Types of Health Coverage

The three main types of health coverage are:

  • Health Maintenance Organizations (HMOs)
  • Preferred Provider Organizations (PPOs)
  • Indemnity

HMOs and POS (Point of Source) plans are the category most people find fit their health care insurance needs. The difference between the two are that HMOs are more restrictive, meaning there is no out of network options for health care. In other words, there is only coverage if you go to health care providers within the health plan network. While POS plans do have an out of network option, HMOs and POS plans are considered managed care. The main benefit of these types of plans are generally a lower out-of-pocket cost for medical care. The network is accessed through your primary doctor incurring a much lower co-pay charge for common medical procedures.

PPO plans give a patient more autonomy in choosing healthcare in that a referral from a primary physician for specialist care is not required. The network of doctors available to choose from is also slightly larger. For this freedom of choice, you trade off the lower monthly cost, which can be offset with a higher deductible.

Indemnity plans or fee-for-service coverage was the norm for many years. Under this type of health coverage, you have complete autonomy when it comes to choosing doctors, hospitals and other health care providers. You can refer yourself to any specialist without getting permission, and the insurance company doesn't get to decide whether the visit was necessary. In most cases indemnity plans pay benefits directly to the insured.  Many variables exist today.