In simple terms, health insurance is the type of insurance that covers the cost of medical or surgical cost of the insured. Depending on the type of coverage, the insured can either pay the amount out of his pockets and then reimbursed, or the insurer makes the payments directly to the insurance company. Despite being one of the biggest insurance plans, not so many people have a thorough understanding of the various types of health insurance available, and how they work. Here is a sneak preview of the major types of health insurance.
Traditional health insurance
Until just recently, a majority of people held indemnity coverage. It works more or less like motor insurance; you make upfront payments in the form of deductibles, and the insurance company makes the remaining balance later. Due to advancements in the medical field, the provision of health care has increased, which has eventually enabled people to live much longer. This forced many insurance companies to look for practical ways of reducing the cost of doing business.
Fee-for-service has remained the norm in the insurance industry for quite long. Under this type of insurance, the insured enjoys complete autonomy when choosing doctors, health care providers or hospitals. The insurance company does not have a say with regards to which specialist you have chosen. Under this plan, the insurer pays only for the reasonable or customary medical expenses. However, this always attracts deductibles before the company commits to paying. If the doctors charged anything above what is considered reasonable, you as the insured will meet the difference.
Managed care type of insurance has come a long way and underwent many revolutions. Today, the majority of people who hold private health insurance have some form of managed care. Although managed care plans have differences, they also have similarities worth knowing. For instance, they all have an arrangement that involves the insurer and a network of special health care providers. In order to guarantee quality health care provision, there are high set standards for selecting a provider as well as the involvement of a formal procedure.
Private health insurance
According to statistics at the Centers for Drug Control and Prevention in the US, the US health care system heavily relies on private health insurance. It is estimated that about 58% of American population carry private health insurance.
Public health insurance
In this type of health insurance, premiums are paid, even though it is the government that is responsible for providing coverage. Most public health insurance plans are designed for people aged 65 years and above, as well as those that are disabled.
Preferred provider organizations
This insurance plan allows holders to enjoy lower fees with a multiple of health care providers. These organizations mostly give their clients incentives that enable them stay within that given network. With this plan, you can visit any specialist without getting any approvals, provided that it is within the provider’s network. Essentially, it means spending less money and signing fewer documents.
Health Maintenance Organizations
This is the least expensive, as well as flexible type of insurance plan. Alongside that, they focus more on members, as opposed to individuals. Thanks to its low paperwork and lower premiums, this program only requires you to see their special doctors and a referral, preferable from your physician before seeing one of their specialists.
Author: Brenda Panin is a passionate blogger and a regular contributor to several blogs. Follow her on Google+.