Individual and family health insurance is a type of health insurance coverage that is made available to individuals and families, rather than to employer groups or organizations. Given the option, most people would prefer to have their employer provide group health insurance coverage. But, if this is not an option for you, it is still important for you to seek coverage. You may be pleasantly surprised with the variety and affordability of the individual and family health insurance options available. What kinds of individual and family insurance plans are available? 

Individual and family health insurance plans are usually described as either "indemnity" or "managed-care" plans. Put broadly, the major differences concern choice of healthcare providers, out-of-pocket costs and how bills are paid. 

Typically, indemnity plans offer a broader selection of healthcare providers than managed care plans. Indemnity plans pay their share of the costs for covered services only after they receive a bill (which means that you may have to pay up front and then obtain reimbursement from your health insurance company). 

There are several different types of managed-care health insurance plans. These include HMO, PPO, and POS plans. Managed-care plans typically make use of healthcare provider networks. Healthcare providers within a network agree to perform services for managed-care plan patients at pre-negotiated rates and will usually submit the claim to the insurance company for you. In general, you'll have less paperwork and lower out-of-pocket costs with a managed care health insurance plan and a broader choice of healthcare providers with an indemnity plan. 

How does a PPO plan work? 
As a member of a PPO (Preferred Provider Organization) plan, you'll be encouraged to use the insurance company's network of preferred doctors and hospitals. These healthcare providers have been contracted to provide services to the health insurance plan's members at a discounted rate. You typically won't be required to pick a primary care physician but will be able to see doctors and specialists within the network at your own discretion. You will probably have an annual deductible to pay before the insurance company starts covering your medical bills. You may also have a co-payment for certain services or be required to cover a certain percentage of the total charges for your medical bills. With a PPO plan, services rendered by an out-of-network physician are typically covered at a lower percentage than services rendered by a network physician. 

How does an HMO plan work? 
Though there are many variations, HMO (Health Maintenance Organizations) plans typically enable members to have lower out-of-pocket healthcare expenses but also offer less flexibility in the choice of physicians or hospital than other health insurance plans. As a member of an HMO, you'll be required to choose a primary care physician (PCP). Your PCP will take care of most of your healthcare needs. Before you can see a specialist, you'll need to obtain a referral from your PCP. With an HMO you'll likely have coverage for a broader range of preventive healthcare services than you would through another type of plan. You may not be required to pay a deductible before coverage starts and your co-payments will likely be minimal. With an HMO plan, you typically won't have to submit any of your own claims to the insurance company. However, keep in mind that you'll likely have no coverage whatsoever for services rendered by non-network providers or for services rendered without a proper referral from your PCP. What is a co-payment? A "co-payment" or "co-pay" is a specific charge that your health insurance plan may require that you pay for a specific medical service or supply. For example, your health insurance plan may require a $15 co-payment for an office visit or brand-name prescription drug, after which the insurance company often pays the remainder of the charges. What is a deductible? A "deductible" is a specific dollar amount that your health insurance company may require that you pay out-of-pocket each year before your health insurance plan begins to make payments for claims. Not all health insurance plans require a deductible. As a general rule (though there are many exceptions), HMO plans typically do not require a deductible, while most Indemnity and PPO plans do. What is coinsurance? Coinsurance is the term used by health insurance companies to refer to the amount that you are required to pay for a medical claim, apart from any co-payments or deductible. For example, if your health insurance plan has a 20% coinsurance requirement (and does not have any additional co-payment or deductible requirements), then a $100 medical bill would cost you $20, and the insurance company would pay the remaining $80. 
 
Buying Tips

One of the most common errors made by insurance companies is miscalculation of the family deductible. For example, your plan may have a deductible of $200 per person and $400 per family. But unless the company adds up all of your family's bills, each of you might still be paying individual deductibles even though the $400 family requirement has already been met. 

A similar error can occur if the claims office neglects to calculate your annual total out-of-pocket limit. Once you have paid this amount, generally between $1,000 and $2,000, the insurance company pays 100 percent of all other costs for the remainder of the year. So be sure to keep a careful tally of individual as well as total family payments. 

Save On Your Hospital Bill
If you need surgery, ask your doctor if it can be performed on an outpatient basis or on the day you are admitted to the hospital. If not, ask if you can schedule your surgery early in the week to avoid spending the weekend in the hospital. 

Have all the necessary pre-op tests done before you're admitted to save at least a day or two of hospital charges. 

Keep a log. Try to keep a daily record of the services, medications and other supplies you receive. You can find forms for logging tests and medication in Take This Book to the Hospital With You, from The People's Medical Society. 

When you get your bill, check that you are not being charged for procedures you didn't have or items you didn't use. If you get a bill with just summary charges, ask the hospital for a detailed breakdown of your stay. 

To make sure the charges are correct, start with the obvious: The room rate, number of days, major procedures, operating room, recovery room, etc. Then, compare the other charges against your records. It might take some time, but it could save you money. (For more information, see How to Check your Hospital Bills.) 

Save On Your Doctors Fees
If your health insurance covers 80 percent of doctors' fees, that means your costs are 80 percent covered. Right? Not necessarily! 

Only 80 percent of fees the insurance company considers to be "reasonable and customary" are covered. What happens if your doctor charges $4,000 for a procedure your insurance company thinks should cost $3,500? Your insurer will only pay 80 percent of the $3,500, or $2,800. That leaves you with $1,200 to pay! Find out ahead of time how much your insurance company will pay for a procedure and tell your doctor you want to make sure his or her fee is covered by your insurance. Many physicians will agree not to charge more than that.

Money-Smart Health Care Choices 

Don't repeat medical tests needlessly. If you change physicians or dentists, have your new doctor get copies of your records. 

Buy generic drugs , both over-the-counter and prescription, and shop around for the best price. Generics are usually a lot cheaper than name-brand medications and almost always as safe and effective. Ask your doctor to prescribe generics when they're available. 

Consider buying prescription drugs from mail-order pharmacies. Mail-order firms often charge less than your local druggist. One caveat: They can't fill prescriptions as quickly. But they're perfect for patients taking medication for long-term conditions, such as high blood pressure or heart disease. Ask your personnel department if your company has a mail-order program or try a mail-order pharmacy. 

Avoid emergency rooms except in true emergencies. Show up at an emergency room at midnight with a problem that can wait until morning and you lose twice: You pay top dollar, and you wait for hours while the real emergencies are taken care of. Try your doctor or a 24-hour urgent-care center.
 
Get your children vaccinated, and make sure you are protected too. Although insurance may not cover their costs, immunizations are among the biggest bargains in medicine. Keep records and get boosters when needed.