Health Insurance:  Health insurance is an essential part of financial plan.  It should be considered the most important insurance you buy.  We purchase homeowners insurance to protect our homes, auto insurance to protect our vehicles and liability, and life insurance to protect our loved ones against income loss.  Health insurance is to protect our most important asset, our health.  Without good health, we may not be able to enjoy life and provide for our families.  It is important you choose an (A) excellent well established carrier and a network that includes your preferred doctors and hospitals.  There are generally (3) types of health insurance an individual or employer can choose.

HMO (Health Maintenance Org.)  An HMO is not really insurance; it is a health care provider.  An HMO is sometimes less expensive but has guidelines that limit access to some medical services that are deemed unnecessary.  All services must be provided within the network and must be approved by a gatekeeper.  You can seek services from a specialist that is not first approved or recommended by the gatekeeper.  HMO’s tend to built on a financial model that provides a dis-incentive for care, so some individuals may not receive the highest level of quality care.  They are considered by some to have lower standards of care and medically redlining seniors and low income populations.

POS (Point of Service) A POS is a type of managed healthcare plan that allows you to choose doctors and hospitals within a network based on an agreed discounted fee.  It is sort of a combination of an HMO and PPO.  You choose a physician within the network and he must refer you to any specialist you might seek.  If you seek a specialist without this referral you likely would bear the cost.

PPO (Preferred Provider Org.)  A PPO plan allows you to choose any doctor or hospital within a network of providers.  It will also allow you to seek services outside of the network at a higher non-negotiated fee.  This is the preferred choice for many people since it allows you to go outside of network for second opinions or services provided by the top rated hospitals and surgeons.  It also, allows you seek medical services that are not restricted by gatekeeper access.  When shopping a PPO plan it is important to know your maximum OOP (Out of Pocket) expense should you incur an accident or serious illness.  This should be your deductible and co-insurance (OOP) and perhaps a hospital admission or facility fee.  Be careful though, many plans have too many limitations and exclusions which limit what they will pay for various services.  An example:  Suppose your plan has a $5 million maximum limit, but pays only up to $600 a day for Hospital stays, the hospital charges $1200 a day.  Who do you suppose would pay the additional fee?   A major medical plan that pays 100% once you have met your deductible and co-pay, with few limitations or exclusions for medically necessary services would be the way to go.  This means fewer gaps in coverage and a broader range of medical expenses covered.

Frequently Asked Questions about Health Insurance and The Most Important Questions You Need To Ask When Looking For Health Insurance? are also articles that will help you understand Health Insurance.