Health Insurance

What you Need to Know before Buying Health Insurance


In today’s highly competitive health insurance sector, it is almost impossible to zero in on one plan and say that it is better than the other. What you ultimately choose to buy depends on your preferences, your needs and the amount of premium you are willing to pay.

However, medical insurance can be broadly categorised as follows –

  • Traditional Insurance – Till about a couple of decades back, most people opted for traditional indemnity coverage. A certain amount is paid by you and insurance takes care of the remaining part of the expenses. This has later evolved into the Fee-for-Service coverage. You have freedom to choose your doctor or hospital and consult a specialist without having to take permission of the insurance provider. However, you have to pay a deductible upfront before the insurance company starts making payments.

  • Managed Care – Most private insurance today have some form of managed care. The main similarity between different plans is that there is an arrangement between the insurer and a network of health care providers. When you avail facilities from that network, you enjoy significant financial incentives. Insurers follow stringent standards when selecting the providers so you are always assured of quality care.

  • Preferred Provider Organizations (PPOs) – This is a step forward from Managed Care where PPOs offer a financial incentive to a policy holder to stay within the network. You can refer yourself to a specialist at minimum co-pay if you choose to remain in the network. If you choose to go outside the network, you have to pay a deductible which is the difference between in-network and out-network doctor’s charges.

  • Point of Service (POS) – This is similar to PPOs but here you have to choose a primary Care Physician (PCP) from within the network of doctors registered in the plan. If your PCP refers you to an outside specialist the insurance provider will pick up the major portion of the tab but not so if your refer yourself out. The advantage here is that POSs offers preventive health care services like subsidized health clubs memberships.

  • Health Maintenance Organizations (HMOs) – This is the least expensive of health insurance plans and more focused on group plans than individuals. You have to pay low premium and minimum paperwork with the only requirement being that you see the network doctors. An HMO can either be a group of individual practices or one with central offices and clinics.

Hence study your requirements and choose a health care insurance provider in tune with your specific needs.