Plans fall into 2 categories: fee-for-service, and prepaid. There are several different types of insurance plans available.

  • Indemnity plans/insurance: Each employee is able to pick their own doctor. They’ll pay for health services on their own, then file a claim with the insurance company, which then reimburses the employee. Deductibles and coinsurance apply (In coinsurance, the employee pays a certain percent of the cost of healthcare, and the plan covers the other other percentage. Typically the split will be 20%/80%, or something similar). There are 3 common indemnity plans.
    • A plan that covers hospitalization, surgery, and hospital physician care
    • A supplemental plan which reimburses the employee for charges not covered in the first plan
    • A plan that covers both hospital and medical care
  • Preferred provider organizations (PPO): A particular insurer or employer and certain hospitals or doctors form a contract to provide healthcare to employees at a lower price. This option is more expensive than a HMO since the network of providers is larger. There is no obligation to use the in-network providers, however, out-of-network providers will be more expensive.
  • Health maintenance organizations (HMO): With these plans, healthcare is provided by a network of hospitals and doctors. Coverage is often more comprehensive than a PPO, and includes preventative care, like immunizations, medical care for babies, weight-loss programs, and more. With a HMO, the primary care provider must be a single doctor, though you can usually choose between several doctors. There is no out-of-network coverage in an HMO plan, but the limited choices mean that HMO plan costs are lower. The plan premiums are fixed, and employees just pay a small copay for services, rather than receiving reimbursement after the fact.