Health Insurance Plans: What You Buy When You Buy Health Insurance
By Evan C Davis
What do PPOs, HMOs, and POS plans have in common? They are all forms of managed health plans, and you need to be familiar with them when you shop for health insurance. PPO means preferred provider organization; HMO means health maintanence organization, and POS means point of service.
In general, managed care plans provide their members with health care from within a network of providers. In other words, members can only go to certain doctors and hospitals that belong to or agree to participate with a particular network. Managed care plans also take care of claims processing that result from a medical service.
A health maintenance organization generally provides the least expensive medical care. HMOs offer medical services in exchange for a fixed monthly premium. However, HMO clients have no freedom to choose their own doctors and hospitals and can only use providers in the HMO network. Doctors belonging to a particular HMO normally refer patients to other HMO doctor members, and a referral from an HMO primary care doctor is needed in order to see a specialist.
A preferred provider organization, or PPO, allows its members greater lattitude in choosing which doctors they can see. Physicians within a PPO make referrals, but the members can refer themselves to doctors and specialists including those outside of the plan. However,though members have the freedom to go outside of the PPO and will still receive coverage, they will pay more for seeing providers out side of the PPO network.
In a point of service plan (POS), Primary care doctors refer members to other doctors, usually within the plan, but members can refer themselves outside of the plan, though they will pay more. If POS doctors refer a patient outside of the plan, the POS usually pays most of the fee. Participants in these plans choose their own doctors and hospitals, and can refer themselves to whatever doctor or specialist they choose.
It is also important to understand fee-for-service, or FFS, plans. These are not really managed care plans in the sense that there is a pre-existing network of providers in place. Fee For Service plans are often much more expensive in comparison to HMOs and PPOs. However, FFS plans allow participants greater lattitude in who they can see. FFS beneficiaries can choose what doctors, and specialists they prefer to see and what hospitals they can go to. In an FFS, what determines what provider members use is whether or not the provider accepts the insurance. Normally, FFS plans require much more in out-of-pocket expenses and require members to pay in full up front and then file for reimbursement.
The plan you ultimately choose will depend on personal needs, whether or not you are single, married, married with children, whether or not the insurance is available in your geographical area, and of course, the amount of income available for health insurance. One very important point to remember is that health insurance, as all insurance, is protection. The better you understand the kind of protection you need, the better your choice will suit your needs.
Evan C. Davis works in Medicare customer service and is the owner and webmaster of Instant Health Insurance. Find cheap health insurance quotes online and low cost health insurance at
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