Types of Health Insurances

There are many health insurance options available in the United States. The type of health insurance you choose depends on how much you are willing to pay and how much flexibility you want. The traditional fee-for-service insurance plans, or indemnity plans, are the most expensive but offer the most flexibility. HMO plans are the cheapest, with the least flexibility. Other types of insurance include PPO and POS plans. Most insurance plans require a monthly premium. As a member of an HMO, a PPO or a POS, you are not required to fill out any paperwork when you visit a physician's office or a hospital. You need only to present your membership card and pay a co-payment.

HMO

• As a member of a health maintenance organization, you must choose a primary care physician, frequently called a PCP, from a list of physicians who are part of the HMO network. You pay a monthly premium, and in return the HMO covers costs associated with preventative care, such as checkups and immunizations, as well as medical treatment, such as hospital stays, surgeries and lab tests. If you need to see a specialist, you must get a referral from your PCP. HMOs do not cover costs associated with visits to physicians who are not "in network."

PPO

• Preferred provider organizations operate similarly to HMOs, but PPOs offer more flexibility. You can choose a PCP from outside the PPO network, but you must fill out additional paperwork and pay for a larger portion of the medical costs. You do not need a referral from your PCP to visit a specialist as long as the specialist is part of the PPO network.

POS

• Point of service plans are similar to HMO and PPO plans but offer the most flexibility. POS plans cover most costs, even if your PCP refers you to a specialist "out of network." You can get some coverage--restrictions might apply--even if you refer yourself to a specialist outside the network.

Fee For Service

• A fee-for-service plan requires a monthly premium. Additionally, you must pay some of your medical costs each year, called a deductible, before your insurance kicks in. Generally, there are no restrictions on your choice of health care providers or specialists, although you might need to get clearance from the insurance company before you go in for a visit.

Medicare and Medicaid

• The federal government, in partnership with state governments, has insurance plans for low-income people and the elderly. You can qualify for Medicare if you are age 65 and older, are younger than 65 with disabilities or suffer from end-stage kidney failure. Medicaid is reserved for people with low income, the elderly and the disabled. You have to be approved by the Centers for Medicare & Medicaid Services (see Resources) to get these services.