Types of Health Insurance Policies

When it comes to health insurance, it's easy to be confused by the dizzying variety of plans and options. Here's a brief guide to the different types of plans available to you.

Health Maintenance Organizations (HMO)

A Health Maintenance Organization (HMO) is a type of health care plan that provides managed care. This means the HMO has specific rules that patients and doctors have to follow. When you join an HMO, you are usually required to choose a primary care provider, typically a doctor. Your primary care provider has overall responsibility for helping you stay healthy. In most HMOs, you must receive a referral from your primary care provider if you want to see a specialist. To control costs, HMOs set limits on the range of treatments available to members. Except in cases of emergency, most HMOs pay for treatment only if it is provided by doctors and hospitals who belong to the HMO's network.

Preferred Provider Organizations (PPO)

A Preferred Provider Organization (PPO) is similar to an HMO, but it typically offers members greater flexibility in choosing treatment. With a PPO, you can use any doctor or hospital on a list of preferred providers. If you want to receive treatment elsewhere, the PPO will pay a portion of the cost. Some PPOs do not require you to choose a primary care provider, and you often do not need a referral to see a specialist. Because PPOs have fewer restrictions on treatment than HMOs, they usually have higher premiums.

Major Medical Insurance

Major Medical Insurance provides coverage for most types of medical treatment. Your options are not limited to certain doctors or hospitals. Some major medical plans have a deductible. That is, you have to pay a certain amount for medical treatment each year out of your own pocket before the plan starts to pay for your care. Major medical plans have fewer restrictions than HMOs and PPOs, so they usually have higher premiums.

Point-of-Service (POS) Plans

Point-of-Service (POS) plans are similar to HMOs and PPOs. Like an HMO, a POS plan requires you to choose a primary care provider, who will have overall responsibility for your care. You must get a referral from your primary care provider to see a specialist. If you see a specialist in the POS network, you pay no deductible and only a small copayment. (A copayment is a small amount you pay each time you obtain treatment.) You also have the option to see a physician outside the network, but if you do, the plan will pay only part of the expense. A POS plan has fewer restrictions than an HMO, but it does not provide as much flexibility as a PPO.

Medicare Supplement Insurance

Medicare Supplement insurance supplements the coverage provided to senior citizens by Medicare. Medicare requires deductibles and copayments for many types of treatment. If your income is below a certain level, these expenses may be paid by Medicaid. If your income is above this level, you will have to pay the deductible and copayments out of your own pocket. Medicare Supplement policies cover most or all of these out-of-pocket expenses.

Supplemental Health Insurance

Supplemental Insurance plans provide benefits in addition to those you receive from other plans. For example, a supplemental insurance plan might pay you a certain amount every day you are hospitalized or disabled. This payment is in addition to coverage you have under health care plans.

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