Health Insurance Puzzle

Providing private health insurance for a family can seem like an intimidating task. The cost of health insurance is one of the factors that can keep would-be entrepreneurs and small business owners from taking the plunge.

First, there is the search for a healthcare provider. Next, comes all the cost considerations, from monthly premiums to co-pays. Providing health care for loved ones is a necessary obligation. The reality is that it only takes one health catastrophe to cause a family's financial ruin.

A good place to start is with understanding the lingo. What is the difference between an HMO and a PPO? What is a premium, and how is it different from a deductible or a co-pay? The insurance industry uses terms like "indemnity" and "managed care," which cause more confusion than understanding.

Indemnity plans, also known as fee-for-service plans, are more expensive but give the biggest latitude when comes to choice of doctors. These more traditional health insurance plans usually reimburse 80 percent of the cost after the consumer pays for health services.

Managed care plans, like an HMO, are the more common type of health insurance plan. Health maintenance organizations (HMO) provide lower cost care by limiting the number of health care providers. A consumer chooses a primary care physician and stays within a predetermined network for health care needs. Premiums, the monthly fee paid to the insurance company, and co-pays, the fee paid each visit to a doctor, are usually lowest with HMO plans.

Preferred provider organizations (PPO) work under the same principle as a HMO, in that health care providers are all in the same network. The biggest difference with a PPO is that a consumer is not required to choose one primary care physician and can pay the same co-pay to see any doctor in the network without a referral. The cheapest premiums come with catastrophic insurance plans, also known as point of service plans, which have high deductibles and low monthly premiums.

The best health insurance option really depends on individual needs. Perhaps that is why the health insurance landscape is so vast: one plan does not fit everyone. Once a consumer has a handle on the basics, next comes evaluating which kind of plan works best for him or her.

Some of the factors to consider are number of people in the family to be covered, ages, overall health, and budget. An individual who visits the doctor five times a year on average would not be saving money with a point of service plan. It's important to not only consider past medical needs, but also anticipate future needs as much as possible.

Armed with some knowledge and a budget for both monthly costs and deductibles, let the shopping begin. It's important to carve out a good chunk of time not only for researching health plans, but also filling out the paperwork or online forms. There is nothing easy about getting health insurance, but the alternative is much worse.


Ki moved to Austin to attend the University of Texas and then started a career as a realtor in the Austin real estate market. He created a site with information broken down by Austin MLS area and by different neighborhoods in the Austin real estate market. It also has search for homes in different neighborhoods like great hills homes.