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What Kind of Health Insurance is Best for You?

By Mary Lou Byrd on May 2nd, 2010

Health Insurance

A cheap health insurance policy may be appealing to your checkbook, but could develop into an expensive decision if you find yourself with high-cost medical bills for services that are not covered by your health care plan. Health needs vary, so one plan might be more suitable for you than another. For example, if preventive care coverage is important, paying more in monthly premiums for a traditional comprehensive plan may save you money in the long run.

There are three main types of health plans:

  1. Traditional individual health plans
  2. Major medical plans
  3. Short-term health insurance

Traditional Individual Health Insurance

Comprehensive health insurance plans usually provides coverage for doctor's visits, such as routine and preventive care, prescription medication, and hospital visits.

There are two subcategories that fall into this type of coverage:

  • Indemnity plans: Plan participants are able to receive covered medical care from nearly any health care provider or hospital for a set monthly premium. You may be required to meet a deductible before policy benefits begin. Once the deductible has been met you may pay a percentage of each bill. These plans offer a lot of freedom, but there may be restrictions on covered health care expenses and prior authorization may be needed for hospital care or other services. However, routine and preventative care is often covered.
  • Managed care plans: According to the Kaiser Family Foundation (KFF), almost all private health insurance has some element of managed care. These plans are usually associated with networks of participating physicians, hospitals, or other health care professionals and facilities. Typically, there are fewer out-of-pocket costs associated with managed care plans, but you may be required to pay co-insurance. There are some types of managed care options, such as preferred provider organizations (PPO) that allow plan participants to receive health care outside of the network but usually at a higher cost.

Major Medical Plans

Major medical insurance, also called catastrophic insurance, covers hospitalization and surgeries but not preventive or routine care.

Many of these plans are high-deductible health plans (HDHP)s. Those who are considering an HDHP should read the proposed policy terms carefully--noting benefits and limitations. Consider the implications of a high deductible, and whether or not you can afford to meet the large deducible or high medical expenses in the event of an unexpected illness.

Short-term Health Insurance

Short-term health insurance is meant to provide insurance to prevent a gap in health care coverage. Plan lengths range from one to six months, but can be renewed for up to 36 months.

This temporary form of health insurance is convenient because applications can be completed online and coverage often starts the day after you apply. Plan participants can see nearly any doctor and have coverage for the following:

  • Surgery
  • Hospital care
  • Emergency services
  • Diagnostic testing
  • Prescription drugs
  • Follow up office visits

Although short-term health insurance does cover some services, preventive care, physicals, and immunizations are not covered.

Short-term insurance can also be attractive because the premiums are cheap. This type of health insurance is less expensive than traditional comprehensive coverage because short-term health insurance is not meant for those with pre-existing conditions. Rather, short-term health insurance is typically made up of a pool of healthy plan participants who only need coverage for a short period of time. The low-risk group can maintain relatively affordable premiums because the insurance carrier expects few claims.

Selecting the Right Health Insurance for Your Needs

When it comes to health insurance, the best plan may not be the policy with the cheapest premium. Think about the type of health care you need before committing to a medical insurance policy.

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