The Two Main Types Of Health Insurance

“Prior proper preparation prevents poor performance” ought to be one of the most common phrases used to emphasize on the importance of preparing for future occurrences.

This common phrase can be used to perfectly describe health insurance.

Health insurance refers to any policy or insurance that covers an individual’s full or partial risk that is incurred due to medical expenses.

The Health Association of America explains the Health Insurance as the ‘coverage that will provide for one’s payment of benefits which result from either injury or sickness.

That, includes ensuring the individuals are covered against losses incurred in cases of medical expenses, accidents, disability or even dismemberment and accidental death.’

It is a contract or agreement between an insurance company and an individual which can be either long term, for instance lifelong or for short periods that can be renewed when necessary.

With the number of health insurance providers rising by the day, you have the option of getting your desired policy from the sea of providers.

Since we all have different financial capabilities, we advise that you not only understand the various types of health insurance, but also find out what kind of packages are offered by different insurance providers then choose one that is fit for your needs and budget.

Types of Health Insurance

There are two major types of health insurance.

  1. Traditional health insurance plan
  2. Managed care health insurance plan

Traditional Health Insurance

This is one of the most common types of health insurance plan that operates under the system or agreement of co-payments and coinsurance.

With this kind of plan, you are required to pay a premium fee which mostly sums up as the monthly fee of your healthcare plan.

However, you will be required to pay a fee upon paying a visit to a specialist.

This is usually a fixed fee that you pay before receiving any treatment.

This amount may vary depending on the kind of facility that you visit.

It is important to note that the facility is among the ones provided for by healthcare insurance.

In most cases, public, government-owned, or community-based facilities have a less copay amount than privately owned facilities just like visiting a general practitioner’s copay price will be less than how much it will cost you at the emergency room or when you see a specialist.

Sometimes, when using this kind of health care insurance, you are required to pay some of the medical expenses.

For instance, some policies and facilities only provide for a bed in case of admission then you copay or facilitate for your medication; either way, this reduces or more so covers part of your expenses even if it is not fully hence reducing losses you would have incurred if you had no healthcare insurance.

Most if not all insurance providers with this kind of healthcare policy do have a limit of the out-of-pocket as it is commonly referred to.

This is how much the insurance covers you; the amount of cover you cannot exceed for in-patient, outpatient, or when you see a specialist.

However, in case you exhaust your cover prior you are required to continue paying your premium as agreed on the policy document.

This kind of healthcare insurance is mostly preferred by employers when they remit monthly contributions to insurance providers for their employees.

Even though, the employee may exhaust their healthcare insurance money the deductions are still paid to the insurance company as agreed on the policy document.

The greatest pro about this kind of insurance does not require you to pay much money upfront therefore making it highly affordable.

Managed Care Health Insurance

These plans work with a system of getting into contracts with healthcare and medical facilities to provide care for their members at subsidized costs.

It might not be as common as traditional healthcare insurance however, it’s the most considered type by people with private healthcare insurance.

The selected providers are carefully selected and vet to ensure that the beneficiaries enjoy good healthcare services

It is important to note that there are several types of managed care healthcare.

As much as there are differences between them there are also similarities.

  1. Preferred Provider Organizations

These are commonly abbreviated as P.P.Os. They majorly target low-income earners.

The insurers get into contracts with affordable healthcare providers to offer the services.

The insurers offer the policyholders incentives to maintain them within their network.

Here you have moderate freedom to select your preferred healthcare providers however the out-of-pocket cost is slightly higher than other plans and there is minimal paperwork involved unless you use an out-of-network practitioner.

An example on how this works; it is cheaper to visit a doctor within the network compared to seeing a doctor who is not part of the network since you will be required to pay the whole amount which can only be reimbursed up to 80% upon production of the bill to the insurer.

With this kind of plan, you can refer yourself to a specialist without the need for permission or approval as long as it is within the network and enjoy the same benefits.

  1. Point of Service

These are also known as P.O.S.

They are very similar to the aforementioned PPO’s however; this type of managed care introduces the gatekeeper that is the person who will be serving you for instance the physician.

You have more freedom to choose your healthcare provider from your network of doctors.

Just like the Preferred Provider Organizations – PPO you can still choose to go out of your network and still enjoy some coverage from the insurer.

You can also choose to get your referral from your primary care physician who plays the role of a gatekeeper in his scenario or you can refer yourself.

Self-referral can be a whole load of hassle and more expensive.

Reimbursement is usually very minimal in cases of self-referral and you may be required to pay an amount of money for going out of your network commonly referred to as a deductible.

  1. Health Maintenance Organizations (HMO’s)

This is a managed care plan whose system works by arranging for the provision of healthcare services to a group of people at a fixed and prepaid fee.

This plan is the least flexible of them all since you barely have the freedom to choose your preferred healthcare provider.

One of the greatest advantages of using this kind of plan is the fact that there is less paperwork to be taken care of and your primary care doctor can always refer you to a specialist when need be.

The freedom to choose your healthcare provider is minimal.

In conclusion, having seen that there are various types of healthcare insurance to choose from that are all tailored for a particular niche of people; we cannot emphasize enough on the importance of first discovering your need and doing thorough research across providers to find out which is an ideal match for you and which one serves you perfectly.

The days of downplaying the importance of healthcare insurance are long gone.

With the high cost of living, rise in diseases, and infections you are advised to embrace a healthcare policy for yourself and your loved ones.

You never know when it will come in handy.

Pro Tip: Make hay when the sun shines.