Irrespective of if you are looking to buy a new health insurance plan or planning to change your existing plan, knowing the various health insurance options you have puts you in a very strong position. In this article, you will learn about the various types of health insurance plans and how they work.
Indemnity Plan
One of the most traditional health care plans, this plan gives the policy holder the liberty of choosing their own doctor and hospital.
Working of the Indemnity Plan
- In addition to the monthly premiums, the policy holder needs to pay the provider a certain deductible amount based on the health plan opted for before reimbursing any amount from the insurance provider.
- As there is no particular network of doctors and hospitals mentioned in the plan, the insurer has the liberty of choosing the one he prefers the most from any place in the country.
- Once the deductibles are paid to the provider, most of the costs are covered by the company though not all. Services like baby care and preventative programs may be left uncovered.
- There are two options while clearing the hospital or doctor’s bills. The policy holder can foot the entire bill and later on send in the paperwork to the provider to reimburse 80% of the total cost. The other option is to request the insurance company to pay the entire bill and repay 20% of the total cost to them.
- Coverage in case of a comprehensive plan that offers basic and major medical benefits is as follows. While the basic coverage takes care of the costs related to your stay in the hospital, surgical costs and the various examinations you had to undergo, the major coverage takes care of everything that does not come under the purview of the basic coverage.
- Your yearly out-of-pocket costs, which include the co-payments and yearly deductible, are “capped” by the indemnity plan with the “cap” ranging from $1000 to $5000 based on the plan.
Health Maintenance Organizations (HMOs)
The Health Maintenance Organizations are more popular than the Indemnity plans because of the lower premiums they offer to customers because of their tie-up with a particular healthcare provider. The plan holder has to opt for the doctors and hospitals that are specified in the network.
Working of the HMO health plan
- Premiums are paid on a monthly basis and a minor co-payment in the range of $5 – $10 is pending for each visit and $25 for stay in the hospital.
- While you will have to limit your choice to the options given in the network, exceptions will be made in case of emergencies.
- In addition to routine visits to the doctor, surgical cost, x-ray cost and other services, the HMO plan also covers baby care, mammograms, wellness programs and immunization costs.
- As compared to the other plans, HMO plans don’t expect you to fill in claim forms for doctor visits and stay in the hospital. A membership card which is provided will suffice for plan verification and processing of payment.
- Vision and dental coverage are also covered in this plan
Preferred Provider Organization Health Plan (PPO)
While the PPOs and the HMOs offer similar plans to their policy holders, people opt for the former over the latter because of the increased freedom of choice.
Working of the PPO health plan
- Choosing a provider in your PPO network will reduce your deductibles and co-payments.
- As compared to the HMO, the PPO offers a better ratio for payment which is in the range of 90/10 where 90% of the cost is borne by the insurance company and 10% by the plan holder (post deductibles and co-payments)
- The ratio will be in the range of 70/30 if the policy holder decides to opt for a doctor or hospital outside the network specified.
- PPO plans, like the HMOs, include all the medical services including preventive care, baby care, wellness programs, mammograms and surgical costs.
- Like HMOs, PPOs also use membership cards as opposed to claim forms.
Point of Service Health Plan (POS)
The Point of Service health plan is similar to the HMOs and PPOs, with the only difference being this plan given the policy holder the complete freedom of choosing their doctor or hospital either within or outside the specified network.
Working of the POS health plan
- On the lines of the rules governing the HMOs, the plan holder opts for a primary care doctor mentioned in the network.
- This doctor can refer the plan holder to a specialist outside the network if needed. The plan will still pay for almost all the costs.
- If the policy holder directly opts for a doctor or hospital outside the network, then, co-payments have to be made by the plan holder as mentioned in the guidelines of the POS plan.
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