Health insurance is a legal contract among two or more
parties that promises certain performance in exchange for considerations. A
health insurance policy is measured as an independent contract.
The sections below outline the general Types of health
insurance Policies and Policy Options. In order to help you create a benefits
package that's right for you and your employees, it's a good idea to work with
an agent.
Given below is a
list of common types of health insurance policies:
Indemnity (Free-for-service)
An indemnity plan reimburses you for your medical expenses irrespective
of who provides the service; although in some cases, your reimbursement amount
may be limited. The coverage offered by most traditional insurers is in the
form of an indemnity plan.
In order to determine how much you will receive for your
medical expenses, different plans use different methods.
Although this plan is very flexible in who provides your
care, the premiums are more than other types of health insurance. Also,
indemnity plans typically do not provide any coverage until the deductible has
been satisfied.
PPO (Preferred Provider Organization)
The insurance
company has a network of "preferred providers" (hospitals, doctors,
clinics, etc.). These providers discount their service fees to your insurance
company in exchange for being part of the network.
You'll have to
submit a claim and likely pay a higher deductible, if you use a provider from
outside the network. This is usually cheaper than but not as flexible as the
indemnity plan.
HMO (Health Maintenance Organization)
All The HMO is
much similar to a strict PPO: you must use the providers they authorize (barring
emergencies as defined by your plan). Your medical services are provided by the
organization of doctors, hospitals, etc.
As necessary, your
doctor refers you to other doctors within the HMO. The HMO's benefit is that it
has no deductibles and usually requires only a small co-payment for each
service. There may also be an utmost to what you pay annually
"out-of-pocket."
POS (Point-Of-Service)
This is an
option of HMO with greater flexibility. Your primary doctor may refer you to
someone outside of the HMO with negligible or no additional cost. You may also
refer yourself to a non-HMO provider, but you'll have to pay co-insurance.
When
considering the types of health insurance policies, given below are the Common
Options.
Accident Supplement (AS)
During an
accident, this option would pay for any medical treatment up to the fixed
amount without a deductible. Any costs in excess would then have deductibles
and co-payment apply as normal.
Preventive Care
Some policies
may offer this as either an option or an inclusion. Routine physicals,
immunizations, and tests may be covered without a deductible.
Vision
Your carrier
may comprise visual benefits, ranging from co-payment eye exams and discounted
glasses.
Dental
Along with your
policy, general cleaning and other basic dental care may be included. Often
co-payment is required for extractions, crowns and other advanced procedures.
Doctor Co-Pay
Similar to
HMO's, Indemnity, and PPO plans may offer doctor co-payment options. For each
visit to the doctor, a small fee is paid to the insurance company ($10-$40).
This usually isn't subject to deductibles and co-insurance.
Prescription Card
The card
enables your insurance carrier to pay most of your prescription costs. Usually
presented at the drugstore, you'll pay only a fraction what it normally costs
depending on your policy and type of prescription (i.e. brand name or generic).
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