In most cases, private health insurance comes through your employer, who picks up the vast majority of the premiums. Usually, you’ll have some choice as to the type of plan you have. The job of choosing the coverage options is left to the employer.
If you’re self-employed or work for a company that doesn’t offer health insurance, you can buy it on your own. Taking that route isn’t cheap. You may have a wide range of plans and plenty of coverage options to choose from, but the final decision will probably come down to what you can afford.
In 1995, more than 60 percent of Americans under the age of 65 had some type of private health insurance. Many of us have the coverage, but understanding the different kinds of health insurance can be a challenge. No matter who pays the premiums, make sure you know what you’re getting.
Private health insurance can be broken down into two broad categories: traditional and managed care. Within those categories, there are four basic types of plans:
- Traditional indemnity plans, which are now often called Fee-for-service;
- PPO, or Preferred Provider Organizations;
- POS, or Point-Of-Service plans;
- Closed-panel HMO, or Health Maintenance Organizations.
No one type of health care plan is better than the other. It really depends on your needs and preferences. Some people enjoy the autonomy offered by fee-for-service plans, while others prefer the low costs associated with closed-panel HMOs. Also, as health insurers compete for business, distinctions among the types of plans may blur.
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