What Kind of Health Insurance is Best for You?

When it comes to choosing health insurance, many of us just pick the one that will take the smallest bite out of our paycheck each month. Choosing health insurance on the basis of premium cost is one way to go about making a choice, but it could end up costing you a lot in the long run. Before you make a decision that will affect you and your family’s health care for years to come, take the time to research your options and choose the one that will offer the benefits that your family needs.

There are a number of different types of health insurance, each suited to a particular need or type of use. Choosing the right one is a matter of knowing the kind of coverage that will suit your family’s needs the best.

Indemnity Insurance
Indemnity insurance, also known as fee-for-service health insurance, is the oldest type of health insurance. The insurance company establishes a schedule of fees that lists how much they will pay providers for various procedures. The subscriber – that’s you – is free to choose from any doctor they want, including specialists, to provide the medical care that you want. The doctor bills the insurance company, who pays the amount set out in the fee schedule. You’re then responsible to pay the rest out of your pocket. Usually, you’ll be responsible for a deductible – an amount you pay out of pocket each year before the insurance coverage kicks in – and may also have to pay a co-pay when you visit the doctor. Indemnity insurance offers you the most flexibility, but in general, you’ll pay far more for that flexibility.

Preferred Provider Organizations
Preferred Provider organizations, or PPOs, are networks of doctors and health care providers who agree to accept certain fees for certain services. With a PPO, you choose a doctor or medical provider from within the network when you need medical attention and your cost will be lower than if you choose a doctor who is not a part of the network. You don’t need a referral to access specialist services, and don’t usually have the advantage of having a primary care physician to manage your health needs. Your out of pocket expenses will include a deductible that you have to meet before insurance coverage kicks in and a co-pay when you visit a doctor or provider. If you choose a doctor outside the network, you’ll also end up paying the difference between what the plan will cover and what the doctor charges, as well as, typically, a higher co-pay.

Health Maintenance Organizations
HMOs, sometimes called managed care organizations, first came into being in the mid-1970s. They operate on the principle that prevention is the first step to good health. In order to ensure that patients get necessary care, HMOs generally require that you choose a primary care physician who manages all of your care. Your primary care physician will make referrals to specialists if needed, and you always have the option of seeking a second opinion. The HMO is generally the least expensive type of insurance as far as out of pocket expenses are concerned. In generally, your financial responsibility will be confined to a co-pay whenever you visit the doctor. HMOs encourage annual physicals, eye exams and screening tests in the name of preventing illnesses and early diagnosis and treatment.

Those are the major options. Others include discount health plans, long term care plans and point of service plans. Each has its own advantages and disadvantages, so shop wisely before deciding on one coverage.