and disadvantages of different health care plans can be confusing, it is important to choose the correct plan for your needs, and not to agree to any policy, prior to gaining a complete understanding as to how it works.

  1. Fee-for-Service Health Plans

    • According to ForeignBorn.com, fee-for-service health plans are the most common type of health insurance policies issued. Besides your monthly payment, known as your premium, you are also responsible for a deductible, a fixed amount of money you need to pay for annual medical care, before the insurance company will start to pay for services. Once you have paid the deductible, which could be anywhere from $250 to upwards of $5,000, the insurance company then pays a percentage of subsequent health charges. There is usually a cap for your out-of-pocket expenses each year. Your premium, deductible, co-insurance and out-of-pocket expenses will vary from plan to plan.

    HMO

    • A health maintenance organization (HMO) gives you less options than other plans since you must use a doctor in their specific network. However, you are likely to have no deductible and only pay a small co-pay when you see a doctor. Since your choices are more limited, you may need to wait longer before getting an appointment with a doctor. Most HMOs also require you designate a primary care doctor. You must usually see this doctor first and get a referral before seeing a specialist. The specialist most also be part of the HMO network, if you want your insurance company to cover your visits.

    PPO

    • Preferred Provider Organizations (PPO) act like a combination of HMOs and fee-for-services health plans. Just like an HMO, you are given a list of providers who are "in-network." If you choose to go to one of these doctors, most of your fees, except a small co-pay, are generally covered. You will also be required to choose a primary care doctor with a PPO. However, if you opt to see a doctor outside your network, the PPO plan will cover a percentage of your fees. People choose PPOs because they give more options for doctors and service providers, even if you have to pay part of the coverage to see someone out of the network.

    Medicare and Medicaid

    • Not everyone can avoid private health insurance coverage. Luckily, the United States provides Medicare and Medicaid for citizens in need. Medicare is available to people over 65 years old who have paid Medicare taxes for at least 10 years. Otherwise, you will have to pay a premium. Basic Medicare helps pay for hospital stays and offsets medical costs. Medicaid, on the other hand, is available for people with low levels of income. Poverty alone is not enough to qualify for Medicaid. Eligible people must fall into one of these categories: pregnant, under 18, blind, disabled or over 65. Medicaid will also accept some people who have medical bills they cannot afford to pay.

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