In the United States, there are about generally five different types of health insurance available: traditional health insurance; PPO’s or preferred provider organizations; POS or point-of-service plans; HMO’s or health management organizations; and most recently, HSA’s or health savings accounts. With so many types of health insurance, it may be confusing to try and figure out which one best fits your needs, so research each thoroughly and speak with a professional if you need additional clarification.
Traditional health insurance is the one that most people think of when they think of health insurance. You pay the insurance company a premium every month, and if you have an accident or need for health coverage, you have a deductible amount you must pay and then the insurance company pays the rest of the bill. You often have an inexpensive office and/or prescription co-pay with traditional health insurance.
Since people are now living longer, health insurance companies have begun to look for more ways to reduce their costs, developing different health plans such as PPOs. PPOs are plans which will cover nearly all of your medical expenses as long as you stay within a preferred network of physicians or hospitals. This network creates a “preferred provider” list that you can choose from. Treatment outside of this network of providers is covered but only at a reduced rate, meaning you end up paying more to see a physician outside the network. By limiting the hospitals and physicians covered in their network, the insurance company can control, to an extent, their costs and lower your premiums. POS plans work like PPO’s, but require you to have a primary care physician through whom you can receive referrals for specialists. If you need to see a dermatologist or neurologist, you must first visit your primary care physician for an initial diagnosis in order to receive a referral to a specialist for a more thorough diagnosis. POS plans also have a preferred provider network, and if you choose to visit a specialist or physician outside that network, your coverage will be limited.
HMO’s combine a stricter version of PPO’s and POS plans. HMOs have a defined list of physicians, often much smaller than PPO networks, which you may see. You will not be covered at all if you see a physician outside your HMO network. Furthermore, you must also get a referral from your primary care HMO physician to see any specialist. However, these restrictions mean that you pay an extra low or no monthly premium.
HSA’s were recently signed into law by President Bush. You can deposit money into a special non-taxed, interest-gaining savings account that must be used for medical expenses. The ideal situation for an HSA is to combine the account with a low-cost, high-deductible insurance plan. The savings account is designed to allow you to cover the high deductible if you find the need to cover expensive medical costs while the insurance company will pay the rest of the bill.
Again, it’s important to carefully consider each option before choosing a health insurance plan. Your health is important, make sure it is protected in the best way possible.