The term health insurance refers to a wide variety of insurance policies. These range from policies that cover the costs of doctors and hospitals to those that meet a specific need, such as paying for long-term care.
Choosing between health insurance plans is not always easy. Although there is no one "best" plan, there are some plans that will be better than others for you and your family's special health needs. If you are looking to buy health insurance, it is a good idea to get a number of quotes, which are usually provided for free, from multiple companies.
When people talk about health insurance, they usually mean the kind of insurance offered by employers to employees, the kind that covers medical bills, surgery, and hospital expenses. You may have heard this kind of health insurance referred to as comprehensive or major medical policies.
Today, when people talk about broad health care coverage, instead of using the term "major medical policy," they are more likely to use the terms fee-for-service or managed care. These terms apply to different kinds of coverage or health plans. It is also common to hear people talk about specific kinds of managed care plans: health maintenance organizations (HMOs), preferred provider organizations (PPOs) and point-of-service (POS) plans.
While fee-for-service and managed care plans differ in important ways, in some ways they are similar. Both cover an array of medical, surgical, and hospital expenses. Most offer some coverage for prescription drugs, and some include coverage for dentists and other providers. But there are many important differences that will make one or the other form of coverage the right one for you.
Health insurance is generally available through groups and to individuals. Premiums—the regular fees that you pay for health insurance coverage—are generally lower for group coverage. When you receive group insurance at work, the premium usually is paid through your employer.
Group health insurance is typically offered through employers, although unions, professional associations, and other organizations also offer it. As an employee benefit, group health insurance has many advantages. Much—although not all—of the cost may be borne by the employer. Premium costs are frequently lower because economies of scale in large groups make administration less expensive. With group health insurance, if you enroll when you first become eligible for coverage, you generally will not be asked for evidence that you are insurable. Some employers offer employees a choice of fee-for-service and managed care plans. In addition, some group plans offer dental insurance as well as medical.
Individual health insurance is a good option if you work for a small company that does not offer health insurance or if you are self-employed. Buying individual health insurance allows you to tailor a plan to fit your needs from the insurance company of your choice. It requires careful shopping, because coverage and costs vary from company to company. In evaluating policies, consider what medical services are covered, what benefits are paid, and how much you must pay in deductibles and co-insurance. You may be able to keep premiums down by accepting a higher deductible.
