The biggest choice in health insurance today is between managed care and fee-for-service coverage.
Managed care, which includes Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs), requires you to choose healthcare providers that participate in your plan and have agreed to accept a specific fee for their services. You choose a primary care doctor, often called a gatekeeper, who will refer you to specialists if your medical problem is outside his or her sphere of expertise. You pay a small charge, called a copayment, for each visit. The payment usually ranges from $20 to $30.
Fee-for-service medical plans, sometimes known as conventional health insurance, allow you to choose the healthcare providers and specialists you want to use. You pay your medical bills until you reach your deductible, which is a predetermined amount of money, usually set around $250. After you reach your plan’s deductible, your insurance company begins to pick up part of the cost. Generally, you pay the bill first and then submit a claim. Your plan reimburses you a portion—typically 70% to 80%—of the amount the plan approves for the particular service you’ve had.