Health insurance policies can be fee-for-service or managed care, including HMO, POS, and PPO. Fee-for-service policies are the most common and offer a large selection of physicians, while managed care policies have limited networks and lower out-of-pocket costs.
There are two basic types of health insurance policies: fee-for-service and managed care. Managed care includes Health Maintenance Organization (HMO) policies, Point of Service (POS) policies, and Preferred Provider Organization (PPO) policies. Any policy can be purchased as part of a group plan or individually, and can be offered for long-term or short-term coverage.
Fee-for-service policies are the most common type of health insurance policy. They provide the largest selection of physicians and cover basic care or major medical expenses at the subscriber’s choice. Subscribers pay a premium to get discounted rates on doctor visits and services. There is a deductible that must be met before the policy will cover many expenses, and coinsurance is paid beyond that deductible. The most common coinsurance amount is 80/20, which means that the policy covers 80% of the cost, while the subscriber pays the remaining 20%. There is a limit on total out-of-pocket costs per year.
Health insurance policies under the title HMO are prepaid plans that cover all basic medical services such as office visits, emergency care, laboratory work and therapies. Subscribers generally pay a copay for office visits. The choice of doctors and hospitals is limited to those in the network, and often the insurance company chooses the doctor for the subscriber. To see a specialist, the doctor must refer you and the specialist must also be in the network. HMO plans generally cover preventive care and have low out-of-pocket costs, and many plans have a deductible for services not covered by the policy.
POS health insurance policies work much like HMO plans. The main difference is that out-of-network doctors may be covered. These plans tend to have the lowest copays and a low or no deductible. Premiums are the highest of the policies, as subscribers pay for the luxury of choice and the ability to have most covered services.
A PPO is a combination of fee-for-service and HMO policies. There are limited doctors in the network, but the subscriber can choose which doctor he wants from a list. Out-of-network doctors are covered, but the subscriber has to pay a higher rate for them than in-network ones. Sometimes there is a deductible and coinsurance. Many fees are paid in advance and reimbursed at a later date, either by the sponsoring employer or by the insurance company. These types of health insurance policies have a greater amount of paperwork than others due to this reimbursement procedure.
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