||[Aug. 6th, 2006|08:21 pm]
Understanding Health Insurance in America
Last time, I went over the indemnity plan and the HMO. Indemnity plans came first, but they are unsatisfactory in many ways (the high cost before any benefit is paid out is a big factor). HMOs were invented as an answer to indemnities, but while HMOs have a much lower out-of-pocket cost to the patient, they have strict rules and harshly punish the patient for breaking those rules.|
The other two major categories are the PPO and the POS.
( No, POS does not mean anything vulgarCollapse )
There are other types of plans, filling almost every shade in the spectrum between the extremes of the indemnity vs. the HMO. Too numerous for me to list (too numerous for me to claim that I even have heard of them all). These four are the major ones.
In the end, there is no perfect plan. Each type has advantages and disadvantages.
When you get insurance through your employer, you often have pretty much no choice - a lot of employers offer one policy and if you don't like it, your only other option is not to sign up for it at all. Some larger employers offer a small choice (they may give the option of an HMO or an indemnity, for instance). And, of course, if you are buying an individual policy, not through an employer, you have all the world open to you.
If you are offered a choice, however, you should take into consideration more than just how much the copayments or deductibles are. You also need to judge how healthy you are - and how much you can anticipate actually needing to use the insurance - versus the difference in premiums. It is sometimes a far better deal for you to get an indemnity plan instead of a PPO ... for a fairly healthy person with no children, what you pay out for office visits which apply entirely to your deductible may be easily offset by your savings in how much you are paying in premiums.
There is no perfect plan, and really nobody can tell you what the "best" plan for you will be.