Health Insurance Plans
There are two basic types of health insurance: indemnity plans and managed care.
Indemnity health insurance, also called "fee-for-service" - generally gives you greater freedom and flexibility than managed care. However, you'll pay more out of pocket for the health care you get. With indemnity health insurance coverage, you can choose any doctor, hospital, laboratory, or other medical provider.
As long as your health insurance contract includes the service performed, insurance will cover it, though it won't pay the entire charge. You'll have to satisfy an annual deductible - generally a few hundred dollars - before insurance even kicks in.
Then, you'll owe a portion of each bill, called a co-payment, normally 20%. If the provider you choose charges unusually high fees, your share may be considerably higher. That's because your insurer will base its 80% share on the "usual and customary" fee for the service in your area, not on the actual bill.
Managed care health insurance is different. With a health maintenance organization (HMO), deductibles are often smaller than with other plans and sometimes there are none. Co-payments are fixed and low, and preventive care, drugs, and mental health treatment are usually covered.
However, you can choose only among doctors, hospitals, and other providers who have contracts with your HMO, and you can receive only medical services authorized by the plan. If you use non-authorized providers or receive nonauthorized care, your HMO will not pay any portion of the bills.