Healthcare plans can be broken down into types, and people who purchase health insurance should know the difference in these plans. There may be some issues with defining healthcare plans, because some health maintenance organizations (HMOs) call their policies "plans," while other companies may call different types of health insurance “insurance.” It is appropriate to use the term plan to refer to most types of health insurance in the US.
A healthcare plan can be defined as a method of insurance in which people prearrange a certain amount in payments in order to get significantly reduced price coverage for most medical needs. Plans may vary and have things like lifetime maximums or coverage limits, exclusions to coverage, deductibles that must be met before any money is reimbursed to the insured or providers, and copayments. The last is common in many healthcare plans and refers to a defined amount of payment per services, like doctor’s visits.
There are essentially four types of healthcare plans that people may have. Major medical, health maintenance organizations (HMOs), Preferred Provider Organizations (PPOs), and Point of Service (POS) plans. Some people may have other types of healthcare like health discount plans or catastrophic insurance. Discount plans may help discount some services rendered and catastrophic plans tend to only cover healthcare when care becomes extremely expensive.
Major medical can sometimes be called traditional health insurance. In this model, people see doctors of their choice and pay them when they receive services. They then file with their insurance to receive back a certain amount of their payment. 80% of the payment is a common reimbursement.
In major medical plans, people often have a deductible they must meet before the health insurance will make reimbursements, and the deductible usually renews each year. These types of plans can have exclusions to coverage, but they do offer considerable choice in which medical providers to see. They have become less common with the introduction of other types of healthcare plans.
An alternative model is the HMO, which works on limiting access and contracting with specific providers. Under this type of plan, people see doctors or other health care workers and facilities that contract with the HMO plan. When they need to see specialists, they may also choose from a list of specialist providers, and only on rare occasions can people see specialists that aren’t contracted with the plan. They may require approval to see specialists or to have any planned hospitalizations, if they want reimbursement for care.
Under most HMOs, people may have a small deductible, but tend to pay copayments as part of their cost. They don’t typically need to ask for reimbursement because medical professionals file for the additional money owed with the health insurance company. This can mean obligation to pay for medical services begins and ends with the copayment, which can be convenient.
A PPO is similar to an HMO plan except that people can choose to see specialists outside of the preferred provider list. When they do, the plan operates like major medical insurance and will pay a percentage of the person’s costs. Most people do use a preferred provider, which means they pay copayments much like in HMOs. One difference is that referrals usually aren’t needed to see specialists.
A point of service plan is a hybrid HMO/PPO plan. People have preferred providers but tend to need referrals to see specialists. Without referrals, they may be responsible for the whole cost of specialist care. They can see specialist in or outside of the health plan network, but do usually require a referral first.
Most of these healthcare plans require regular payment. People may get a plan through their work, a professional association, privately, or through some government health programs. Most plans come from private insurance companies and amount of choice in the type of plans available may vary. PPOs and POSs tend to be slightly more expensive than HMOs, and major medical can vary in coverage prices.
