Major Types of Health Insurance Plans

Meta: There are various health insurance plans available on the market, but which one should be the choice of you and your family? Let’s find out!


Health is the most precious asset of human beings, but it’s also highly susceptible to damages by diseases and aging process. Therefore, it stands to reason that you should always take great care of your health. Normally, you are likely to run into a huge sum of money yearly to cover health services without any medical insurance provided by a third party. A policy signed with a health insurance company is designed to help you get rid of worries about enormous unexpected expenses.

Along with the increasingly diverse demands of consumers, insurance providers have offered numerous plan types. However, there are four main health insurance plans that lay the foundation for other types. They remain favored by a large proportion of the population.

Four Major Types of Health Insurance Plans

Fee-for-Service Plans (Indemnity Plans)

Fee-for-Service Health Plans, or Indemnity Plans, are the basic and most conventional type of healthcare policy when insurance providers pay a portion of fees for the services used by policyholders within the policy terms. As a policyholder, you are given the most freedom to choose doctors and hospitals upon your wish wherever you are.

Each year, you have to pay a certain sum of money called deductibles to activate health insurance payments besides monthly premiums. From that on, all bills will be divided between you and the insurance company on the basis of a negotiated ratio. To get the cost redeemed, it is essential that you fill in forms and send them along with medical expenses’ records to the health insurer. Typically, in case the total charges add up above what is counted as reasonable and customary by providers, you are required to pay excess fees.
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You may get the best out of an indemnity plan if you can’t stand being confined to a narrow list of health professionals and centers. Economically, if you can afford higher rates in return for increased service control, then a fee-for-service health plan is definitely your first choice.

Health Maintenance Organization (HMO)

A health maintenance organization, known as HMO, is a health insurance plan that requires advanced payments. You pay a premium on the monthly basis in exchange for thorough health care for yourself and your family members. Under HMO, you are eligible for hospitalization costs, emergency care, surgeries and even preventive care including doctor visits, lab tests, well-baby checkups. However, several services, namely outpatient mental health care, are restricted to reimbursement.

Provided that doctors and healthcare professionals are listed in the record file of HMO, you are totally insured by the program. Normally, a doctor is either assigned or chosen by you as your PCP, or Primary Care Physician, whose responsibility includes monitoring your health status, providing medical care and referring to other specialists if necessary.
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In other words, you are not allowed to make any specialist appointment without your primary care doctor’ referral, exceptionally in emergency cases. By this way, your choices are exposed to inflexibility and limitation while in-network doctors’ benefits are somewhat ensured.

If you receive treatment from an in-network doctor, your premiums and out-of-pocket costs are kept low. This is large because HMO concentrates on integrated care and it resorts to PCP for consultations on truly necessary testing. On the other hand, you have to bear 100 percent of the treatment cost if an out-of-network doctor sees to your illnesses.

HMO is massively popular among inhabitants in terms of no requisite for claim forms of office visits and hospital stays. Alternatively, the insured just need to present a distinct card at clinics and hospitals and wait for an appointment.

In general, HMOs are judged the least costly sort of health insurance plan by numerous health insurance advisers; therefore, it can suit the needs of average population. An HMO is considered the best option for individuals who are seeking lower premiums or receiving all care in only an area.

Preferred Provider Organization (PPO)

PPO, known as Preferred Provider Organization, is a mixture of an HMO and a traditional fee-for-service. As a kind of health insurance agreement, it allows policyholders to choose their favored doctors and hospitals regardless of their being within or beyond PPO’s network.

Unlike HMO, you aren’t necessarily obliged to opt out a PCP. In the event of specialized care, you can arrange an appointment with a specialist without a referral from your own PCP. In this case, your visit fees are still covered by your insurance company but at a lower percentage, at about 70 percent. This is a special feature that makes PPO become the most comprehensive and flexible care service provider. You don’t have to change your currently favorite doctor to take out an insurance plan with PPO.
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Like HMO, your plan comprises coverage of preventive care ranging from doctor visits, immunizations to mammograms and well-baby care. Besides, a set amount of expenses called deductibles has to be incurred by the insured before getting compensations from the provider. This sum varies in inverse proportion to annual premiums, which means a plan with low deductibles may result in relatively high premiums. Deductibles usually come along with copayments, fixed amounts paid to in-network doctors during an appointment, or even plus coinsurance, the balance covered by the participants after a portion of bills covered by PPO.

PPO should be put on top of priorities for consideration if you are constantly on the go and not fit to stick to one healthcare professional only. In other words, when it comes to choosing providers, you need more flexibility and to avoid the complicated process of getting referrals.

Point-of-Service Plans (POS)

POS, or Point-of-Service Plan, is a combination of the most favorable features of HMO and PPO.
Like HMO, it sometimes requires customers to choose a primary care doctor contracted in the network and to receive referrals from your own doctor in case you need specialists’ treatment. The number of primary care doctors under contract with PPO is smaller than that of HMO.

Like PPO, you are still qualified for coverage of out-of-network health services from the insurance company but, of course, at a lower rate than in-network ones. However, when it comes to out-of-network doctors, the POS plan promises to pay more of the total expenses if they are referred to by your doctor than if you make appointments with them of your own choice. In some cases, you can run the risk of doing all the paperwork yourself while paying the entire fee without reimbursement.
PPO premiums fall in the range between HMO and POS plans, with no deductibles included for in-network services. As a rule, just a nominal co-payment is asked for when you use a certain health service. However, policyholders are inclined to bear all the treatment cost out of pocket before gaining benefits from the provider’s deductible plan.

Regarding its nationwide coverage, POS plans turn out relatively ideal for those leading a traveling life and worrying about getting health care services outside their registered area. Similarly, this is also true if you both want to have a specific provider coordinate your health status and keep your family doctor for specialized advice at the same time. In this case, please keep in mind to check their policy terms for rates of reimbursement carefully.


Regarding a large number of health insurance plans available on the market, it is necessary that you consider both benefits and limitations of each carefully before jumping to conclusions. Hopefully, this post can help you choose the best protection for you and your family. Thank you for reading!

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