Types of health and dental insurance

Health Savings Account

A new type of health insurance coverage is the health savings account (HSA). The goal of such an account is to invest money on a regular basis to use if and when it is needed to pay for health services and health insurance premiums not covered by an employer. Deposits into a health savings account are tax-deductible, or if an employer sponsors the plan, deductions can be taken from your paycheck pre-tax. Withdrawals are penalized if used for something other than health care expenses. To qualify for a health savings account, you must also be enrolled in a high-deductible (at least $1,250) insurance plan. Such a high-deductible plan would have a lower premium than similar plans with no or lower deductible. Another benefit to a plan with an HSA is that the contributions accrue tax-deferred over time, and if not used, the money may be rolled into a qualified retirement savings account.

Preferred Provider Organization

Another common type of health plan is the Preferred Provider Organization (PPO). Unlike an HMO, a PPO lets you choose a doctor or a hospital. However, there is a group of preferred providers, doctors, and hospitals that are part of the plan. When you see this group of providers, most or all of your health care needs are covered by the plan, though some charge deductibles or fees for certain services. If you see a doctor or a hospital outside of this group, the plan usually covers a lower percentage of the costs. PPOs and fee-for-service plans are examples of open plans, in which you have a choice of health care providers.

Health Maintenance Organization

One of the largest and oldest models is the Health Maintenance Organization (HMO); the first one was started in 1929. In this model, you must use a tightly integrated network of health care providers associated with the HMO. If you go to a provider outside of the network, you must get pre-approval. With most HMOs you do not pay directly for medical care, though some charge deductibles or fees for certain services. An HMO is an example of a closed plan, in which you can use only those providers in the network. It is also a managed care type of coverage, where the HMO can decide what type of care you receive. HMO plans often have relatively low premiums, compared to fee-for-service and PPO plans.

Fee-for-Service Health Insurance

One of the simplest and earliest models of health insurance is the fee-for-service plan (sometimes known as an indemnity plan). Under such a plan, whenever you visit a doctor or a hospital, you pay the doctor directly. Then you contact the insurance company, and the insurance reimburses you for a percentage of the bill. Under this type of plan, you can usually have a broad selection of health care providers to choose from. Often, this type of plan has higher premiums than HMO or PPO plans.

Dental Insurance Plans

The two most common types of dental insurance plans are Dental Health Maintenance Organizations (DHMOs) and Preferred Provider Organizations (PPOs), which operate in a similar way to the health insurance types of the same name. Both are managed care plans, with dentists joining the plan agreeing to charge set rates for procedures. The PPO plans provide more flexibility in choosing a dentist but sometimes higher premiums. Most dental plans have both annual limits and deductibles. The higher the limit and the lower the deductible, the more expensive the premium.

Medicare and Medicaid

There are several types of government programs for those eligible. Medicare is a federal government-administered program primarily for persons age 65 or older, or those with certain covered disabilities. It provides a variety of coverage, including hospital stays and some prescription coverage (through Medicare Part D). Medicare is funded by payroll taxes, so a portion of everyone's paycheck goes to fund the program. Medicare eligibility is not dependent on income level. While premiums and coinsurance costs are lower than the other types of health insurance, people must still usually pay some premiums and deductibles. Since Medicare only covers basic medical expenses, many people also purchase Medicare Supplemental Plans through third-party insurance companies. These plans protect individuals from the gaps in coverage under Medicare. Medicaid is a federal program for individuals and families with low incomes and resources. Among the groups of people served by Medicaid are eligible low-income parents, children, seniors, and people with disabilities. Medicaid is the largest source of funding for medical and health-related services for people with limited income. Medicaid does not pay benefits to individuals directly but to health care providers. In some states, Medicaid beneficiaries are required to pay a small co-payment for medical services. Only US citizens or resident aliens are eligible for Medicaid.