Buying Private Health Insurance
If you’ve just lost your job, changed marital status or left the security of your parent’s health insurance policy, you need to start examining the options regarding buying private health insurance for yourself. The process can be a little confusing for the first time purchaser but understanding the best type of plan for your situation can make it a lot easier.
There are two types of health insurance plans available to those who are buying private health insurance. The first is the indemnity policy. The indemnity policy was the first type of policy on the market. With this health policy, those buying private health insurance can go to any doctor or health care provider and the health insurance company either reimburses you or pays directly to the doctor. Indemnity policies have deductibles, an amount you pay out of your pocket before the insurance company pays anything. Once you meet the deductible, then there’s a co-insurance amount. The company pays a specified percentage and then you pay the rest until you reach a maximum out of pocket annual amount. Then the insurance company pays the entire bill.
The second type of health insurance is managed care insurance. Managed care can be an HMO, PPO or POS type of plan. The basics are all the same with the HMO being the most restrictive of the three types of health insurance. HMOs won’t make any type of payment if you don’t use their doctors or facilities.
If you are buying private health insurance it is important to know that managed care insurance carriers make an agreement with a specific group of doctors or health care providers for a discounted service. As long as you use those carriers, you have to pay only a small co-pay each time you visit the doctor or hospital. It is important for those buying private health insurance to know if you use another provider not on the list, PPOs and POS plans require you pay more out of pocket and a higher out of pocket maximum. HMOs, as mentioned before pay nothing.
There are varying types of plans under the two major categories of health insurance. For instance, one type of indemnity plan offers the opportunity to start a health savings account, an HSA. These health savings accounts are similar to health care IRA’s. The plan consists of a high deductible health insurance policy and a side savings account that grows tax-free as long as you use the money for health care.
Another type of health care plan specifies amounts of money the company pays if you have specific services. For instance, it might pay $20 every time you go to the doctor, up to a specified number of visits per year. This type of health insurance doesn’t fit the needs of most people.
Traditional, indemnity, plans cost more than managed care health insurance but you also have more freedom. Of course, if you opt for a plan with a high deductible and compare it to the cost a managed care plan with a low co-pay, the higher deductible is normally less money.
When those buying private health insurance start shopping for health insurance it is important to find the best plan by first analyzing your specific needs. If you frequently go to the doctor, consider the amount of the co-pay and your annual expense. You might consider a traditional plan instead. If you seldom see a doctor then a high deductible plan with a HSA might be the best type of plan for your situation. If you don’t use the money in the health savings account, it rolls to the following year.
