Health insurance is basically a kind of insurance which covers an individual’s or family’s risk in terms of health expenses incurred due to sickness or injury. In fact, as with most other kinds of insurance, the policyholder is also at risk. This policy can cover medical expenses incurred by self-employed persons, children and the old. In general, health insurance serves as protection against the possibility of major illnesses and accidents.
The usual situation in which most people avail health insurance is when they become sick or injured. When ill, it is quite natural for them to seek medical treatment from a hospital. However, in the event that they are unable to receive treatment in a hospital, many people may choose to go to home. It is here that health insurance comes into play.
There are two basic kinds of health insurance: PPOs and HMOs. In a PPO, as opposed to health insurance provided by health insurance companies (HMOs), the client pays a monthly fee to a health insurance company for health care services. Under the PPO, health expenses incurred by the insured are covered only if he has taken out a policy from a recognized PPO provider. HMOs, on the other hand, provide cover for medical expenses incurred during the entire period of the policy tenure.
A major difference between PPOs and HMOs is the amount of deductible an individual has to pay for his health insurance. With a PPO policy, the insured is not required to pay any deductible if he gets ill. Under a PPO policy, there is no requirement to pay a deductible. However, an HMO policy allows the insured to pay a fixed monthly premium for medical care expenses only. If the insured gets ill during the period, and then he needs to get medical care, he will have to pay a fixed amount to the HMO company – called the deductible – in exchange for medical care.
Another difference between PPO and HMO health insurance plans is their co-pays and deductibles. A PPO policy allows its clients to choose from a variety of co-pays and deductibles, ranging from a low cost per visit or office visit, up to a maximum out-of-pocket expense per visit or office visit. An HMO policy, on the other hand, requires its clients to pay deductibles, regardless of co-pays. Some HMOs also allow their clients to choose their own doctors, even if they do not participate in the network. PPOs do not have any restrictions on the doctors one can see.
To sum it up, both types of health plans have various restrictions and limitations when it comes to its deductibles and co-pays. People with high deductibles and co-pays would most probably find it more practical to go with a PPO health insurance plan, which allows them greater control over their out-of-pocket expenses. But if one just needs basic health care, an HMO health plan may be more affordable in the long run.