Health insurance can be provided by both public programs and private health insurance companies.  Private health insurance can be employment-based or purchased by an individual.  Below you will find some basic information about private health insurance that will help you understand your health insurance.

Employer-Sponsored Health Care Plans

Many people have coverage through their employer. There are two different types of employer-sponsored health care plans: fully-insured and self-funded plans. In a fully-insured plan, the employer purchases health insurance from a company that pays for employees’ medical expenses and charges the employer a fee that covers both the medical expenses and administrative costs such as customer service and claims processing. In a self-funded plan, the employer pays the cost of covered medical expenses, and the insurance company charges a fee that covers administrative costs only. Employers that choose to be self-funded can decide for themselves whether they want to provide certain benefits. For example, they can decide if they want to cover routine costs of clinical trials or cover specific drugs.

Different Types of Private Health Insurance Plans

 There are many different types of health insurance.  Here is an explanation of the major types and what you can expect from each.

• Fee-for-Service plans: In fee-for-service plans you are free to see any doctor or hospital of your choosing.  In return for this flexibility you may pay higher copayments or deductibles.  You often pay providers directly for services, and then submit claims to your insurance company for reimbursement.
• Health Maintenance Organizations (HMO): A health maintenance organization (HMO) is a type of managed care organization in which hospitals, doctors, and other providers are contracted with the HMO, which will only cover care provided in accordance with their guidelines and restrictions for treating patients.  Most HMOs will require you to select a primary care provider (PCP) who directs access to medical services. Except for in emergency situations, patients need to obtain a referral from their PCP to see a specialist or another doctor.
• Point-of-Services plans (POS): Many HMOs offer an indemnity-type option known as a point-of-service plan.  The primary care doctors in a POS plan usually make referrals to other providers in the plan.  But in a POS plan, you can refer yourself outside the plan and still get some coverage.  If your doctor makes a referral out of the network, the plan pays all or most of the bill.
• Preferred Provider Organizations (PPO): A preferred provider organization is a combination of traditional fee-for-service and an HMO.  It consists of physicians, hospitals, and other providers that have subscribed to the PPO plan to provide health care services at reduced rates.  Like an HMO, there are certain doctors and hospitals to choose from.  When visiting an in-network physician, you will pay a small fee, or copayment.  You may use other practitioners outside the plan (out-of-network), but you will pay more toward the cost of care (a higher copayment and often must to satisfy a deductible before being reimbursed) than if you sought care within network.