Three types of health insurance plans and managed care options

Health Insurance Plans

There seem to be three basic health insurance categories. They are generally called Fee-for-Service, Managed Care or Health Saving plans, though some call them by other names. The fee-for-service plan is what many people consider the traditional type of insurance. Like automobile insurance, people choose the cover they want and pay the price for those services. Often health care providers just take this insurance and the company pays after a deductible or co-pay, which are amounts to be paid at the time of service (usually a relatively small amount).

Managed Care is a newer type that essentially relies on the insurance companies having some type of agreement with doctors, hospitals and other care providers. Those who join a managed care program have choices from these services and negotiated amounts are paid to the provider for very specific services or types of treatment. In some cases, there are restrictions on what types of care will be paid for. Again, sometimes deductibles have to be met first and most services have co-pays. Some of these services have preferred higher levels of quality or specialties that are appealing to some who may be willing to pay more.

The final type is something like a Health Savings Account. This was an effort to give individuals more control over their money and is often offered by employers. Basically money is set aside in a bank account that can be used for certain purposes over the course of a year. There are incentives for how to use the money related to health care. Until it is spent the funds can be invested or can earn interest. Most of the time individuals with these services also have another type of health insurance to cover certain costs.

MANAGED CARE TYPES: There are three kinds of Managed Care plans: HMOs, PPOs and POSs. Health Maintenance Organizations are popular because they save money by having large numbers of people who share costs. Their focus is often on preventive care, trying to keep health problems from developing or getting worse. Doctors and hospitals agree to accept certain fees and co-pays. They often restrict the procedures. Cost savings is very important with HMOs.

Preferred Provider Organizations are similar to HMOs but usually cost more but offer more flexibility, at least within the network of doctors and hospitals they arrange. These types of programs usually allow people to go outside of the network if needed but it can cost higher service fees to do this. Sometimes specialist services can be included if someone needs a particular type of care. Point of Sale options are a final type. They are a hybrid of HMOs and PPOs. A primary doctor has to be identified and he or she determines what care can be received and where. With his or her authorization, the patient can go to other caregivers as needed though fees may again be higher. It seems that this option was a way to confirm that medical treatment, not just cost management was still important.