Health plans have evolved considerably over the years. Today, there are three main types of health plans: traditional, managed care and consumer-driven.
Traditional Plans (also known as fee-for-service or indemnity plans)
This type of coverage allows you to go to any provider you choose. After you meet your annual deductible, the plan pays a certain percentage of your health care services – usually 80% – and you pay the remaining amount. What you pay depends on what medical costs are covered by your plan and what your providers charge for services.
Managed Care Plans
A managed care plan offers a network of doctors and hospitals. You pay a monthly premium, plus a copayment (a fixed amount) or coinsurance (a percentage of the cost) for covered medical care. There are three types of managed care plans:
- HMO (Health Maintenance Organization) – With an HMO plan, you choose a primary care doctor from your plan's network. The primary care doctor will provide referrals for specialists when necessary. Generally, you won't need to make a copayment for preventive care. But a small copayment may be required for other services, such as urgent care and prescriptions. Except for emergency room visits, services received from out-of-network providers aren't covered by your plan.
- PPO (Preferred Provider Organization) – Like an HMO, you choose doctors who are in the plan's network, but you don't have to designate a primary care doctor. You can go to doctors outside of the network, but you'll pay a higher percentage of the cost. For visits and services within the network, you'll typically pay a copayment (a fixed amount) or coinsurance (a percentage of the cost) for health care services.
- POS (Point of Service) – With a POS plan, you may be required to choose a primary care doctor from your plan's network. Your primary care doctor provides referrals for specialists when necessary. And although you can go to providers outside of the network, you'll pay less if you stay in-network. You'll typically pay a copayment (a fixed amount) or coinsurance (a percentage of the cost) for health care services and prescriptions.