HMOs often have the least expensive premiums, but they're also generally the least flexible of managed care plans. Although there are variations from plan to plan, a central part of an HMO is that you must select (or be assigned) a primary care physician who coordinates and oversees your care. It's important to review your policy carefully so you understand exactly what is and isn't covered.

HMO advantages

• It's a lower cost option with generally lower premiums, no deductible and small co-payments.
• It involves minimal paperwork on your part.
• It includes coverage for preventive care, including checkups, immunizations, mammograms and more.
• You can choose from a wide range of services, including physician services, outpatient services, hospital care, emergency room visits and prescription drugs.

HMO disadvantages

• You are limited to seeing physicians within the plan.
• You must have a referral from your primary care physician to see a specialist.
• There are limitations on covered services.

A PPO tends to be more flexible (and often more expensive) than an HMO, but there are still set rules that determine your care. For instance, there is a network of preferred doctors and medical facilities. You can choose to see a physician within the network who provides services at a low negotiated rate, or you can pay more to see a doctor outside the network.

PPO advantages

• Limit on costs—Fees for network physicians and facilities are pre-determined.
• Unlimited choice of doctors—You can always choose to pay more to see an out-of-network doctor.
• Convenience–In general, you do not need a referral to see a specialist.

PPO disadvantages

• Costs are generally higher than an HMO (although less than a traditional fee-for-service plan).
• There is generally more paperwork for a PPO, especially if you are using an out-of-network physician.
• In general, few preventive services are provided.

A POS plan combines the features of an HMO and a PPO plan. Similar to an HMO, you must designate an in-network physician to be your primary care physician. But, like a PPO, you can choose to go out of network. You will, however, have to pay a significant amount of the fee on your own.

POS advantages

• You can see a doctor outside of the network.
• It tends to provide more preventive care and wellness programs than a PPO.

POS disadvantages

• You must choose a primary care physician to oversee your care.
• You must have a referral from your primary care physician to see a specialist.

Although less common, some companies offer a fee-for-service (FFS), or indemnity, plan. This is a traditional insurance policy that pays fees for services to medical providers on behalf of the insured.

FFS advantages

• It offers the most flexibility in terms of choice of doctors and hospitals.
• You can change doctors at any time.
• You can use any medical facility in the country.

FFS disadvantages

• It is generally more costly, both in terms of money and time.
• In most cases, you will pay monthly premiums, a deductible and co-insurance fees.

• You may be required to fill out claims forms to be reimbursed for your expenses and keep track of receipts for drug coverage and other medical costs.

You may have heard of the term COBRA. It stands for Combined Omnibus Budget Reconciliate Act of 1986. Under this act, all employers who maintain a group health plan and who employ 20 or more people are required to continue insurance for a period of time for covered employees and their dependents if the employee resigns or is laid off or fired (except in the case of gross misconduct). In most cases the coverage must be available for at least 18 months after termination (and even longer in certain circumstances), and the premium cannot exceed 102 percent of the cost to current employees. For up-to-date information on how COBRA works, read the FAQs for employees at the U.S. Department of Labor website.

There are some differences in COBRA rules from state to state. For specific state information, contact your state's department of insurance.

NOTE: Under new legislation, if you lost your job between September 1, 2008, and January 1, 2010, the federal government will subsidize 65 percent of your COBRA premium.