There are several types of health insurance plans available. Choosing one depends on your specific needs and wants Basically, there are three major types of health insurance plans: Health Maintenance Organization (HMO), Preferred Provider Organization (PPO), and Health Savings Account (HSA).
HEALTH MAINTENANCE ORGANIZATION (HMO)
An HMO, Health Maintenance Organization, is a specific type of health care plan characterized by lower costs than traditional health insurance plans. However there is a tradeoff. An HMO plan sets guidelines under which doctors can operate so there are limitations on the range of treatments available.
PREFERRED PROVIDER ORGANIZATION (PPO)
A PPO, Preferred Provider Organization, generally costs a little more than an HMO plan, but it offers greater flexibility when choosing doctors and seeing specialists.
HEALTH SAVINGS ACCOUNTS (HSA)
HSAs, Health Savings Accounts, are a fast growing option in health insurance. They involve a tax-advantaged medical savings account. Funds contributed to the account are not subject to federal income tax.
Understanding health insurance starts with understanding the most common terms used to describe it. Below you’ll find descriptions of some of the most typical health insurance terms.
Deductible—when deciding on an insurance policy, you choose the deductible which is the amount you pay toward medical bills before the insurance provider kicks in. So if you choose a $500 deductible, and your medical bills surpass that amount, the insurer pays the difference.
Co-pay—a specified amount paid upfront by the patient when they visit the doctor or fill a prescription. The insurer than pays the remaining cost.
Coinsurance—the percentage of medical bills the insured must pay after the deductible is met. Usually, a provision called a stop-loss is involved which limits the amount you’ll ever have to pay out of pocket.
For example, let’s say your coinsurance is 80%, with a $1,000 stop-loss. After paying your deductible, your covered medical bills are $8,000. The insurer pays 80% ($6,400) which leaves $1,600 left for you to pay. But because your stop-loss is set to $1,000, the insurer must pay the remaining $600.