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Health Insurance

Health Insurance

Health Insurance is designed to pay all or a portion of the cost for the insured person's medical care which may include preventive care, diagnosis and treatment for illness and injuries and prescription drugs. Some health insurance plans may also offer optional dental and optical insurance benefits.

While there are dozens of different health insurance policies sold in the state of Maryland, there are three basic types of policies commonly in use: HMO (Health Maintenance Organization), PPO (Preferred Provider Organization), and Indemnity plans.


The Health Maintenance Organization plan allows subscribers to simply pay a small co-pay to visit a doctor, lab, hospital or other medical facility.s a HMO subscriber you must select a primary care physician (PCP) who participates with your HMO plan and you must see your PCP first for all medical needs. If a specialist is needed or if tests are required, you must get a referral from your primary care physician before seeking treatment.

Some HMO plans also offer out-of-network benefits where the subscriber may seek medical care outside the HMO network. Generally, a HMO plan with an out-of-network option will have a higher premium and using the out-of-network benefit requires significantly higher co-pays and/or deductibles.


The Preferred Provider Organization is simply a network of doctors and hospitals that have contracted with an insurer to provide care to its subscribers. As a PPO member you must use physicians and hospitals that are in the PPO network however you do not have to select a primary care physician and you generally do not need referrals to see specialists as long as they are part of the PPO network. Some PPO plans require that a deductible be met before benefits are paid however it is more common to simply have co-pays for various physician, lab and hospital services.

Indemnity Plans

The Indemnity plan, sometimes called a "traditional plan," generally provides the most freedom of choice in doctors and hospitals for the subscriber. However, unlike the HMO, a deductible will apply before benefits are paid and very often there will be an 80/20 cost sharing in addition to the deductible. This means the subscriber's responsibility could be the deductible plus 20% of the doctor or facility's bill. Most policies have a maximum out-of-pocket limit after which the insurance company pays 100%. As always it is important to ask questions and make sure you understand potential out-of-pocket medical costs before purchasing any health insurance policy. If a subscriber is willing to pay smaller medical bills out-of-pocket and accept a higher deductible, significant premium savings can be realized.

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