- The main function of health insurance which is also known as medical insurance is to shield the insurer or the assurer from the cost of medical care which would have been paid by the individual.
- Medical bills for treatment of a serious illness or injury could easily consume your savings or push you into a state of bankruptcy, therefore, health insurance companies help loosen the onus of insurers.
- Also, another function of health insurance is to provide you with access to discounted or rebated medical care. Most Insurance companies negotiate discounted rates for most medical services with doctors and hospitals in your area, in order to send customers their way.
- When you’re part of a health insurance plan and you receive medical care from providers in that network, you benefit from those lower rates. Believe it or not, without health insurance a doctor’s office may charge you twice as much for a routine visit (or anything else) compared to someone who has health insurance.
Types of health insurance
All health insurance companies shield their clients from medical bills, however they differ with regards to how they function.
Before you come to a consensus that you want to be on any health insurance plan, try and find out how each of them works and the privileges you are to enjoy from them.
The following shows the various types of health insurance:
Preferred provider Organization (PPO)
PPO is a type of health insurance plan in which employees are required to use a network of selected doctors and hospitals. These health insurance companies contact the chosen doctors and hospitals to provide services to plan members at a discounted or negotiated price. Employees have the opportunity to see any of the selected doctors or hospitals within the plans network.
Under this plan, services rendered outside the network of the selected doctors or specialist may end up in a higher out-of-pocket cost.
Health maintenance organization (HMO)
This plan is considered to have a lower out-of-pocket expenses. The cost for an HMO plan are basically lower than other types of health insurance plans.
However, it also presents to the employees less flexibility with regards to the choice of doctors or hospitals than other health insurance plans. Health Insurance Organization Health Insurance Plans usually provide coverage for preventative services than other policies.
They also demand from the employee to choose a Primary Care Provider (PCP) from the network. Once the employee chooses, it becomes your home base for medical care. This helps the PCP to get to know your whole being well and coordinate all your care. In severe cases, the employee could be referred to see in-network specialist.
Exclusive provider organization (EPO) plan
EPO may seem a bit similar to HMO plans because they also employ the use of network of doctors and hospitals their members are required to only except in states of emergencies. This means that if you visit a provider outside the plan’s network of selected doctors or specialist, you are more likely to pay the full cost of service yourself. However, if you want to see a specialist in your network, you don’t need a referral from a PCP.
Point-of-service (POS) plan
POS combines HMO and PPO plans. POS plans also require employees to choose a Primary Care Physician from the plan’s network of doctors and hospitals. Generally, services rendered by the PCP aren’t subject to the policy’s deductible.
Services received outside of the network are usually reimbursed in a manner similar to conventional indemnity plans (e.g., provider reimbursement based on a fee schedule or usual, customary and reasonable charges).
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