Health Insurance: Types & Concept

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  • 0:02 What Is Health Insurance?
  • 0:38 Fee-for-Service Plan
  • 1:29 PPO & HMO
  • 2:57 Point-of-Service (POS) Plans
  • 3:33 HDHP & CDHP
  • 4:57 Lesson Summary
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Lesson Transcript
Instructor: Yolanda Williams

Yolanda has taught college Psychology and Ethics, and has a doctorate of philosophy in counselor education and supervision.

Did you know that there are an estimated 1 billion health insurance claims filed each year? Learn more about the different types of health insurance that are available in the United States.

What Is Health Insurance?

Health insurance is a form of insurance that is used to pay for the treatment and diagnosis of certain medical conditions. It's important that you choose a health insurance plan that fits your lifestyle, monetary budget, and specific health needs. There are six major types of health insurance:

  • Fee-for-service or traditional indemnity plans
  • Preferred provider organization (PPO)
  • Health maintenance organization (HMO)
  • Point-of-service (POS) plans
  • High-deductible health (HDHP) plans
  • Consumer directed health (CDHP) plans

Fee-for-Service Plan

Fee-for-service plan is one of the more straightforward types of health insurance. You can go to any doctor that you choose, and your doctor will submit a claim directly to your insurance company for payment. These plans usually have a deductible, which is a set amount that you are required to pay before your insurance kicks in. For example, your insurance company may not start paying benefits until after you've paid $250 toward medical expenses. After you reach your deductible, your insurance will cover a set percentage of your medical expenses.


  • Flexibility in choosing a medical care provider
  • You can receive care just about anywhere in the U.S.


  • More expensive than other plans
  • Some services, such as check-ups and preventative care, may not be covered
  • High amount of paperwork, i.e. saving receipts for payment reimbursement



A PPO (preferred provider organization) is a type of insurance plan where the insurance company has contractual agreements with certain 'preferred doctors and hospitals to offer services at a reduced rate. When you receive care from one of the preferred providers, you pay less than what you would if you receive care from a provider that is considered out-of-network (not a preferred provider). PPOs usually have a co-payment, which is a set amount that you have to pay for in-network providers. You may also still have a deductible.


  • Quality choice of medical care providers
  • Option to choose out-of-network providers


  • Additional costs when using out-of-network providers
  • Higher amount of paperwork associated with out-of-network providers


In HMO (health maintenance organization) plans, you are given access to certain doctors and hospitals, and you can only see a specialist after you have obtained a referral from your primary care physician (PCP). Your PCP is in charge of managing your health care needs. Treatments that you receive outside of your network are usually not covered.


  • Total costs are lower than those associated with fee-for-service or PPO plans
  • Usually includes preventive care and a wide range of additional services
  • Minimal paperwork needed


  • Restricted choice of medical care providers
  • Could take longer to get an appointment with a doctor due to lack of choices

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