The health care and health insurance system actually used to be pretty simple. When you were sick, you simply went to the doctor and your health insurance plan paid for the visit. You could go to any doctor, hospital or specialist you wanted.

But because of rising health care costs, a new health insurance system was created — managed care. With managed care health plans, you only had coverage with a specific network of health care providers. If you don’t receive care within the network, you weren’t covered.

Though this new brand of health insurance plan brought new, unfamiliar restrictions, insurance rates came down.

The Most Common Kinds of Managed Care

You’ve actually probably already heard of a few of the most common managed care health insurance plans. Here are a few:

• Health Maintenance Organizations (HMO): HMOs require you to choose a “primary care physician” to provide routine care and refer you to specialists. HMOs are among the most affordable managed cares because 1) many have no deductibles 2) they have restricted networks of health care providers.
• Preferred Provider Organizations (PPO): Alternatively, a PPO plan provides more flexible coverage, allowing you to visit any doctor and keep some coverage. But with this added flexibility comes higher premiums and deductibles to meet.

• Point of Service Plans: POS plans are a hybrid of the HMO and PPO. Like an HMO, you have to pick a primary care physician. But like a PPO, you have some coverage when you receive care out of your plan’s network.