When you are looking for health insurance it is very important to understand the many different types of health insurance available to you. There are advantages and disadvantages to each of the different types of health insurance. Knowing the differences and the options that you have can help you to make an informed decision and end up with the insurance that works best for your situation.

There are two main groups of health insurance. These are traditional and managed care. Within those two groups there are further distinctions. Traditional plans are called fee-for-service plans. Managed care plans can be a Preferred Provider Organization or PPO, a Point of Service plan or POS or a Health Maintenance Organization or HMO.

Fee-For-Service Plans

A traditional fee-for-service plan can be compared to auto insurance. You pay a premium for coverage and then you must pay a deductible before the insurance company pays any expenses. It is rather simple and straightforward. Under this type of health insurance you have the option of going to any doctor, hospital or other health care provider that you choose, including specialists. This type of plan is usually one of the most expensive health insurance options. Deductibles can be high and you still have to pay a co-pay after you reach the deductible. Usually you have to pay all expenses upfront, even after reaching the deductible and then you are reimbursed by the insurance company. There is a chance that the company will deny the claim and you will not receive any reimbursement.

Preferred Provider Organizations

PPOs are created by agreements between the insurance company and the health care providers. If you have a PPO you choose a health care provider that is in the network or out of the network. Providers in the network have agreed to special pricing with your PPO and you will pay less to see them. Out of network providers do not have an agreement and you will pay more to see them. In most cases you must pay the whole bill up front and submit it for reimbursement to your insurance company. You can see specialists without referrals, but preventative care is not always covered through a PPO.

Point-Of-Service

Point-of-service is another of the types of health insurance plan available. POS plans are much like a PPO. The main difference is that you will have a primary care physician. You choose your primary care physician from the network providers and you must see your primary care physician before you can see a specialist or get care from another health care provider. If you refer yourself to a specialist then you may end up having to pay more out-of-pocket expenses. POS plans usually do cover preventative care.

Health Maintenance Organizations

HMOs involve a network of doctors like a PPO or POS. With a HMO you can't see out of network doctors and you have to get permission to go to the emergency room for most non-critical situations. Also, you must see your primary care physician before seeing a specialist or you will pay for the entire bill on your own. While that may see extreme, it is important to realize that HMOs provide the lowest premiums and low co-pays and in some cases no co-pays. HMOs also cover preventative care.

There really is no way to say which types of health insurance plan are the best. It all depends on your individual situation. You have to make sure that you look at each of the types of health insurance plans and find the one that best suits your needs.