Types of Health Plans

Health Maintenance Organizations (HMOs)

HMOs are organized systems for providing health care in a geographic area. They have a set of basic and supplemental preventative and treatment services; members generally select a primary care physician (PCP) who is responsible for making all referrals to specialists. HMOs offer no "out of network" benefits and have low out-of-pocket (co-pay) expenses.


Indemnity Plans

Indemnity or traditional insurance is not considered "managed care." In indemnity plans the member chooses his or her own providers. Oversight of care by the health plan is minimal. The member's out-of-pocket payment is generally a percentage of the provider's usual and customary fee schedule.


Managed Care

Managed care is a broad term that describes programs designed to manage the cost and quality of health care. Ideally, managed care brings about a comprehensive healthcare system where patients receive the care they need, including preventative care when they need it. The plans vary from restrictive provider lists and low out-of-pocket amounts to fairly open provider lists and high out-of-pocket amounts.


Medicaid

Medicaid is the State health insurance program for low-income individuals, the indigent and elderly. Many states are introducing Medicaid HMOs for this population.


Medicare

Medicare is the Federal health insurance program for older Americans and eligible disabled individuals. Medicare HMOs are offered in some areas of the country.


Point of Service (POS)

POS plans build on the HMO concept. However, if a member chooses to seek a specialist directly, without a referral from their PCP, or seeks an "out-of-network" provider, they will have coverage with a higher out-of-pocket (co-insurance) amount.


Preferred Provider Organization (PPO)

PPOs generally provide "in-network" and "out-of-network" benefits and do not require a PCP referral to see a specialist. The amount the member must pay out of pocket is less when using an "in-network" provider.