In the United States, private health insurance plans can be written as group or individual plans, or as indemnity or managed care plans.

Comparing Private Insurance Plans

Alison purchases health insurance coverage for herself and her family members. This is an example ofan individual insurance plan.

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0 / 1

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Explanation:

Alisons purchase of health insurance coverage for his or her use, as well as his or her spouse and family members, is referred to as individual health insurance.

Indemnity, or fee-for-service, plans and managed care plans cover medical expenses if you are sick or injured, but in different ways. The following questions examine the general differences between the two plans.

Taking a closer look at how these plans provide coverage will help you begin to customize a health care plan that best suits your requirements.

Select the plan that most closely matches each given description.

	Indemnity plan	Managed care plan
Insureds create contract with an insurer who does not provide health care services
The higher the deductible, the lower the premium
Insured receive health care services from a designated group of providers
May not even involve an insurance company
No annual deduction is incurred, but a small co-payment may be required

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0.8 / 1

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Explanation:

Remember that within both types of plans, there are different terms and conditions. These descriptions are very general and, as you consider what type of coverage is best for you, should help you determine the direction to go in.

Private Health Insurance Plans

Indemnity (fee-for-service) plans	Insureds create contract with an insurer who does not provide health care services
	The higher the deductible, the lower the premium
Managed care plans	Insured receive health care services from a designated group of providers
	May not even involve an insurance company
	No annual deduction is incurred, but a small co-payment may be required

Now that youve taken a closer look at the differences between these types of plans, consider the following statements. Each indicates common preferences and situations.

Select the type of plan to which each statement most closely aligns.

	Indemnity plan	Managed care plan
I most value the freedom of choice and am willing to pay for it.
Cost is my most important consideration.
Id rather have the flexibility of either having the insurance company reimburse me or directly paying the health care provider.

Points:

0.67 / 1

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Explanation:

The following table lists each statement according to the plan it most closely aligns with, all other factors being equal:

Private Health Insurance Plans

Indemnity Health Insurance	I most value the freedom of choice and am willing to pay for it.
	Id rather have the flexibility of either having the insurance company reimburse me or directly paying the health care provider.
	Traditional health insurance tends to allow insureds more flexibility when choosing providers. This could be especially important if unusual medical problems arise that require highly skilled or experienced specialists.
Managed Care Insurance	Cost is my most important consideration.
	The fundamental approach of HMOs is to catch medical problems as early as possible (when they are relatively minor) to prevent the higher costs of treatments later on (when trouble is discovered). This practice contributes to lower costs for the HMO and, in turn, the subscriber.

There are several types of managed care plans, including group health maintenance organizations (group HMOs), individual practice associations HMO (IPA HMOs) preferred provider organizations (PPOs), exclusive provider organizations (EPOs), and point-of-service (POS) plans. Deciding which particular type of practice would best meet your needs requires knowing the major characteristics of each.

Identify the particular form of private health care organization or plan described by the following three clues.

	Clue #1: I can receive medical services from both in-network and out-of-network doctors and hospitals.
	Clue #2: Services provided by out-of-network providers are covered by the plan but I will incur a greater cost for using them.
	Clue #3: I will pay an annual deductible for this plan, and my covered costs will be reimbursed or paid to the provider, up to 80% of their total, once the annual deductible has been met.

The organization or plan being described is

an EPO

a POS plan

a Blue Cross/Blue Shield plan

a PPO

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Explanation:

The clues that follow describe a PPO:

	Clue #1: I can receive medical services from both in-network and out-of-network doctors and hospitals.
	Clue #2: Services provided by out-of-network providers are covered by the plan but I will incur a greater cost for using them.
	Clue #3: I will pay an annual deductible for this plan, and my covered costs will be reimbursed or paid to the provider, up to 80% of their total, once the annual deductible has been met.

A PPO exhibits characteristics of both an IPA HMO and an indemnity plan, since it uses a network of doctors and medical professionals to provide health care services to members who pay an annual deductible and are reimbursed up to 80% of the negotiated cost of the servicesonce the annual deductible is satisfied.

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