Health Insurance is a contract between you and your insurance company. With medical expenses rising each year, medical insurance is a necessity.

Knowing what questions to ask and understanding the difference between insurance plans will help you choose the right plan for you.

There are two broad categories of health insurance. Basic and Major Medical are known as indemnity plans. Basic plans usually include hospital stays, surgeries and emergency treatment. In most instances, these plans pay one hundred percent of cost; however, there could be a payment limit. This leaves the individual to cover the balance.

Major Medical plans cover a broader range of services, and usually cover hospital stays, surgeries, emergency treatment, prescriptions, x-rays, lab test, dental and mental health services. There could be deductibles and out of pocket expenses. The dollar limit of total payments is higher than a basic plan.

Managed care plans such as Health Maintenance (HMOs), Preferred Provider Organizations (PPOs) and Points of Service (POS) generally provider a broad range of coverage. They involve an arrangement between the insurer and a selected network of health care providers.

When deciding which plan is best, you might want to ask the following questions.

• What copays, deductibles and coinsurance requirements apply?
• Can you choose your own healthcare provider?
• How do I know if the physician I choose is covered under the plan?
• Does the plan cover my specific needs (specialist, vision, dialysis, chemotherapy, prescription drugs, dental, maternity)?
• Does the plan cover pre-existing conditions or is there a waiting period?
• Are referrals required for any or all services?

The best insurance plan is one that gives you the most benefits for the lowest cost, the greatest flexibility and fits your individual or family’s needs.