Health Insurance Types And Their Meaning

The history of health insurance starts in the 1930s, which is when the Blue Cross started to offer pre-paid hospitalization. Before this time, people preferred the idea of wage insurance when illness struck, due to limited treatment options. However, advancements in medical science enabled healthcare to become a powerful force, and that is when Blue Cross started their pre-paid business. This proved to be a highly successful maneuver, and from there health insurance took its roots in American civilization.

Not all health insurance is the same. In fact, there are multiple forms of it that vary in terms of coverage and treatment. It’s important to recognize the differences between these forms of insurance choose the one that’s right for you.

Perhaps the most common form of health insurance is Major Medical Insurance. Basically, this form of insurance requires the policy holder to pay a deductible before the insurance pays benefits. After that is completed, the insurance company goes on to pay 80% of the medical bills while the insured person pays the remainder. The person who is insured can go to any hospital or doctor to receive services, pay the provider directly, and then get reimbursed by the insurance company for 80% of the cost. Conversely, the insurance company can pay 80% directly and the insured can pay 20% afterwards.

Other forms of insurance are PPO, POS, and HMO. Perhaps the second most common form of insurance, the HMO plan is a type of insurance that provides long-term care that is generally less expensive than Major Medical Insurance. The insured individual has a Primary Care Physician, an individual that is responsible for taking care of the patient and coordinating treatment with other doctors if necessary.

The other forms are variations of this treatment, and provide different degrees of flexibility and direct or indirect coverage. It’s important to understand their differences, and make a decision based on your best interests and financial circumstances.