Lesson 1: Introduction to Health Insurance Plans

The aim of this course is to help you, the consumer, to better understand the health insurance options open to Americans today, to evaluate your personal policy options, and to help you find the right balance between cost and coverage.

The course is designed specifically for individuals seeking independent coverage for themselves and their families, although anyone can benefit from the strategies outlined here.

If you're looking for health insurance for your small business, keep reading, because most of the concepts that apply are the same.


Your health is quite literally the most important thing you possess, and a good health insurance policy is a crucial tool in preserving it. Through this introductory course, we hope to help you choose a type of policy, a level of coverage, and an insurer. But even more importantly, we hope to leave you happy and secure with the health care decisions you do make.

So where to start?

In this lesson, we're going to outline the major types of coverage you'll encounter in your search for a health plan, briefly explain how these policies work, and define a couple of terms you'll see popping up fairly frequently in your quest for coverage. If this is all old hat for you, you can skip ahead to Lesson 2.

But if you have any questions at all, stick around. We'll be brief, we promise. And this is important stuff.

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Another thing you can do right now is begin comparing health plan prices. Getting a quote is very easy, and it will give you some idea of what you can expect to pay. You'll be able to amend your application after you finish this course, so that you can get exactly the coverage and services you want, and nothing more. It's the easiest way to save money on health care.

If you need a policy for your small business, click here.

The health insurance policy "continuum"

Used to be, all health insurance was "full coverage", also known as indemnity, or fee-for-service coverage. You bought a policy, you went to the doctor, hospital or other medial facility for care, and you sent the bill to your insurer, who paid a certain percentage of your costs. While this type of policy still exists, the vast majority of Americans now carry some type of managed care.

Managed care flourished mainly as a response to soaring medical costs. The first and best-known type of managed care is the HMO, or health maintenance organization.

These organizations, sometimes corporations, sometimes networks of doctors and hospitals, have sought to control costs in a variety of ways, by cutting down on unnecessary tests and consultations, for example. HMOs have done this by placing limits on why, where and when, and from whom members could seek medical care.

Partly as a response to patient dissatisfaction with such restrictions, and partly as a response to new government regulations, health plan providers eventually began offering managed care alternatives to the HMO, such as PPO (preferred provider organization) and POS (point-of-service) plans which offer patients more control over their own care.

(Both types of plan allow patients greater flexibility in dictating care in return for paying a higher share of the costs involved.)

At the same time, many traditional indemnity plans have moved nearer the managed care model by placing new restrictions on what services the policies will and will not cover.

To sum up: today, health care policies lie on a continuum from pure indemnity to strict HMO. But almost every American will end up with some kind of managed care. And that's not necessarily a bad thing, as managed care has been shown to help keep medical costs down and in some cases increase the efficiency and speed of patient care.


Next: Lesson 2: the costs in your policy