Un-expected medical costs are the most common cause of bankruptcies in the United States. That is why choosing the correct type of health insurance could be one of the most important financial decisions that a person can make. For those that are looking to buy health insurance the first thing that they need to understand is the different types of health insurance policies. There are two categories of insurance plans, managed share plans and fee for service plans.
Managed Care Health Insurance Plans
There are three types of managed care insurance plans Preferred Provider Plans PPO’s, Health Maintenance Organization Plans HMO’s, and Point of Service Plans POS’s.
Preferred Provider Organization
In a PPO plan you are not assigned a specific doctor, rather you are given a list of the providers to choose from, and if use one of the providers in the PPO’s network you will receive a discount. PPO members generally have a number of coverage options but policyholders are usually required to pay a copayment of $25 to $30 for doctor visits.
Health Maintenance Organization
In a HMO you have to pay a fixed amount for your medical expenses. When you join the HMO you will be assigned to a doctor of their choice. The HMO will then pay for all of your medical expenses and you will only be required to pay a small deductible.
Point of Service Insurance
A POS plan is a hybrid mix of a PPO and HMO plan. It is similar to a HMO in that you will be assigned to see a specific doctor. However like a PPO you are allowed to see a doctor outside of the network, however if you do the insurer will pay a smaller percentage of the bill.
Fee for Service Plan
In Fee for Service Plans individuals can see almost any certified medical provider that they choose. The provider can charge an acceptable fee for the services that they provide, and once you pay the annual deductible along with a copayment of usually 20% the insurer pays the 80% balance.