Medical Insurance Plans: What You Purchase When You Purchase Medical Insurance

What do PPOs, HMOs, and POS programs have in common? They are all forms of managed health plans, and you need to be familiar with them when you shop for health care insurance. PPO means preferred provider organization; Health Maintenance Organization (HMO) means health maintanence organization, and POS means Point of Service. In general, managed care programs provide their members with heathcare from within a network of providers. In other words, members can only go to certain medical providers and hospitals that belong to or agree to participate with a specific network. Managed care programs 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. Thus, Health Maintenance Organization (HMO) clients have no freedom to select their own medical providers and hospitals and can only use providers in the Health Maintenance Organization (HMO) network. Physicians belonging to a specific Health Maintenance Organization (HMO) generally refer patients to other Health Maintenance Organization (HMO) medical provider members, and a referral from an Health Maintenance Organization (HMO) primary care medical provider is needed in order to see a specialist.

A preferred provider organization, or PPO, allows its members greater lattitude in selecting which medical providers they can see. Physicians within a PPO make referrals, but the members can refer themselves to medical providers and specialists including those outside of the plan. Thus,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 , Primary care medical providers refer members to other medical providers, generally within the plan, but members can refer themselves outside of the plan, though they will pay more. If POS medical providers refer a patient outside of the plan, the POS generally pays most of the fee. Participants in these programs select their own medical providers and hospitals, and can refer themselves to whatever medical provider or specialist they select.

It is also important to understand fee-for-service, or FFS, plans. These are not really managed care programs in the sense that there is a pre-existing network of providers in place. Fee For Service programs are often much more expensive in comparison to HMOs and PPOs. Thus, FFS programs allow participants greater lattitude in who they can see. FFS beneficiaries can select what medical providers, 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 programs 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 select 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 care insurance. One very important point to remember is that health care insurance, as all insurance, is protection. The better you understand the kind of protection you need, the better your choice will suit your needs.