Indemnity insurance is the traditional type of health coverage. PPO plans (preferred provider organization) are managed care plans with more restrictions. Health insurance quotes may offer both options.

Indemnity insurance, also called fee-for-service, is intended to cover a portion of your medical bills as a result of illness or injury. An annual deductible amount must be paid by the patient before the plan begins to pay benefits. Indemnity plans usually pay a percentage of the bills; 80% is typical. The remaining 20%, called co-insurance, is the financial responsibility of the patient. There is usually a stop loss at which the plan begins to pay at 100% up to the annual or lifetime limit, if there is one. A typical stop loss is $5,000.

For example, in a year with major medical expenses, if the deductible is $500 then the patient pays the first $500 out of pocket. Then the plan pays the next $5,000 at 80% and any expenses over that amount for the year are paid in full, up to the limit. So, the patient may need to cover $1,500 of expenses during that year. Deductibles, payment percentages and stop loss amounts differ from plan to plan. These plans often don't cover routine physical exams or other kinds of wellness care. The advantage of this plan is that you can choose any doctor and choose any hospital and change doctors at any time.

PPO plans are offered by insurers who have contracted with medical providers to provide services at a discounted rate to the insurer. You must choose a primary care doctor from their approved list. This doctor becomes the gatekeeper and must refer you for visits to specialists or for other medical services.

When you visit the doctor you must pay a copay, usually from $5 to $20 to the provider for each visit. Prescriptions also have varying copays depending on whether it is a generic, a brand, or a brand preferred by your insurance company. You can usually use services outside of the PPO plan but then you will have to meet a deductible and pay a percentage of the bills.

The obvious advantage of choosing a PPO is that you save money on out of pocket expenses as long as you stay within the preferred network. Disadvantages include having to get services approved through your primary care provider and the extra out of pocket expenses if you choose a provider not on the plan.

When comparing health insurance quotes, be sure you understand the type of plan offered. The availability of PPO providers, the amount you can afford to pay out of pocket and the flexibility should all be taken into account.