People can purchase health insurance for themselves or for their families through different insurers or their employers. Millions of people are covered by private health plans in the United States. There are two main types of private health plans that provide benefits to fit the needs of policy owners.
Facts about Private Health InsuranceOf the 255 million people who had health insurance in 2008, 201 million were covered under a private medical plan according to the U.S. Census Bureau. Also during 2008, 176 million people had coverage under their employer’s health plan.
Types of Private Health Insurance
There are two main types of private health plans which are managed health care plans and indemnity health insurance. Managed health care plans provide affordable health care to their members by utilizing a network of contracted doctors to perform medical services at discounted rates. By receiving in-network care, members enjoy higher insurance benefits with lower out of pocket expenses. There are types of managed health care plans available: Health Maintenance Organization (HMO), Preferred Provider Organization (PPO) and Point of Sale (POS).
Indemnity health insurance plans are considered the traditional health plan of the United States because it is the oldest type of health insurance. These plans are considered fee-for-service plans as insurance companies reimburse members after medical services have been rendered. Indemnity health members are able to see any doctor of their choice no matter the location or the cost. For the freedom of choices it provides, indemnity health plans are more expensive than managed health care plans.
When Considering Purchasing Private Health Insurance
When it comes to purchasing a private health insurance plan, insurers take into consideration several factors to determine premium prices. Such factors include the applicants age, occupation, health history and gender. For employer-sponsored health plans, there are two ways insurers set initial premiums: community rating and medical underwriting. A community rating sets the premium price based on the geographical area of the group health plan. Medical underwriting, which is the method used for individually owned health plans, uses the information submitted on the application to determine premium prices.
Also affecting premium prices is the amount policy owners are willing to pay for out of pocket expenses such as deductibles, co-payments and coinsurance. The more policy owners pay in out-of-pocket expenses, the lower the premiums and vice versa.
Why Purchase Private Health Insurance
With private health insurance, the insured can obtain medical services without paying for the entire medical bill. The insured(s) can receive preventive or emergency care without worrying about being seen by a doctor. With employer sponsored health plans, all eligible employees are required to be extended coverage regardless of their medical history. However, this isn’t true for individually owned plans. In fact, applicants who have pre-existing conditions and/or have a poor medical history can be denied coverage.
Sources
American Heart Association Managed Health Care Plans (accessed July 12, 2010).
AgencyInfo. HMOs, PPO & POS Plans (accessed July 12, 2010).
U.S. Census Bureau. Income, Poverty and Health Insurance Coverage in the United States: 2008 (accessed July 12, 2010).
National Coalition on Health Care. Health Care Facts: Costs (accessed July 12, 2010).
National Coalition on Health Care. Health Care Facts: Costs (accessed July 12, 2010).
HealthInsuranceFinders. Indemnity Insurance (accessed July 12, 2009).
Jarrod Howell - Jarrod Howell is a graduate of Thaddeus Stevens College. He has been a freelance writer for a couple of years with most of his articles ...
