Thursday, October 15, 2009 10:18:08 AM

What are the differences between an HMO, PPO, and POS?

In general, there are two main types of health insurance plans: indemnity plans and managed care plans. Indemnity plans are more expensive because you have a lot of freedom to choose your health care providers. These plans typically feature high co-pays and high deductibles. Preventative care, mental health care, prescription drug coverage, vision care, and dental care are usually excluded from indemnity plans unless added on.

Managed care is the most common type of health insurance these days. There are many different levels of managed care, and some plans incorporate features of indemnity coverage to add flexibility. Managed care plans include health maintenance organizations (HMOs), point of service plans (POS), and preferred provider organizations (PPOs).

Typical characteristics of managed care health insurance include low co-pays, low deductibles, and a network of preferred or mandatory health care providers. Preventative care, prescription coverage, mental health care, vision care, and dental care are often included in the coverage. Some managed care plans, however, require pre-authorization of services.

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Laura Adams is a personal finance expert and award-winning author who is Senior Insurance Analyst for InsuranceQuotes.com. She represents Bankrate Insurance’s web properties in the media and works as an advocate to make sure consumers protect their financial futures by having the right kinds of insurance.

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