Among the different types of health insurance are indemnity plans and fee-for-service plans. An indemnity plan pays the insurer a predetermined amount for each covered health care service, typically 80%. Individuals then pay coinsurance to cover the rest. Fee-for-service plans allow members to see any doctor or hospital they wish, and typically have more flexible networks. But there are some key differences between indemnity and fee-for-service plans.
A PPO plan encourages members to use a network of preferred doctors and hospitals. You don’t have to pick your primary care physician, but can choose any specialist in the network. Your co-pay will be higher if you visit a physician outside the network. But you’ll save money on medical care. And a PPO plan may provide better coverage for preventative services. Depending on your situation, you may want to look into a HMO plan before making a decision.
A high-deductible health plan is often combined with a Health Savings Account (HSA). This allows you to contribute tax-free money to your savings account and then use it to pay the deductible. Limited benefit plans, also called mini-meds, offer very little coverage but are widely advertised on television as cheap health insurance. Unfortunately, you may end up running out of coverage if you become sick or injured. You’ll also be subject to the financial penalty if you don’t have health insurance.
Critical illness insurance plans cover specific life-threatening diseases. These conditions may require a prolonged course of treatment or a change of lifestyle. In addition, critical illness insurance payouts don’t reflect actual hospital costs, but instead focus on the diagnosis and need for medicines. Some critical illness plans allow the policyholder to use the funds for changing their lifestyle or replacing lost income. However, a critical illness insurance plan will not cover life-threatening conditions like cancer or heart disease, but it can provide additional money to treat these ailments.