Individual Health Insurance Plans

By: EconomyWatch Content   Date: 8 February 2010

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Individual health insurance plans can be purchased from several private insurers. One can buy individual coverage either as an indemnity plan or as a managed care plan.

Individual Health Insurance Plans: Indemnity Plan

As an individual health insurance plan, indemnity coverage offers the freedom to seek treatment from any physician or hospital. Later, the medical bills are submitted to claim for a refund. However, the plan imposes certain cost related restrictions, such as pre-authorization is required for non-emergency hospitalization, surgery and diagnostic tests. The cost restrictions are generally termed as ‘covered charges,’ which refers to the scope of medical services and their charges as covered by the insurance policy.

Indemnity plans have a pre-decided deductible associated with the policy. It is the amount that an individual has to pay from his pocket before the policy begins to pay. One has to also pay for coinsurance, which is the policyholder’s share of the claim.

An indemnity plan requires the individual to follow the standard procedure to apply for a claim. This procedure is outlined in the policy disclosure document provided by the insurer.

Individual Health Insurance Plans: Managed Care Schemes

Managed care schemes are the more popular individual health insurance plans. These plans offer more medical benefits through a network of contracting physicians and hospitals. There are three types of managed care plans:

  • Health Maintenance Organization (HMO): In an HMO plan, the policyholder chooses a primary care provider (PCP) from a network of approved physicians in the service area. The services that are not provided by the PCP are not covered under the policy except in an emergency. Co-payment has to come from the insured person’s pocket for select services. 

  • Preferred Provider Organization (PPO): A PPO plan offers the flexibility to seek treatment from physicians who are not in contract with the network. However, the cost benefits are higher if the policyholder seeks services from the PCP or networked physicians.

  • Point-of-Service (POS): A POS plan is similar to a PPO plan in the sense that one can seek medical services from within or outside the network. However, the policyholder has to take authorization from the PCP to avail claim for out-of-network services.

Based on personal health requirements and medical service available in the area, an individual can select any one of the health insurance plans.


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