At first glance, the term individual health insurance appears to suggest that they are just for single or divorced individuals and not for families. When you look into it more closely, you will discover that they also cover you, your wife and any children and not just you alone. In reality, this description is meant to separate this class of insurance from group policies that cover members of a company, association or organization with a sizeable enrollment.

Most people would prefer to be members of a group plan just by virtue of the fact that premium costs are lower. But for many, this is not a viable option. In this case, it is still vital for you to obtain coverage and you may be pleased to know that there is a variety of affordable individual plans available for individuals and families. These plans are referred to as either ‘indemnity’ or ‘managed care’ plans, the primary difference being the choice of health care providers, out-of-pocket costs and premium payments.

Indemnity plans generally offer a broader selection of providers because their covered services are paid only after they are billed. In this instance, you might have to pay the provider up front and then seek reimbursement from the insurance company. Managed care plans, on the other hand, come in several different types including HMO, PPO and POS plans. These plans typically use networks of health care providers. The individual providers within a network will perform services for patients at agreed upon rates and will submit the claim to the insurance company directly, so you don’t have to pay up front. On the bottom line, this means less paperwork and lower out-of-pocket costs for you with a managed care plan.

HMO or Health Maintenance Organization plans work in many different ways, but typically provide lower out-of-pocket expenses. Unfortunately, they also offer less flexibility in your choice of doctors or hospitals. You must select a primary care physician with an HMO and ask him for a referral if you need a specialist. With a PPO, or Preferred Provider Organization, you’ll be expected to utilize the insurance company’s providers who are contracted to provide services at a lower rate. You won’t need a primary care physician but you can choose doctors within the company’s network.

A discussion with a professional insurance agent will help clarify these in more detail and help you choose the best individual health insurance plan for you and your family.