Even for people who have dealt with health insurance before, it can be hard to understand. For people who have never done it before, it can be very hard to understand. The basics are a good place to start when you want to learn more about the issues behind health care insurance.
In general, there are two kinds of health insurance: indemnity and managed care, which is also known as HMO.
This type of health insurance is also called "fee-for-service" insurance. This type of insurance gives you the most freedom because you can choose your own doctor, clinics, hospitals, and so on. On the other hand, it will be a lot more expensive than managed health care plans. These extra costs may show up in the premiums you pay, but they will definitely show up in the out-of-pocket costs you have to pay when you get care. Many people can't get indemnity health insurance because of the costs they have to pay out of pocket.
You will also have to pay an annual deductible, which can be anywhere from a few hundred to a few thousand dollars, on top of the much higher out-of-pocket costs. Before the insurance will pay anything, this amount must be paid.
After you've paid your annual deductible, the insurance company will pay a portion of what's owed. Most of the time, you will have to pay a co-payment of about 20%, and the insurance company will pay the other 80%. If the doctor or other health professional charges high rates to begin with, you may end up paying more because the insurance company will usually only pay what it considers to be "usual and customary" fees for the service.
Most of the time, indemnity health insurance only covers illness and accidents. It does not pay for preventive care like flu shots or birth control pills or devices. Depending on your policy, it might or might not pay for psychotherapy or prescription drugs.
One way to think about managed care is as the opposite of indemnity care. Health maintenance organisations (HMOs) usually have lower deductibles than other plans. There may not be any deductibles at all in some cases. Most of the time, co-payments are fixed and kept low. Most preventive care, medicines, and treatments for mental health are covered, but you should always check.
The problem with managed care health insurance is that you have to choose from doctors, hospitals, and other health care providers who have contracts with your HMO. In other words, you can't just go see anyone you want. Also, you can only get medical services that are covered by your plan. If you use a provider that isn't on your insurance plan's list or get care that isn't on your plan's list, your insurance won't pay for any of it.
Many people didn't like these limits, so managed care has started to change to include hybrid plans that mix some of the benefits of HMOs with some of the benefits of indemnity health care coverage.
The Point-of-Service plan is one example. If you have a point-of-service plan (POS), you can keep your overall costs low by using a network of doctors and hospitals that have contracts with your insurance company. If you decide to go somewhere outside of the plan's network, you will have to pay a higher deductible and a higher co-payment for the services.
