Understanding Managed Care Health Plans

Major medical plans, similar to today's fee-for-service plans, used to be the dominant form of health insurance. A revolution in health care delivery has given us a new form of comprehensive health coverage: managed care.

Under managed care plans, such as a health maintenance organizations (HMOs), you are generally required to use doctors or hospitals that are part of the provider network. Unlike fee-for-service plans, you have no deductibles or co-insurance, but you may be charged a small co-payment fee for certain services.

Your medical expenses are much more predictable, but you typically lose the flexibility to see the doctor of your choice. Under the typical HMO, you will select a primary care physician -- a gatekeeper -- who then coordinates your care, referring you to a specialist when necessary. The specialists usually also participate in the HMO, though there are exceptions.

Besides HMOs, the other main types of managed care plans are preferred provider organizations (PPOs) and point-of-service (POS) plans. These plans are like HMOs with additional fee-for-service options. This added flexibility usually comes at a higher price.

These plans will charge you co-insurance when you go outside the network for medical care that will usually far exceed the in-network cost. A PPO requires no primary care physician to coordinate services, making the PPO even more flexible than a POS plan.

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