Individuals with preexisting conditions face problems obtaining private health insurance coverage.
Health insurance protects individuals and families from suffering financial losses due to seeking medical care when they're sick or injured. These plans cover a portion or the entire cost of the insured's medical bills in exchange for premium payments. People shopping for health insurance are able to purchase policies privately or obtain coverage through group-sponsored plans. However, limited control over options and restrictions on coverage are just two disadvantages to having health insurance.
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Types of Health Insurance Plans
Two types of health insurance plans are purchased in the United States: indemnity health and managed care. Indemnity health plans are considered the traditional health plans as they're the oldest type of health insurance. Members of these plans are reimbursed by their insurers after receiving health-care services. Managed health-care plans provide their members with affordable health coverage by negotiating rates with doctors. There are three managed health-care plans available: preferred provider organization, or PPO; health maintenance organization, or HMO; and point of service, or POS.
Limitations and Restrictions
Health insurance plans may limit the options available to their members to control medical costs. Those who are covered under the three managed health-care plans are given provider networks, which are lists of doctors in their locations that are contracted to perform services at negotiated rates. Members who use physicians within their networks are given higher insurance benefits. Certain plans, such as HMO plans, require their members to stay in-network for care. If HMO members decide to go out of network for care, their insurance doesn't cover the visits unless they're considered emergencies.
Higher Costs for More Choices
Individuals and families who want more control over their health care decisions pay more out of pocket. Indemnity health insurance policies, as well as PPO and certain POS plans, allow their members to go out of network and still receive insurance coverage. In fact, indemnity health plan members aren't given provider networks at all and are free to choose any doctors they want. However, members of PPO and POS plans receive less insurance coverage and have to pay higher deductibles and coinsurance amounts when they receive non-network care. Indemnity plans are considered more expensive than all managed health-care plans.
Group Health Insurance Problems
Group plans, which cover all eligible applicants regardless of their medical conditions, provide blanket coverage, with all options, features and benefits controlled by the policies' sponsors. Sponsors can drop coverage altogether without input from their members. When premiums for group plans are increased, it affects all members, even if certain members don't even use their insurance. Also, if an insured person leaves the group, she can't take her coverage with them.
Individual Health Insurance Problems
Although owning private health plans provides policyowners with flexibility and more control, there are disadvantages as well. Insurance premiums are solely the responsibility of the policyowners, and not all applicants are accepted for coverage. They must prove their insurability through medical examinations and medical background information. If the applicants have preexisting conditions, poor health or families with histories of medical problems, they may find it hard to find insurers to grant them coverage. If accepted, applicants have to pay higher premiums.
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