Currently, two broad types of health insurance exist. Traditional insurance (also called indemnity insurance) pays for your health care as you use health care services. Managed care insurance assumes a greater responsibility for the health care services you receive. Rather than just paying for your care, managed care plans negotiate fees with providers to help make your insurance more affordable. They also closely monitor quality and utilization of services.
Traditional Insurance Plans
Traditional plans offer the consumer the widest choice of doctors and hospitals. Generally, you pay for doctor visits and submit a claim form to your insurance company for reimbursement. Many preventive and primary services at the doctor's office are not covered by the plan. You must meet a deductible, which means you spend a specified amount out-of-pocket before you can receive payment for services. You are usually responsible for a co-payment, your share of the bill, for certain services after you have met your deductible. Services are paid on a fee-for-service basis, which means preset fees are paid for services defined by your insurance plan. Some participating providers accept as payment in full what is paid by the insurer for services you receive. This is called assignment. Others require you to pay the portion of the bill not covered. This amount is not reimbursed by the insurer.
Managed Care Plans
The three common types of managed care insurance plans include: health maintenance organizations (HMOs), preferred provider organizations (PPOs) and point of service (POS) plans. Because these plans typically cost less than traditional plans, many employers and government programs are giving individuals financial incentives to join a managed care program. In Pennsylvania, Medical Assistance recipients, in particular, are encouraged to join an HMO.
- Health maintenance organizations (HMOs) provide a comprehensive set of basic health care services, emphasizing preventive care such as doctor visits, immunizations, and well-baby care from a specific group of doctors and hospitals. Most HMOs require you to select a primary care physician who becomes your first point of contact with the health care system. These primary care physicians are often called "gatekeepers." If you need specialty services, you usually have to be referred by your primary care physician. Often, you will pay a small co-payment for services and office visits. You also will pay extra to see non-participating physicians.
- Preferred provider organizations (PPOs) contract with a selected group of providers to make their services available to PPO enrollees, usually at a discounted price. PPOs do not require you to use preferred providers, but typically you will pay more to see a non-preferred provider.
- Point of service (POS) plans are a mix between HMOs and PPOs. Like an HMO, point of service plans require you to choose a primary care physician as your "gatekeeper." But like a PPO, you have the option of seeing a non-participating physician and paying a larger share of the cost. Like the HMO, point of service plans emphasize both primary care and preventive care.
Other Types of Insurance
Other types of insurance, such as car insurance and worker's compensation insurance, also may pay for part of your health care if you have an accident. To help ensure that your health insurer will pay for any services not covered by these other types of insurance, inform your health insurer of any accidents as soon as possible. If you are on Medicare, you may purchase supplemental insurance, called Medigap insurance, to pay for services not covered by Medicare.