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Health Insurance Plans

When you're shopping for health insurance, you have a lot of options to consider as far as health insurance plans go. Here, you'll learn more about the options that are available, and you'll get some of the information you need in order to make an informed decision.

The first type of health insurance plan is the HMO, or health maintenance organization. The HMO is a legal entity that has the responsibility for paying for and providing health care services to a designated member group for a fixed, prepaid amount. An HMO is different from a regular indemnity insurance plan because they take care of both the servicing and the financing of the plan. HMOs are focused on preventive care and early detection of medical issues, through routine check ups and regular diagnostic testing. HMO plans also provide full medical and hospitalization benefits in the case of injury or sickness.

Another type of health insurance plan is the PPO, or preferred provider organization. The PPO is a group of health care service providers that enter into contracts with insurance companies, trust funds, employers and other entities to provide members with medical care at a pre-negotiated and often reduced fee. Much like the HMO, they can either be an individual plan or a group plan. A PPO is different from an HMO in two main ways; they provide their benefits on a fee-for-service model, with the fees set according to a fee schedule that is standard for all members, and plan members have financial motivation to use providers in the preferred plan network. Also, a plan member's access to specialty care isn't routed through a primary care physician, as is the case with an HMO.

EPOs are similar to preferred provider organizations in their methods and purpose, but unlike a PPO, an EPO strictly limits their plan participants to using in-network providers. A person with EPO coverage has to get all their health care from a participating provider, severely limiting choice with this kind of health insurance plan.

A point-of-service (POS) plan is not a true health care plan; rather, they are a sort of hybrid between a traditional expense plan and an HMO or PPO. With a point-of-service plan, participants' access to specialty care is routed through a primary care physician. Participants can get care from out-of-network providers, but coverage amounts are reduced. These plans are referred to as an "open HMO", and they are the fastest-growing plan type in the US.

The PHO, or physician-hospital organization, is a plan that is owned and run by physicians and hospitals, and usually developed as a way for these entities to enter into contracts with other managed-care companies to provide health care. There are also carve-out plans, managed apart from the general plan by a PPO or an HMO that specializes in a particular branch of health care. HMOs and PPOs that specialize in one segment of care are usually better at keeping costs low; substance abuse treatment, mental health care, and prescription drug coverage are some of the types of care covered under a carve-out health insurance plan.