Understanding Health Insurance Coverage

By Shannon C , last updated July 9, 2011

Understanding health insurance coverage takes lot of research, talking with friends, and patience, but it is an absolutely essential aspect of modern life. Finding coverage on your own can feel daunting, especially for those who are self-employed or otherwise do not have access to employer-sponsored health insurance plans, but the good news is that with the rise of the internet you have access to more and better information than ever before.

Types of Health Insurance Plans

There are many different options in today's health insurance marketplace. If you have access to an employer-sponsored plan, you will likely be presented with a discrete range of options and you will be required to choose one of those options as your health insurance plan. If you are seeking health insurance privately, you will encounter traditional or fee-for-service health insurance plans, also often called indemnity health insurance plans, and these tend to be the priciest and offer the greatest flexibility in terms of which providers you can see and what types of health care you can obtain.

A newer type of plan is the health maintenance organization, or HMO, plan, which gives you a lower, fixed price point in exchange for keeping your health care providers "in network" and subject to governance by a primary care doctor, who must make recommendations before you can see a specialist for a higher level of care. A subsidiary type of plan here is the POS, or point of service plan, that functions as an HMO that gives you network and non-network flexibility in exchange for different fee rates. Yet another type of health insurance plan is the preferred provider plan, or PPO, which eliminates the need for the primary care physician and specialist-referral system in exchange for slightly increased premiums and increased rates for seeing non-network providers.

Government-Sponsored Plans

Medicare is the official government-sponsored health insurance, and this type of insurance is only available to certain categories of individuals, including those age 65 or older who are enrolled in Social Security, and those who have certain chronic disease or permanent disabilities. Medicaid is the other type of government-funded plan and this plan is only open to those who have financial need as outlined in the application requirements.

Selecting a Health Insurance Plan

The key when selecting a health insurance plan, should you not be eligible to choose an employer-sponsored plan, is to decide not only how much you can afford for health insurance, but also set a maximum financial limit of how much you could pay out of pocket if you opt not to have health insurance and find that you need it.

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