Health Insurance 101 - The Pros and Cons of Health Insurance

Not all employers offer health insurance. If you decide to buy an individual policy you should be aware of the different forms of health insurance available.

HMO - Health Maintenance Organization

Pro: HMOs are a very cost effective and budget friendly health insurance plan. They employ very low co-pays and focus on preventive care.

Con: With lower cost comes less flexibility and fewer choices. HMO health insurance plans require a primary care physician to coordinate your health care. If you want to see a specialist, your primary care physician must refer you. Also, HMOs only cover services for doctors and hospitals within the network.

FFS - Traditional Indemnity Fee For Service

Pro: These types of health insurance plans are characterized by flexibility and choice. You choose the doctor or hospital you prefer without worrying about networks. With a fee for service plan there are no networks.

Con: FFS plans have higher out of pocket costs and deductibles than other plans. They usually pay for no more than 80 percent of the medical cost while you pay the other 20 percent in most cases. Also, there is more paperwork involved with these types of health plans, but if you prefer to choose your own medical provider without being encumbered by a network or needing to get a referral, an FFS plan may be for you.

PPO - Preferred Provider Organization

Pro: PPO's allow you greater choice in doctors without much red tape. You won't need authorization or referrals to see a specialist. Co-pays for PPOs are relatively low.

Con: There is still a network of doctors to work with and out of network doctors will cost you much more to visit.

POS - Point of Service Plan

Pro: POS plans combine aspects of HMOs and PPO-type plans together. They focus on preventative care and also allow more choices and coverage for out of network doctors.

Con: While you will get some coverage for out of network doctors, it will be significantly less than if you were to see a doctor in the network, creating more out of pocket expense for you. Also, POS health plans require all policyholders to select a primary care physician.