Ultimate Guide to Health Insurance

The number of options consumers have when choosing health insurance coverage is staggering, which can make the buying process a bit overwhelming. On the one hand, you can purchase protection according to your situation, such as whether you're self-employed, a student, a small business owner, etc. Alternatively, you can buy coverage by policy type, such as a PPO, HMO, or POS plan. With so many choices to make, you may not even know where to begin. To make the selection less stressful and confusing, we've compiled the following guide to health insurance. In it, you will find descriptions of every major type of comprehensive health insurance.

Indemnity Insurance

Before the advent of managed care, indemnity plans were the most popular form of protection. You may also hear indemnity plans called traditional or fee-for-service (FFS) insurance. Though indemnity offerings have the highest health insurance premiums, they also offer policyholders the most freedom to select their own providers and hospitals. With an indemnity option, you visit any provider, hospital, or clinic you wish and pay the fee for service. You or your provider then submits a bill to your health insurer for reimbursement. You will not receive reimbursement for your medical expenses until you have met the deductible for your policy, however. Deductibles can range from $500 to $2,000 or more depending on your policy. To recap, the pros and cons of indemnity insurance include:

• Maximum flexibility - you choose your doctors and hospitals
• Most expensive type of health insurance
• High out-of-pocket costs - you will have to meet deductibles and pay co-insurance

Health Maintenance Organizations (HMOs)

Despite all of their shortcomings, managed care plans remain the most popular type of health insurance today, primarily because of their affordability. HMO products tend to have the lowest premiums of all types of health insurance. Unlike other options, HMO policies tend to emphasize preventive care heavily. HMOs see preventive measures as a good investment; they want to catch and treat illness before it develops into a more serious, more expensive condition. With an HMO policy, you will have to select a primary care physician (PCP) from the insurer's network. This doctor will then act as the gateway to further medical services. Before you can see a specialist, you will need a referral from your PCP. As long as you stay within your HMO's network, you will have little or no out-of-pocket costs. However, if you choose to go out of network, you will more than likely be 100% financially responsible for the costs. We've included an overview of the benefits and drawbacks of an HMO below.

• Very affordable premiums
• Excellent access to preventive care
• Minimal or no out-of-network service - your HMO will pay for little or none of the care you receive out of network
• Inflexibility - you are limited in the providers and hospitals you can choose

Preferred Provider Organizations (PPOs)

Consumers who want the flexibility of an indemnity plan with the affordable premiums of an HMO may do well with PPO. A PPO plan is somewhat of a hybrid between an HMO policy and indemnity insurance. Like with HMO, PPO products arrange reduced fees for policyholders with certain providers and hospitals. However, unlike an HMO, a PPO plan does not require policyholders to go through a primary care physician in order to see a specialist. In fact, PPO policyholders don't have to have a primary physician at all if they so choose. If you stay in the PPO network in selecting your provider, you will have a minimal co-payment. If you choose a provider who is out of network, you can still receive partial coverage, which is another difference from HMOs. A PPO is still a managed care plan, though, which means it will usually offer prescription benefits for various medications and treatments like birth control. We've summarize the pros and cons of PPO below.

• More flexibility - you can self-refer to specialists
• Partial coverage for out-of-network care - if you choose to go out of network, your PPO agreement will partially reimburse you
• Moderately expensive premiums - PPO premiums fall in between those of HMOs and those of indemnity plans. You pay more for the additional flexibility.

Point of Service (POS) Plans

POS coverage is another type of hybrid policy. A POS plan falls somewhere in between an HMO policy and a PPO policy. This offering is similar to an HMO in that policyholders must select a primary care physician (PCP). The PCP must approve all visits to specialists before the POS plan will extend service. Also like an HMO, a POS agreement has no deductibles and minimal co-payments for in-network service. On the other hand, a POS plan is also similar to a PPO policy in that it will extend some coverage for out-of-network care. If you receive out-of-network care on a POS option, you will have to pay deductibles and higher co-payments than for in-network care. The pros and cons of POS offerings are summarized below.

• More flexibility than HMOs - members can receive some coverage for out-of-network treatments
• No deductibles and minimal co-payments - out-of-pocket costs are minimal for in-network treatments
• Members cannot self-refer to specialists - policyholders will need the approval of their primary care physician before they can see a specialist