Quite simply, health insurance can offer you protection from rising health care costs by helping to pay your medical expenses. While most people generally receive health coverage through their employer (group insurance), others choose to purchase coverage directly from an insurance company (individual health insurance).
In response to the growing need for insurance protection, there are more health insurance choices available today than ever before, including:
- Traditional Health Insurance — Comprehensive coverage for covered medical services that normally has no restrictions on which providers you can see. The provider charges a set fee for each service and a claim is submitted to the insurance company. You will probably be reimbursed for some (but not all) of the expenses and will likely have to pay a deductible, coinsurance and/or co-payment. Traditional health insurance is also called indemnity insurance or fee-for-service insurance.
- High Deductible Health Insurance — Coverage that is generally designed to help protect against catastrophic events. The insurance is similar to traditional health coverage except the deductible you pay is higher. Therefore, although your premiums are lower, your out-of-pocket expenses can still be high.
- Health Savings Account (HSA) — An account that lets you save money to pay for your medical services. You can make tax-free contributions throughout the year, which earn interest. Any money left over at the end of the year can be added to your account for the following year. You must meet certain requirements to be eligible for an HSA (including having high deductible health insurance) and can receive benefits for qualified health expenses (such as hearing aids and glasses) that are not normally covered under your other insurance.
- Managed Care Insurance — Coverage that offers the benefits of traditional health insurance but without as much flexibility in your choice of doctors and hospitals. While you can be limited to a specific network of providers and a drug formulary, you can have lower out-of-pocket expenses (as long as you stay within the network). The common types are Preferred Provider Organizations (PPOs), Health Maintenance Organizations (HMOs) and Point-of-Service (POS).
- Limited-Benefit Insurance — Coverage that is typically less expensive than traditional and managed care insurance. However, it is not normally as comprehensive. Limited-benefit insurance can help pay your everyday covered medical expenses (such as doctor's office visits, hospital stays, surgeries and preventive care) but generally doesn't cover your less common expenses (such as catastrophic medical events). You normally won't have a deductible, so you don't have to wait to receive benefits.
- Mini-Medical Insurance — Coverage that is similar to limited-benefit insurance except it can be more restrictive and you can have caps on the benefit amount you receive (normally ranging from $1,000 to $10,000).
- Supplemental Insurance — Coverage that can offer benefits to cover the gaps in your other health insurance. It generally pays benefits for specific types of services (such as hospitalizations and outpatient treatments). You can use the money to help pay deductibles, co-payments and other out-of-pocket expenses. It is often not intended to be your sole source of protection, although benefits can be used as such if you do not have any other type of health insurance.
- Critical Illness Insurance — Coverage designed to help pay the expenses a critical illness (such as a heart attack, stroke or cancer) can often bring. The insurance can help pay for specialized treatments, medications and preventive care that may not otherwise be covered under other types of health coverage.
Choosing the right plan for you can be difficult. Make sure you look at your financial situation and figure out exactly what you can afford. Remember, due to inflation, some types of health insurance can have premium increases, so be sure to factor that into your budget. Also consider your health — both now and in the future — and if you will have access to the doctors, hospitals and emergency care of your choice.
Additional Information
It’s always a good idea to learn as much as you can before making any decision. A licensed professional who can explain all your options can be a great resource. Also talk to friends and family for their input.
For additional information, please visit our
Senior Resource Center.
Make sure to check out other important insurance topics, including:
Information from:
"Questions and Answers About Health Insurance: A Consumer Guide," Agency for Healthcare Research and Quality (AHRQ), August 2007
This educational content is provided courtesy of Physicians Mutual®.
