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Health insurance is simply protection of the person or group insured against financial loss from illness or injury. Can you live without it? Probably. Should you? The answer depends upon whom you ask.

Like other forms of insurance, you don`t need health insurance until you NEED it. Automobile insurance doesn`t help until you get into a car accident. Life insurance isn`t of value until you die. And health insurance doesn`t do you any good until you need medical assistance. But, if you believe in Murphy`s Law -- that whatever can go wrong will go wrong -- then you should consider getting health insurance.

Health insurance coverage varies greatly between policies, but basically, it pays a pre-negotiated percentage of the expenses for a policy holder`s covered medical treatments.

3 Types of Health Insurance

In the United States, there are 3 basic types of health insurance:

1. Self-Insured/Uninsured. People with no insurance,and people who have health insurance but are responsible for paying 100% of the insurance premium. This group is estimated at 30% of the US population.

Managed Care Plans. They fall into 3 categories. All are essentially networks offering services from specific providers at contracted prices:

* Health Maintenance Organizations (HMO) are plans in which members pay a fixed monthly fee, regardless of how much medical care they need in a given month. HMOs provide medical services ranging from office visits to hospitalization and surgery, and usually require that you stay within the network when you need services from physicians and hospitals.

* Preferred Provider Organizations (PPO) are groups of doctors and hospitals that provide medical services only to members. PPO members typically pay for services as they are provided, and the PPO sponsor reimburses them for the cost of the treatment. In most cases, the healthcare providers and the PPO sponsor negotiate the price for each type of service in advance.

* Point of Service (POS) plans are less common than the other 2. Here you pay no deductible and usually only a minimal co-payment when you use a healthcare provider within your network. You also must choose a primary care physician who is responsible for all referrals within the POS network. If you choose to go outside of the network for healthcare, you will be subject to excess charges or deductibles.

3. Indemnity Plans allow participants to seek medical assistance whenever and wherever they need it. Participants can visit any doctor or specialist, as often as they feel necessary. There are no restrictions when it comes to seeking medical help. This is by far the most expensive type of health insurance plan.

Which of these types of health insurance is best for you will depend on your personal situation. Choosing a health insurance plan is a time-consuming task, but an educated choice will ensure you have the right insurance coverage when the need arises. And as we age, the need will inevitably arise.

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