Health Insurance

Health insurance is basically medical risk prevention/protection mediated through a contract between the insurance provider and the user for a set premium.

There about four types of health policies available to consumers: health maintenance (HMOs), the point of service plan, the preferred provider organization, and the traditional individual health indemnity plan. These plans vary in their respective prices and available services.

At first glance, an indemnity health insurance plan may seem to hand policy holders the short end of the stick. After all, this type of insurance tends to pay less toward health care claims than a managed-care plan. Additionally, the policy holder generally pays more out-of-pocket and has to deal with more paperwork when it comes time to file a claim

However, for a great number of people, indemnity is the undeniable way to go. Individuals may choose indemnity plans because they have favored health care providers who are not part of a managed-care network, or because they travel a lot and need the flexibility to seek care away from home, or for any number of other reasons. What makes an indemnity plan the right choice is different from one consumer to the next.

What primarily separates an indemnity plan from a managed-care plan is the presence or absence of a provider network. A managed-care plan comes with a network of health care providers who have arranged with the insurance company to provide their services at an agreed-upon rate. This allows the insurance company to know how much to expect to pay for any given service. It also allows the provider to know to some extent which services will be covered and the corresponding level of coverage. Because the insurance company has made prior arrangements with these providers, paperwork can be filed directly between the provider and the insurance company. The insurance company pays the provider directly for care, requiring the policy holder to pay only a small percentage of coinsurance or minimal co-pay amount out-of-pocket.