What are some different types of health insurance plans?

There are a variety of types of health plans in the US. They may best be viewed as being on a continuum from the standpoint of the degree of choice of health care provider given to the insured or member (the term differs depending upon the type of plan). Here are a few, with brief explanations of how they generally work:

1. Fee for Service. This is the traditional kind of plan which offers the greatest patient choice. Therefore, it also tends to be the most costly. This kind of plan essentially pays the fee of the health care provider (subject to the deductible and copay. Generally, you can see any provider that you wish and go to any hospital or other care facility.

2. Point of Service (POS) Plans. This can be an option offered by a more strict type of plan called a Health Maintenance Organization. There are usually primary care doctors in these sort of plans whom you see for day to day needs. They are authorized to make referrals to specialists, outside the plan, as and if necessary, and the plan will cover the cost. Additionally, a member may self-refer to a provider outside the plan, and under the terms and conditions of the plan, the plan may pay a part of the expense.

3. Preferred Provider Organizations (PPO). This is sort of a hybrid between a fee for service plan and and a health maintenance organization, and is within the realm of what has come to be called "managed care". There is a more limited number of physicians and facilities to choose from, as not all providers are on the panels of all PPOs. If a panel provider or facility is used, most expenses get paid, subject to deductibles and co-payments. However, if you see a provider outside of the plan and who has not been pre-approved by the plan, a smaller portion of the cost is usually paid by the plan. That said, there is flexibility as the plan may well approve an outside provider when a specialism is needed and there is no one suitable on the panel.

4. Health Maintenance Organizations (HMO). This is the most restrictive in terms of choice. In return for the payment of a premium, the HMO undertakes to provide a full range of health care, including well-care, diagnostic tests, and all else that may be needed. The HMO has contracted providers who perform these services, often on a per head basis, whether or not any particular member uses the services. Since they get a fixed fee for providing all of your care, HMOs are thought to have a vested interest in keeping you well and therefore, focus on preventive care. That may or may not be true but it is one of the theories. HMOs are generally an economical alternative to some of the other types of health insurance. but the lack of choice may be a drawback to some.

In all events, it is critical that you deal only with an insurer or an HMO that is licensed ("authorized") to do business in your State. You should contact the State insurance regulatory authority to confirm this. The insurance regulator's job, in part, is to ensure that the insurer or HMO is financially sound so as to come through on its promises.