Types Of Health Insurance.

If you are self-employed, or otherwise find yourself in a situation where you need to obtain your own health insurance coverage, the choices available to you can be confusing. You'll be sifting through terms like HMO, PPO, premiums, co-pay and deductibles, which can be intimidating if you don't know what you're looking at. The biggest thing to consider is the type of policy you're looking at so you can compare apples to apples. The three most common type of policies are: PPO plans, fee-for-service, and HMO plans.

PPOs (Preferred Provider Organizations)

A Preferred Provider Organization (PPO) is a health insurance plan where medical treatment is fully covered if provided by a doctor or hospital belonging to the PPO's network of health care providers. Treatment performed outside the network is also covered, but at a reduced rate. Policy holders are liable for any differences if seeking out of network treatment. PPOs are essentially a group discount form of health insurance; by maintaining administrative control over a group of doctors and hospitals, PPOs are able to provide medical care at a discount. PPOs generally require prior approval before allowing major medical services.

HMOs (Health Maintenance Organizations)

Health insurance from Health Maintenance Organizations (HMOs) greatly restricts who a patient may see for non-emergency medical services. The advantage is a significantly lower premium. HMOs have generated considerable controversy, as in many plans doctors receive financial incentives for reducing the amount of medical services provided to patients. One method of doing this has been to pay doctors a fixed monthly fee for each patient, regardless of the treatment they need. HMOs do tend to cover more preventive procedures such as immunizations, mammograms and physicals.

Fee-for-Service Policies

Fee-for-service plans are also sometimes called indemnity plans. In these types of plans, the insurance companies pay fees for the services provided to you. The fee-for-service plans are generally provide the most flexibility and choice of doctors and providers, but they generally have one major drawback. This type of insurance usually requires you to pay the provider up front for the services, and then submit forms to the insurance company to be reimbursed.

If having the greatest flexibility in choosing a health care provider is important to you, this type of plan can satisfy that, but be prepared to pay for service up front and then have to do the legwork of submitting claim forms yourself in most cases.

Like all insurance policies, fee-for-service plans will require that you pay a monthly premium, deductibles, and coinsurance after your deductible is met. Fee-for-service policies also typically have annual caps which limit the out-of-pocket expenses you can incur in one year.