HMOs provide medical treatment on a prepaid basis, which means that HMO members pay a fixed monthly fee, regardless of how much medical care is needed in a given month. In return for this fee, most HMOs provide a wide variety of medical services, from office visits to hospitalization and surgery. With a few exceptions, HMO members must receive their medical treatment from physicians and facilities within the HMO network. The size of this network varies depending on the individual HMO.

When you join an HMO, you choose a primary care physician (PCP) who is your first contact for all medical care needs. The primary care physician provides your general medical care and must be consulted before you can see a specialist. Because of this control system, HMO costs tend to increase less rapidly than other insurance plans.

A PPO is actually a group of doctors and/or hospitals that provides medical service only to a specific group or association. The PPO may be sponsored by a particular insurance company, by one or more employers, or by some other type of organization. PPO physicians provide medical services to the policyholders, employees, or members of the sponsors at discounted rates and may set up utilization control programs to help reduce the cost of medical care. In return, the sponsors attempts to increase patient volume by creating an incentive for employees or policyholders to use the physicians and facilities within the PPO network.

A Point of Service plan is a type of managed healthcare system that combines characteristics of the HMO and the PPO. Like an HMO, you pay no deductible and usually only a minimal co-payment when you use a healthcare provider within your network. You also must choose a primary care physician who is responsible for all referrals within the POS network. If you choose to go outside the network for healthcare, POS coverage functions more like a PPO. You will likely be subject to a deductible, and your co-payment will be a substantial percentage of the physician’s charges.

A health savings account is a tax-advantaged medical savings account available to taxpayers in the United States who are enrolled in a High Deductible Health Plan or “HDHP”. The funds contributed to the account are not subject to federal income tax at the time of deposit. Unlike a flexible spending account, funds roll over and accumulate year to year if not spent.

With an Indemnity Health Plan there are no in-plan doctors or specialists or hospitals. With an Indemnity Health Plan you choose your own doctor or specialist or hospital with no regard for whether they are in-plan or not. Many people appreciate the unlimited choices that an Indemnity Health Plan makes possible. The trade-off is cost. With an HMO, PPO or a POS health plan there are doctors, specialists and hospitals which have agreed to reduce prices in order to be part of the plan. That’s not the case with an Indemnity Health Plan. Sometimes you have to do your own billing.