Individual Policy Health Insurance
Health insurance is important to have so that a trip to the doctor or hospital doesn't take big bites out of your wallet. For those who are not part of or eligible for an employee-sponsored health plan or are ineligible for government insurance coverage such as Medicare and Medicaid, three types of individual health plans can be purchased. Each plan operates on different philosophies primarily tied to choice of doctor and out-of-pocket expenses.
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Considerations
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For a person to have health insurance, she must pay the insurance company premiums. The premium amount consists of three major parts: plan type, features of the plan and the risk determined by the insurer. Once the plan is chosen, the insurance company weighs the risk of providing coverage to an applicant by considering several factors such as age, gender, occupation, location, current health status, pre-existing conditions and whether she smokes. The features of the plan -- such as the amount of the co-pay, co-insurance and deductible -- will affect the amount a person will pay annually for coverage. The lower these amounts are for the insured, the higher their monthly premiums will be and vice versa.
HMO (Health Maintenance Organization)
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An HMO plan is the most restrictive of the three, but it provides the highest coverage from the insurer. A member must choose a primary care physician (PCP) from a network of contracted doctors in their geographical area provided by the insurer. The PCPs act as gatekeepers, meaning they have the authority to coordinate your medical activity. They will refer you to another doctor or specialist within the network if the medical care is necessary. If a member wants to receive non-network care, his PCP will have to provide a referral, or the insured might not receive any coverage from the insurer.
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PPO (Preferred Provider Organization)
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A PPO plan is very flexible, but the insured's costs are higher than the other two managed care plans. Unlike an HMO, a member doesn't have to choose a PCP. However, there is a network of doctors provided by the insurer, and members are encouraged to stay in network for care by providing higher coverage amounts out of network. A PPO member has the flexibility to seek non-network care at their discretion, but they will incur higher out-of-pocket costs such as elevated co-pay, deductible and co-insurance amounts.
POS (Point of Service)
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The POS plan is a blend of the other two plans. It is becoming the more popular of the three because it is less expensive than a PPO, but more flexible than an HMO. The insurer encourages, but doesn't require the member to pick a primary care physician for her basic medical needs. If she does choose a PCP, she will receive higher benefit amounts and lower out-of-pocket expenses with a referral to non-network doctors. Like a PPO, the POS member has the ability to receive in-network and out-of-network care at her own discretion. However, members will incur higher out-of-pocket charges.
Indemnity Health Plan
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Indemnity health insurance plans are considered 'traditional' plans because they are the original type of medical insurance policy. These plans allow the insured to visit any doctor of their choice regardless of cost and location. They reimburse the insured when he files an insurance claim after receiving his medical bill. Three options are offered under the indemnity health plan. Two are similar reimbursement packages, but one pays a percentage, usually 80 percent, of the total bill. The remaining 20 percent is paid by the insured. The other option pays 100 percent of the claim. The third option guarantees a specified amount to be paid to the insured daily up to a maximum number of days. These plans are more expensive, and the insured is in charge of his own paperwork whereas a PCP in a managed-care plan handles that for her patients. Also, depending on the insurer and medical provider, the insured may have to pay the entire medical bill upfront.
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