Knowing as much as you can about health insurance will help you save a lot of money. Here is some basic information about different types of health insurance that should help you understand what is available from the current market.

First of all, there are two main types of health care plans. Indemnity plans are somewhat more expensive, but will allow much more freedom of choice in healthcare providers. With an indemnity health care plan, the insured person can go to any doctor they prefer, fill out any prescription they need and receive any medical treatments they may need. They then have to pay for these medical services from their own money, which is called an out-of-pocket expense. When the insurance company is presented with the bill, they pay back the insured person. This form of health insurance allows a very broad choice in healthcare providers, but the main drawback is that you must pay the full bill yourself first, then apply to get the money back from your health insurance provider.

The other form of health insurance comes in the form of what are called managed-care plans. Managed-care plans actually fall into three different types:

Health Maintenance Organization (HMO)

While most health insurance providers will offer HMO plans that differ slightly from each other, they generally allow you coverage without too many out-of-pocket expenses. Instead, you may have a smaller choice of healthcare providers, be that doctors or hospitals. If you have an HMO health insurance plan, you will first have to choose a primary care physician (PCP). This will be your normal doctor, and they will have to refer you to any specialist you may need to see. HMOs tend to provide more preventative healthcare coverage than other health insurance plans.

Preferred Provider Organization (PPO)

In this case, your insurance company has a business relationship with a certain network of healthcare providers, including doctors, pharmacies and even hospitals. Your health insurance will cover a larger percentage of your medical expenses provided by members of this preferred network, whereas if you receive care from a non-network provider, your insurance company will cover less of the cost. This type of coverage allows more freedom of choice than an HMO plan, while still carrying certain restrictions.

Point Of Service (POS)

POS health insurance plans are sort of a compromise between PPOs and HMOs. Like with an HMO, you will still be required to declare a primary care physician, chosen from the plan's network of healthcare providers. This doctor's services will be covered by the insurance provider, and will include a large amount of preventative healthcare. You are still free to seek healthcare outside of the insurer's network of providers, though these will be covered at a lower rate. Also, there will often be out-of-pocket bills which you will have to submit to the health insurance provider for reimbursement.

One of the benefits to managed-care plans is that there are fewer out-of-pocket costs, as most of the time the healthcare provider will submit the bills directly to your health insurance provider.