What is health insurance?

When insurers talk about a “Provider“, they typically speak of a clinic, hospital, doctor, laboratory, healthcare professional or pharmacy that treats a person.

The “Insured” is the owner of the health insurance policy or the person with the health insurance coverage.

Depending on the type of health insurance coverage, the insured can pay out of his own pocket and receive a reimbursement, or it is the insurer who makes payments directly to the provider.

In those countries where there is no universal health coverage, such as the United States, health insurance is commonly included in employer allowance packages.

A Commonwealth Fund 2011 report informed that one-fourth of all U.S. citizens of working age experienced a gap in health insurance coverage. Many people in the survey lost their health insurance when they changed jobs or became unemployed.

Types of health insurance

Private health insurance

The Centers for Disease Control and Prevention (CDC) say that the U.S. healthcare system relies heavily on private health insurance. In the National Health Interview Survey, researchers found that 65.4% of people under the age of 65 years in the U.S. have a type of private health insurance coverage.

Public or government health insurance

In this type of insurance, the state subsidizes healthcare in exchange for a premium. Medicare, Medicaid, the Veteran’s Health Administration, and the Indian Health Service are public health insurance examples in the U.S.

Other health insurance types

An insurer can also manage plans and connects with healthcare professionals.

Managed care plans

In this type of plan, the insurer will propose contracts with a network of health care providers to provide low cost medical care to their policyholders.
Penalties and additional costs expected, added to off-line hospitals and clinics, but will provide some treatment.
The more expensive the policy, the more likely it is to be flexible with the hospital network.

Indemnity, or fee-for-service plans

An Indemnity plan covers care fairly among all healthcare professionals, allowing policyholders to choose their preferred location.

Usually, insurer pays at least 80 percent of the costs in an indemnity plan, while the patient pays the remaining costs as co-insurance.

Health maintenance organizations (HMOs)

These are organizations that provide medical care directly to the insured. The policy will usually have a dedicated primary care physician that will coordinate all necessary care.

HMOs will normally only fund treatment that is referred by this GP and will have negotiated fees for each medical service to minimize costs. This is usually the cheapest type of plan.

Preferred provider organizations (PPOs)

Similar to an indemnity plan, PPOs allow insured to visit any doctor they want.

The PPO also has a network of approved providers with which they have negotiated costs.

The insurer will pay less for treatment with out-of-network providers. However, people on a PPO plan can self-refer to specialists without having to visit a primary care physician.

Point-of-service (POS) plans

A POS plan functions as a mix of an HMO and PPO. The insured can choose between coordinating all treatment through a primary care physician, receiving treatment within the insurer’s provider network, or using non-network providers.

The type of plan will dictate the progress of treatment.

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