Health insurance helps protect against financial upheavals in case of a serious illness or accident. Usually, it is provided by one’s place of employment or through a family member’s employer. Some plans are also available for purchase from an insurance company. Whether the coverage is provided by a group or individual plan, health insurance directly affects the quality of healthcare and its associated costs.
The types of health insurance available include health maintenance organizations (HMOs), preferred provider organizations (PPOs), and indemnity, fee-for-service (FFS), or point-of-service (POS) plans.
HMOs
This association of healthcare professionals and medical facilities sells a package of healthcare services at a fixed price. Every patient gets a primary care physician (PCP), who is also called a “gatekeeper” and coordinates all healthcare for the covered individual. HMOs tend to cost less and often will not need claims forms. But out-of-network services aren’t covered, and if referrals are needed, then more doctor visits are required. Some services may also be limited. These plans are suited to healthy individuals who don’t visit the doctor often and seek a low-cost coverage plan.
PPOs
PPOs offer the same services as HMOs but allow one to go outside the network to any healthcare provider when deemed necessary. In such cases, benefits may be limited, and out-of-pocket costs may increase. A PCP referral may also not be required. But the costs can be unpredictable, and the policyholder has more responsibility compared to HMOs. These plans are best suited for those who seek flexibility in terms of choosing healthcare providers, whether they are in- or out-of-network.
Indemnity, Fee-For-Service (FFS) & Point-of-Service (POS) Plans
These are traditional plans that allow one to visit any doctor or specialist. The insurance company then pays for a set portion of the charges, and the covered individual pays the rest. These plans offer the most flexibility and do not require one to select a PCP. These plans offer one complete control over one’s healthcare too. But costs tend to be higher than that of HMOs and PPOs, and often upfront payments for medical expenses are required, which can be claimed later. These plans are suited for those seeking a combination of the HMO and PPO plan structure.