Types Of Medical Insurance

In the United States, health care is provided through the government as well as through insurance companies. While critics argue that this creates a fragmented and confusing system for consumers, supporters believe letting the free market system dictate health care is the best way to govern cost and quality and provide Americans with choices. The U.S. has thousands of plans to choose from that include various formulations of benefits, premiums, co-payments, co-insurance, deductibles, in-network and out-of-network provider lists and eligibility requirements.

Government Plans

The government provides public health care for the elderly, disabled and low-income residents in the form of Medicare and Medicaid. Medicare is funded by the federal government, while Medicaid is supported jointly by the federal and state governments. Beneficiaries bear various portions of the costs in the form of premiums, co-payments, co-insurance and deductibles. Medicare includes coverage for hospitalizations, outpatient medical services and prescription drugs. Medicaid benefits vary by state. There are traditional, or fee-for-service plans, administered directly by the federal or state governments, as well as plans contracted out to nonprofit and private companies.

Managed Care Plans

Managed care plans are the most common coverage offered through employers. They can also be purchased in the individual market. The most common are PPOs and HMOs. PPOs, or preferred provider organization plans, allow you to obtain services within a network of providers as well as go outside the network for care, though at a higher cost. HMOs, or health maintenance organization plans, restrict you to a network of providers. You choose a primary care physician who coordinates your care through a network of specialists. There are also POSs, or point of service plans, which allow you to choose between a PPO or HMO option each time you seek services. Care is coordinated by a primary care physician chosen from a network of doctors.

Indemnity Plans

Indemnity plans, also referred to as conventional plans, differ from managed care in that there are no restrictions on providers. After the member surpasses a deductible--the amount needed to be paid before insurance kicks in--the plan covers a percentage of the costs of services utilized. As of 2006, these plans only made up 3 percent of the market, according to the Kaiser Family Foundation.

Health Savings Accounts

Health savings accounts, or HSAs, are owned by individuals and are designed to help them save for future medical needs. Members deposit money into the accounts on a tax-free basis. They must be joined with a high-deductible health plan. HSAs began in 2003 as part of the Medicare Modernization Act and are intended to help contain health care costs by making consumers more aware of the cost of services.