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Types Of Plans

Basically, there are two general types of health insurance plans, indemnity health plans (also called fee-for-service plans) and managed care plans.
Indemnity Plans
An indemnity plan allows you to use any medical provider you wish. You do not have a primary care physician to manage your health care needs. This is the least restrictive of the various health care plans, but it is typically more expensive. The focus of indemnity plans is on medical treatment, not necessarily prevention.

Either you or your employer pays a monthly premium. You will then be responsible for a percentage of your medical expenses in addition to meeting a yearly deductible for each family member. However, these plans usually have a maximum annual out-of-pocket expense. Once this maximum amount has been paid, your insurance company will pay your remaining medical expenses for the year. Some indemnity plans do not cover preventive expenses like well-check visits.

There are three types of indemnity plans: basic health insurance, major medical insurance and comprehensive insurance. Basic health plans cover hospital room and care, some hospital services such as x-rays, surgery and some doctor visits. Major medical plans cover treatment for long-term illnesses or injury and comprehensive insurance plans cover a combination of items from the two other plans.

Managed Care Plans
A managed care plan is a health care plan that pays for and supervises the medical services you or a family member receives from an organized network of doctors and hospitals. The focus with managed care plans is often preventive medicine to help keep medical costs down. Managed care plans usually cost less; however, they offer you limited choice concerning your health care. There are three types of managed care plans: health maintenance organization (HMO), preferred provider organization (PPO) and point-of-service plan (POS).

Health maintenance organization plans charge a fixed monthly fee or premium. You choose a primary care physician from a group of eligible physicians for each member of your family. The primary care physician then directs the family member's health care needs. If you need to see another physician or specialist, you must obtain a referral from your primary care physician; otherwise, your insurance will not cover the expenses.

Preferred provider organization plans are like HMOs in that you pay a monthly premium and are given a list of providers within the network. However, you are not required to choose a primary care physician. Without a primary care physician, there is no one to oversee your health care needs; however, you can choose to see any physician outside of the network. You will simply pay more for those services.

Point-of-service plans combine elements from both HMOs and PPOs. Like HMOs, you must choose a primary care physician from within a given network for each member of your family. However, the primary care physician may refer you to a specialist outside of the network. If you are referred to a physician outside of the network, you will be responsible to pay a higher amount for the services.

Choosing the Right Plan for Your Family