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Common Types of Health Insurance and Which Plan Is Right for You

Common Types of Health Insurance and Which Plan Is Right for You

Nine years after the passage of the Affordable Care Act, American health insurance remains a controversial subject. This is largely because health insurance has become an important facet of modern life. Much of the trouble comes from the convoluted nature of the insurance market and a layman’s seeming inability to determine a plan that balances affordable premiums with specific needs.

Indemnity Plans

Diverse styles of health insurance lodi ca exist today. The most traditional sort is an indemnity (also called fee-for-service) plan. Under this arrangement, you pay for your care and the insurance company compensates, or indemnifies, you afterward. These indemnities can be for a certain percentage of the cost, or a flat amount set by the company for each procedure or illness. Indemnity plans let you choose your own provider, but you pay up-front for everything.

Managed Care Organizations

Managed care plans are currently the most popular type of medical insurance. Health maintenance organizations, or HMOs, are a classic example of managed care. HMOs set their own standards and practices for treatment, and contract with specific providers who agree to follow their rules. An HMO will often cover all expenses, so long as you use providers within their network. As a rule, HMOs don’t cover any care received outside of their network, while PPOs (preferred provider organizations) function in a similar way but will provide limited out-of-network coverage.

Many Other Options

A slew of experimental new medical plans has arisen to combat the downsides of traditional models. High-deductible health plans (HDHPs) exist to cover severe, high-cost illnesses like cancer and heart attacks, as opposed to more ordinary ailments. HDHPs are accompanied by government-approved, un-taxed health savings accounts (HSAs), specifically to cover the out-of-pocket costs of deductibles. At the other end of the spectrum, limited benefit plans are designed solely for routine care coverage.

With the exorbitant prices of practically everything medical, you cannot afford not to have health insurance. Deciding which kind of plan is best for you is the first step in getting the coverage you need.