Be a smart shopper: before you buy, here's what you need to know about health insurance.

Shopping for health insurance can be a daunting experience. To help you make the right decisions, there are a few things you can do before contacting an insurance broker.

The best way to start is to find out what types of health plans are available in your area and to focus on those plans that meet your employee's priorities. Here's a summary of three basic types of health insurance:

Indemnity or Fee-for-Service: This plan lets the policy owner choose any doctor or hospital they want. There is usually a deductible amount that must be paid before the insurance company will pay benefits. Once the deductible had been met, the policyholder and insurance company share the cost on a percentage basis. This is commonly referred to as the co-pay and is typically divided so the insurance company pays 80 percent of the cost and the policyholder pays the remaining 20 percent. Indemnity plans usually require that you submit a claim form to be reimbursed for expenses. Usually the higher the deductible, the lower the monthly premium cost.

Health Maintenance Organization (HMO): An HMO provides comprehensive medical care (inclusive of doctors visits, hospitalization, emergency care, lab tests, surgery) as well as preventive care (immunizations, "well baby" checkups, mammograms). The policyholder pays a monthly premium and usually a small co-payment for office visits. The advantage of this type of plan is that medical costs are usually lower and there are no claim forms to submit. The disadvantages include a restricted choice of health-care providers and the need to coordinate most health-care visits through your Primary Care Physician (PCP).

Preferred Provider Organization (PPO): This type of insurance plan combines elements of the traditional indemnity plan with those of an HMO. Usually, the insurance company has contracts with many doctors for discounted services. Those doctors are thereby considered "preferred providers." If the policyholder goes to one of those providers, they would typically make an office visit co-pay and the physician would file the insurance claim. Most PPOs still provide some level of coverage even if you use a doctor outside the network. Usually, there are more doctors to choose from in a PPO than an HMO.

Health-care insurance: 4 questions

When considering what type of health plan is right for your company, ask yourself these four key questions:

1. How many times did my employees go to the doctor?

2. How much can my company afford to pay in monthly premiums?

3. How much does my staff want to pay each doctor visit, and how much are they willing to contribute to monthly insurance premiums?

4. How important is prescription drug coverage?

Once these questions are answered, the next step is to contact an insurance broker who can provide you with a comparison of the policies and the costs involved. The final plan, or combination of plans, you choose should satisfy how much coverage you need in exchange for the amount of premiums that you can afford.

Roy Lamphier is senior director of insurance programs at the Detroit Regional Chamber.