Private Health Insurance
Government-sponsored programs can provide valuable options when it comes to getting insured after you get canned. These programs are linked to group plans, where lower rates are negotiated on behalf of a group of participants. For some individuals, however, private health insurance may still be the best option.
This is where things get complicated. This page serves as a primer on individual health insurance plans. For more information, explore the links below.
Introduction
There are two types of health insurance plan:
Indemnity: you pay for your medical expenses out of pocket and the plan reimburses you all, part, or a fixed amount. You can usually choose any service provider you would like with indemnity plans.
Managed care: includes PPO, HMO, and POS plans. These are arrangements between a provider and a network of service providers. You will pay penalties or receive limited coverage if you do not use the caregivers in the plan’s network.
There are nuances between these types of plans. Generally speaking, though, indemnity plans provide more choice and managed care plans provide more comprehensive coverage at a lower cost.
ABCs of Managed Care
In each arrangement below, there is usually a strong financial incentive to use a physician or hospital within a set network. There are three types of managed care plan:
Health Maintenance Organization (HMO): Except for emergencies, you must use a physician within the HMO network. You choose a primary care provider (PCP) who acts as the quarterback of your health care. Your PCP must approve any tests, equipment purchases, or specialist visits in accordance with the HMO’s guidelines. There are no deductibles, but there is usually a co-pay.
Preferred Provider Organization (PPO): Offers more choice than HMOs, as you can see any doctor that you want. Outside the network, however, you will typically only receive partial coverage (between 70 percent and 80 percent) or pay a higher deductible or co-pay. Pre-approval is not usually required for specialist services. These plans are often a bit more expensive than HMOs.
Point of Service (POS): Like HMOs, you designate a PCP that is in-network. Except for emergency services, your PCP must pre-approve all expenses. You bare a large cost for using physicians outside of the network, unless your PCP refers you.
Understanding Costs
Aside from your monthly premiums, there are three other types of “out-of-pocket” costs that a plan might require:
- Deductible: A fixed amount that you must pay for medical expenses each year before you insurance provider starts paying.
- Co-pay: A set amount that you pay for a given service every time you receive it.
- Coinsurance: The percentage of your medical expenses that you have to pay yourself (usually after you have reached your deductible.)
Nontraditional Plans
For the unemployed, a comprehensive health plan may not be the best option. Especially if your situation is temporary, one of the following scaled-down plans might work for you:
High Deductible Health Plan (HDHP): You pay for all of your health expenses out of pocket up until a high deductible has been reached. After that point, your insurance kicks in. These plans are great for people who are healthy, as they really only cover you in the event of a serious illness.
Short-term/ Temporary: Many of the largest insurance dealers offer plans for durations of less than a year. These plans can be more expensive than annual plans, but can be competitive with COBRA in some circumstances.
Limited Benefits: In some states, low-cost providers are allowed to offer stripped-down benefits packages. Although these plans are cheap, many of the usual coverage allowances are not included.
