What is health insurance?

What is health insurance?







The term refers to a variety of insurance policies, ranging from those that cover the costs of doctors and hospitals to those that meet a specific need — like long-term care or dental coverage. When most of us talk about health insurance, however, we refer to the kind of plan that covers doctor bills, surgery and hospital costs.




You may have heard terms like "managed care," "Fee-for-Service" and "indemnity." These words define different types of coverage or health plans widely used by today's consumers. Confused? Don't worry. We'll help you make sense of the lingo.

In a nutshell



Fee-for-Service (also known as indemnity or traditional) plans generally offer complete freedom to choose your own doctors (including specialists) and hospitals. These plans, however, tend to be more expensive to the consumer.



Managed care plans, on the other hand, have agreements with certain doctors, hospitals and health care providers to give a range of quality health services at a reduced cost. The secret? Patients have to stay within the plan's network of providers and health facilities to get the best benefits. HMOs, PPOs and POS plans are all types of managed care.