Health insurance will pay specified sums for medical expenses or treatments and can offer many options and approaches to coverage. There are different types of health insurance coverage designed to meet your needs and budget. Health insurance is a risk management tool which helps you ensure that you and your family have access to the healthcare you need without causing a tremendous financial burden. There are two main types of health insurance. One is called an indemnity plan which reimburses you for medical expenses regardless of which provider you use.

An indemnity plan is also called a reimbursement plan, as it reimburses you for your medical expenses. The amount that can be reimbursed depends whether you have reimbursement of actual charges, where the insurer reimburses you for the actual cost of your medical care, or reimbursement of a percentage of actual charges, where the insurer pays a set percentage of the actual charges on covered procedures and services, and you pay the difference.

Another type is indemnity is where the insurer pays a specified amount per day regardless of the actual cost of care. But you need to remember that reimbursements will never be more than the actual expenses.

Another category is called managed care plans, in which there is an arrangement between an insurer and a network of selected health care providers. They offer financial incentives to the insured to encourage them to use the providers in the network, and usually have specific guidelines regarding the selection of providers and formal procedures that must be followed. There are three different types of managed care plans, which are HMOs or Health Maintenance Organization, Preferred Provider Organizations or PPOs, and Point of Service or POS.