Health insurance plans offer financial cover against diseases or illnesses that are insured under the policy. Although most countries have put in place a universal health care system, such programs provide health cover for low-income families and senior citizens. However, with growing medical expenses, people are buying personal health insurance as well. This trend has revolutionized the health insurance sector in the past decade.
Health Insurance Plans: Indemnity Insurance
Indemnity health insurance plans offer great flexibility and coverage. However, the policyholder has to bear some of the financial burden to enjoy indemnity insurance. This plan allows the individual choice of services, such as doctors, laboratories and hospitals.
Indemnity insurance pays for all the medical charges covered under the insurance contract. However, the insurance company does not reimburse that amount in full. It pays the customary fees as prescribed by the government. An individual needs to pay the deductibles to qualify for reimbursement. Moreover, there are co-payments that have to be paid by the policyholder. Co-payments are usually 20 percent of each medical claim.
In addition, indemnity insurance covers medical expenses due to sickness or accidents only. This plan does not include payments for preventive treatment.
Health Insurance Plans: Managed Care
Managed care plans are exactly the opposite of indemnity insurance. A health maintenance organization (HMO) plan offers lower deductibles, fixed co-payments and the facility to cover preventive care, pharmaceuticals and other forms of treatments, such as dental check ups.
The only limitation of the HMO plan is that an individual cannot choose the doctor, hospital or lab by himself. The policyholder is bound to visit only authorized medical centers as prescribed under the policy document. If one opts to go to a center outside the network, the insurance policy will not pay for the visit.
Since many policyholders felt too restricted with the HMO plan, the point-of-service plan emerged under the managed care services. This plan allows an individual to keep insurance payments low by visiting networked medical practitioners. However, if one goes outside the network, s/he has to pay higher deductibles and co-payments.
Health Insurance Plan: Group vs. Individual
Apart from government aided healthcare programs, most people receive health insurance from the organizations where they work. A group health insurance plan offers good coverage at reasonable rates. Individual insurance plans provide coverage for all personal health insurance needs. With such a plan, an individual is free to choose whatever s/he can pay for.