3 Types Of Health Insurance Plans: Indemnity, Managed Care, Health Savings Accounts
Health insurance plans are broadly classified as Indemnity Plans, Managed Care Plans and Health Savings Accounts (HSA).
These different health plans differ in the approach they use to cover medical costs. It includes factors like your control over the care you receive, the cost of the care, the network of doctors and hospitals, and insurance coverage.
Indemnity and consumer-directed plans offer a wider choice of doctors whereas managed care plans offer broader coverage.
Health Insurance Plans Has Varying Costs
The American health care system offers an enormous range of health insurance choices starting from low-cost minimum coverage plans to highly-expensive comprehensive plans.
Check out the details of various health care plans below:
These plans are also commonly known as traditional or fee-for-service plans. These health insurance plans give insureds the full freedom to choose any doctor or hospital and they then indemnify him for the cost of the care.
This means that the insurance company does not directly pay the provider unless the benefits under the policy have been assigned to the healthcare provider.
These plans generally have a deductible before any benefits are available and will pay a percentage of the cost after the deductible has been met up to a specified limit.
Indemnity plans are usually a very expensive option and are suitable for people who are willing to pay more for the freedom of choice they get to select medical providers.
2. Managed Care
Managed care plans provide 1st dollar benefits like office and prescription copays and they control the cost of healthcare by managing health care services.
The insurance company has an agreement with the network of doctors, hospitals, and other healthcare providers that provide health care services to the insured at a reduced cost.
These plans are less expensive, provide benefits for preventive care and offer less out of pocket expenses. There are three primary types of Managed Care Plans:
- HMO or Health Maintenance Organization
- PPO or Point of Provider Organization
- POS or Point of Service.
HMO or Health Maintenance Organization
HMOs benefits are usually a copayment which varies on the type of services you are receiving and they generally have no deductibles or co-insurance expenses.
Benefits of HMO
Benefits are limited to services delivered by a medical provider from the HMO network except in the case of a life-threatening emergency, and a referral is generally required to visit a specialty care physician like a cardiologist.
HMO networks include physicians, physical therapists, psychologists, surgical centers, hospitals and other healthcare providers.
Some include holistic and alternative medicine providers as well. HMOs, include the convenience of minimal paperwork when you see a network provider and a simple copayment when you get care.
These insurance plans protect you against all types of health challenges and also provide health benefits like preventive care.
The Downside Of HMO
The downside of an HMO is that you have to use their providers, which is fine when you are healthy. The challenge is when you or one of your dependents becomes catastrophically ill. And you need to see an expert who is not in the HMO.
PPO or Point of Provider Organization
PPO includes benefits of both indemnity plans and managed care plans. You can visit the doctor of your choice. But, your benefits are much better if the doctor belongs to the PPO network.
The cost of a PPO plan is also lower than an indemnity plan. It cost can be comparable to an HMO plan.
Benefits of PPO
Benefits typically include a copay for office visits and prescription drugs. You will need to pay your deductibles and coinsurance for other services and a higher deductible for out of network care.
POS or Point of Service
POS plans are a hybrid between an HMO and a PPO plan. These plans provide the highest benefits when you work within the rules of the plan but you also can receive care from medical providers outside the network, but you will have more out of pocket expenses.
These plans generally require referrals for specialty care although you can visit specialists without a referral by paying the higher cost in the benefits.
3. Health Savings Account (HSA)
HSA”s require that you buy a qualified high deductible health plan with minimum deductibles and out of pocket maximums.
These health insurance plans are generally offered with an Indemnity or PPO plan design, with the PPO plans to provide you with the negotiated discount for health expenses before you meet the deductible.
You then can save money into the account on a tax-deductible basis, and take the money out with no taxes to cover any qualified medical expenses. These plans are the most affordable plan and the best value for most consumers.