Health Insurance 101: The Main Plan Types and How They Differ

For most people, the first criterion for choosing a doctor is finding one who will accept your health insurance – an understandable requirement since having the best doctor in the world won’t matter if you can’t afford his/her care.

But to many of us (myself included), health insurance is nothing more than an intangible item that involves handing a card over to the doctor’s receptionist in exchange for treatment that won’t bankrupt you.

Understanding the different health plan types doesnt have to be as hard as trying to read your doctors handwriting. 514x343 Health Insurance 101: The Main Plan Types and How They Differ Photo

Understanding the different health plan types doesn’t have to be as hard as trying to read your doctor’s handwriting.

To help clear up the mystery, here’s a list of common insurance terms and their general meanings. Please check with your provider for information on what these terms mean in regards to your specific plan.

Managed Care Plans
Most health insurance plans are managed care plans. With these plans, you pay a fee, or co-pay, in exchange for medical care. Co-pay amounts are much lower than the actual cost for care received, thus making healthcare affordable for the plan holder. Common benefits include financial incentives for using providers that participate in the plan, paying for a small portion of the visit or procedure (co-pay) and use of comprehensive services. Restrictions may include pre-authorization for procedures, higher co-pays for emergency services and a review of the appropriateness of treatment. Common managed care models include:

HMO – A Health Maintenance Organization (HMO) negotiates contracts with doctors, hospitals and medical service providers for services. For a fee, the insurance provider assumes the financial risk of providing medical care in a specified area. Members may be restricted to one network of doctors, but often can take advantage of comprehensive care for a reasonable price.

PPO – The Preferred Partner Organization (PPO) model enables members to use healthcare professionals and facilities within a specified network for a substantial discount. They may also be able to see doctors outside of the network, but higher fees and deductibles may then apply.

POS – A Point-of-Service (POS) plan blends both the HMO and PPO models together to provide members with open-ended options. Significant discounts and co-pays may apply to in-network providers, but out-of-network services may also be reimbursed.

Primary Care Physician
This is the main doctor you see and can be a general or family practitioner, an internist, an obstetrician or a gynecologist. Most insurance plans designate this doctor as your first point-of-contact for medical care. If your primary care physician determines that you need to see a specialist, he/she may need to prepare a referral for you and your insurance company.

Referral
This is a written notification from your primary care physician that you are in need of a specialist’s services for a specified condition. Many health insurance providers require a referral before providing benefits for specialist care and, in turn, many specialists will not see patients without a referral.

Deductible
This is a fixed dollar amount that those insured must pay out-of-pocket before their health insurance provider will begin to pay benefits. If you have a $250 deductible, you are responsible for paying the first $250 of your medical expenses before your insurance plan will begin to pay out benefits.

In-Network vs. Out-Of-Network
As described above, benefits and pricing of services may vary based on provider participation in managed care networks. If your regular doctor participates with your insurance plan, then you will be eligible for in-network benefits (the most coverage). If they do not participate, you will be seeing the doctor out-of-network. In this case, you may be eligible for partial coverage or reimbursement, or solely responsible for payment.

To find a doctor who accepts your insurance, use the Vitals Doctor Finder.