Types of Medical Insurance
There are three major types of medical insurance in the United States. They are:
- Major Medical Insurance
- Health Maintenance Organization (HMO)
- Preferred Provider Organization (PPO)
First, a word about managed care. It’s a way to help insurers control medical costs. Technically, HMO and PPO’s are thought of as managed care health insurance plans.
An example of a managed care process is the referral you have to obtain that allows you to go from one doctor to another. If you fail to obtain approval, you may not be fully reimbursed for the services.
Major Medical Medical Insurance
This type of plan is considered a traditional kind of health care policy. Some of the features of this plan are as follows:
- Offers the most choices of doctors and hospitals. You can change doctors whenever you want and go to any hospital in the country
- The insurer pays a part of your doctor and hospital bills
- You pay a monthly premium
- Before the insurance company begins paying out, you’ll have to pay a deductible (depending on the service)
- After the deductible is satisfied, you’ll have to pay coinsurance. For example, you might have to pay 20% of the next $5,000 in costs while your insurer pays 80%. After that, the insurer will pay 100% up to the policy limit
- Some services are not covered so make sure you check the policy contract carefully
Health Maintenance Organizations (HMO’s)
When you join a HMO, you pay a monthly premium. In exchange, the HMO provides comprehensive care for you and your family. This includes doctors’ visits, hospital stays, emergency care, surgery, lab tests, x-rays and therapy. Features of this plan include:
- After you satisfy a co-payment (such as $25 for an office visit), you’ll get the services you need
- HMO’s emphasize preventive care like well baby checkups and physicals
- Some services, such as outpatient mental health care are often provided only on a limited basis
- You select or choose a primary care doctor
- You cannot see anyone else without a referral form
Before choosing an HMO, it’s smart to talk with other members to get a feel for how the services are provided and how the health care is perceived.
Preferred Provider Organizations (PPO’s)
This is a combination of an HMO and a major medical program:
- There are a limited number of doctors and hospitals to select from
- When you use those providers, most of your medical bills are covered
- As with major medical some services may require you pay a deductible and coinsurance
- You have to select a primary physician to monitor your health care
- Preventive care such as mammograms and routine physicals are covered
- In a PPO, you can use doctors who are not part of the plan and still get some coverage though it may be limited. You may have to pay a larger portion of the services yourself.
Whichever you choose, make sure you review the services grid and fine print carefully so you’re happy with your choice.
Steve Wyrostek -MedicalInsurance.org Expert
A 20 year plus veteran of the insurance industry, Steve managed departments in the personal and commercial lines areas of major insurers. He’s familiar with how insurance—ranging from boat to workers compensation—works.