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Types of Health Plans and How They Run

1. Fee-for-Service/ Indeminity Health Insurance Plans

These heath insurance plans usually believe that the medical professional will be paid a fee for each service provided to the patient. Patients are seen by a doctor of their choice and the claim is filed by either the medical provider or the patient. Simply it means reimburse expenses invited for diagnosis and treatment of medical conditions. This allows you to enjoy maximum flexibility but it is more expensive and has additional paperwork.

When a service is covered under a health policy, you could expect to be reimbursed for some, but mostly not all, of the cost. How much you would get depends on the provisions of the health policy on coinsurance and all deductibles. Here’s how it works:

• The portion of the covered medical expenses you pay is known as "coinsurance." Although there are variations, a fee-for-service health insurance policy frequently repays doctor bills at 80 percent of the "reasonable and customary charge." (This is an existing cost of a medical service in a given geographic area.) You pay the other 20 percent to your coinsurance. However, if a medical provider charges more than the rational and even customary fee, you would have to pay the difference. For example, if the reasonable and customary fee for a medical care service is $100, the health insurer would pay $80. If your doctor charged $100, you would pay $20. But if the doctor charged $105 and you would pay $25. Note that many fee-for-service health plans pay hospital costs in full; some reimburse at the 80/20 level as described above.

• Deductibles are the amount of the health insurance covered expenses you must pay each year before the health insurer starts to reimburse you. These may range from $100 to $300 per year per individual, or $500 or more per family or group. Generally, the higher the deductible, the lower the premiums that is the monthly, quarterly, or could be annual payments for the health insurance.

• Policies naturally have an out-of-pocket maximum. This means that once your fixed cost reach a certain amount in an existing calendar year, the reasonable and customary fee for covered health benefits would be paid in full by the health insurer. (If your doctor bills you more than the reasonable and customary charge, you might still have to pay a portion of your bill.) Note that Medicare limits how much a physician might charge you above the usual amount.

• There also may be lifetime limits on benefits paid under the health insurance policy. Most experts suggested that you look for a health policy whose lifetime limit is at least $1 million. Anything less might prove to be inadequate.

Read more on indemnity health insurance

2. Managed Care/ Fixed Allowance Health Insurance Plans

More than half of all Americans have some kind of managed heath care plan. These plans provide comprehensive health services to their members and offer financial incentives to patients who use the providers in the plan. The plans are

Full preference health plans
PPO health plan - Prefered Provider Organization plan
Individual Health Plans
MEWA health plan - Multiple Employer welfare Arrangements
HMO health plans - Health Maintenance Organizations Plans
Self - Insured Single Employer Health Plans
POS health plan - Point of service plan
HSA health plan - Health Savings Account
Government Sponsored Medical Expense Health Programs

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