There are two main types of health insurance plans, which include managed care and indemnity plans. There are also government-sponsored plans. Some of the differences are upfront costs, provider choices and how bills are paid. No type of plan is best for everyone. Since each person has unique needs, one type of plan may be better for one person but worse for another.
1. Indemnity Plans
Flexible spending or cafeteria plans are sponsored by employers. They allow participating workers to design their own packages, which often combine employee benefits and cash. Some offer pre-tax conversion plans, medical plans with flexible spending accounts, employer credit or a variety of other options. Since benefits vary from one workplace to another, interested individuals should contact their employers or HR managers for more details. Indemnity health plans allow members to choose their own physicians. Members are reimbursed based on the types of care they receive. However, there are limitations for care.
Basic & Essential Health Plans
These provide limited benefits for a lower cost. Premiums are based on gender, age, occupation and location. For those who are considering such a plan, it is important to read and understand the fine print. Some of these plans do not cover basic treatments. For example, many exclude cancer treatment and maternity care.
High-Deductible Health Plans
In some cases, these plans are referred to as catastrophic health insurance. HDHPs have inexpensive premiums and are only used after policyholders pay certain deductible amounts. As a rule, these policies’ deductibles usually start at $2,000 for families and $1,000 for individuals.
Health Savings Accounts
These are usually abbreviated as HSAs and are newer alternatives to traditional health coverage. In summary, HSAs are savings accounts for medical expenses. Money is deposited directly into the account and is used whenever health services are obtained. One benefit of these accounts is that they are tax free. This type of plan gives consumers more control over what they pay for medical care. Consumers also decide what types of investments are made with their money when they want to make their account balances grow.
2. Managed Care Plans
Health Maintenance Organizations, which are commonly referred to as HMOs, provide access to a wide array of hospitals, doctors and various health services. From a list of providers, patients are allowed to choose a physician. However, they must receive referrals from primary physicians in order to see specialists. As a rule, there are fewer upfront expenses with HMOs.
Preferred Provider Organizations
These organizations use a fee-for-service basis to charge members. Health professionals are paid by the insurer, and the costs are lower for people who use in-network services. With most plans, people who use out-of-network services must pay the difference between their bills and what the PPO normally charges for specific services.
POS is an abbreviation for point of service. These types of plans use primary physicians and specialists. The primary doctor must make a referral to a specialist, but out-of-network specialists are covered or mostly covered if they are referred by the primary physician.
3. Government-Sponsored Plans
Two of the most well-known plans under this category are Medicaid and Medicare. Medicaid is for people who do not have enough income to pay for private coverage. Every state has a Medicaid program with its own set of rules for eligibility. For those who are 65 or older, Medicare is available. It is also offered to people with certain disabilities. Medicare covers a wide array of drugs, treatments and services. It also covers long-term skilled care. SCHIP is a state program for children, and it provides coverage for kids from low-income families who do not qualify for Medicaid. TRICARE, CHAMPVA and CHAMPUS are military health plans. The VA also provides medical care and services. Indian Health Services is available to qualifying Native Americans. Some states may also have their own unique plans for people with varying needs. To learn more about any of these plans, discuss concerns with an agent.