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Health Insurance

When you consider that medical bills cause around 50 percent of bankruptcies in the US, it is easy to see why good health insurance is a necessity. Coverage varies, depending on the type of health insurance you purchase, and the type you should purchase will depend on individual healthcare needs and financial limitations. The different types of health insurance plans available are as follows:

Indemnity Plan

With this type of plan, you may visit the Doctor or hospital of your choosing; then, either you or your healthcare provider will submit a claim for reimbursement. For covered services, indemnity plans will often pay 80 percent of the cost. You should note that an indemnity plan will only reimburse you for customary rates. If your healthcare provider's charge is above usual rates, you will have to absorb the additional cost yourself. Furthermore, indemnity plans will usually have a deductible, which you must pay before the insurer will begin to reimburse you. Typically, indemnity plans will have an out-of-pocket maximum, which means after a certain limit is reached, your insurer will begin to pay for services in full, as long as the healthcare provider does not charge more than the customary fee.

Health Maintenance Organization (HMO)

With an HMO you must choose a physician to coordinate the care you receive, who is affiliated with the plan. This means that a referral will be needed, should you require care from a specialist in the network. Your HMO will require that your care be sought within its network of healthcare providers, as a fee schedule will already have been negotiated; however, in some rare cases, care may be provided outside the network, if deemed necessary. In addition to the premiums you pay, an HMO will often require a co-payment for specified services.

Preferred Provider Organization (PPO)

With a PPO, if you visit a healthcare provider within the network, you will pay a fixed co-payment. However, a PPO will allow you to receive services outside of the network, if you wish, but they will only cover a certain percentage of the cost. For example, if you visit a hospital outside of the network, the PPO may cover 80 percent of the cost, leaving you to pay the other 20 percent, plus the fixed co-payment. A PPO may require a deductible, and the higher the deductible, the lower your premiums will be. A popular feature of a PPO is the ability to see a healthcare provider of your choice, without a referral; this gives you the flexibility of an indemnity plan, with the benefit of lower premiums, due to negotiated healthcare provider discounts.

Point-of-Service Plan (POS)

When medical services are needed, with a POS, you will usually choose one of three options, and your choice will depend on your particular plan. The options are as follows:

1. You access services through a primary care physician. With this option, your cover will be based upon guidelines similar to an HMO.
2. You obtain care via a PPO network healthcare provider, in which case services are covered under PPO guidelines.
3. You receive healthcare services outside of a network. This option will usually require a co-payment, plus a higher coinsurance charge.

A POS plan may have deductibles and the higher the deductible, the lower your premiums will be.

Health Savings Account (HSA)

An HSA allows you to save money for medical expenses, on a tax-free basis. There are eligibility requirements for an HSA, which are as follows:

1. You must be covered by a high-deductible insurance plan.
2. You must not be covered by any other medical insurance.

An HSA is most accessible via your employer, should your employer offer it. However, it is possible for an individual to obtain this type of plan, but this depends on the state in which you reside. Covering healthcare expenses via an HSA and high-deductible insurance policy may mean lower premiums; however, this option usually requires higher co-payments, along with deductibles. An attractive aspect of an HSA is that it can cover the cost of healthcare, which is not usually covered in other plans, such as eyeglasses. Furthermore, there is usually a limit for out-of-pocket costs with this type of plan.

The right health insurance plan for you will depend on your circumstances. It is important to review each option, and assess the benefits provided in a worst-case scenario, so that you and your family will be protected, financially, should the worst happen.

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