Insurance - Health Insurance

Health insurance is pretty much the one type of insurance that you are almost guaranteed to use. We all need medical attention for one thing or another, at one time or another. And there are some of us who need it more frequently than others. Some have the mentality that you’re young, healthy and fit, so there’s no need to pay to have health insurance. That is quite naïve to think. Yes, having health insurance helps with the yearly doctors visits and having tests done every so often, but the main reason for having insurance is in the case that you are in a serious accident or something traumatic happens to you and you desperately need medical attention. Having health insurance will greatly benefit you in a scenario such as this.

Like everything else in the world, once again, there are also many types of health insurance available. All of the different plans generally revolve around four main ones. They range from traditional indemnity plans to health maintenance organization plans (HMO’s). There are also preferred provider organization plans (PPO’s) and point-of-service plans (POS). It’s very important to understand the differences between them all, so I’ll give you a brief overview of each one.

Health maintenance organization plans (HMO’s) allow you to pay a monthly or quarterly premium instead of paying for each individual service you have. Another benefit of HMO’s is it offers you a wide variety of health benefits which includes preventative care. With HMO’s you choose a primary care provider that is affiliated with your plan, otherwise known as your family doctor. With most HMO plans you must receive a referral from your primary care provider in order to visit a specialist that is also in your plan’s network. In addition to your monthly or quarterly premium you pay, you will generally also have to pay a co-payment for some services which are usually $10-20 for an office visit. Some will even require a co-payment for hospital visits as well. One of the respected ideas of HMO plans is the fact that they deliver care to their patients directly. Patients are allowed to go to an HMO’s medical facility to see a nurse or a doctor. Another well known fact about HMO’s is the individual practitioners usually will accept your health plan as well as many others.

Indemnity plans allow the patient to go to the doctor of their choice. With this plan you, your doctor or your hospital will submit a claim to your insurance company for reimbursement. Be careful to take note that you will only be reimbursed for those services and costs that are cover under the companies plan. A list of these medical expenses that are covered can be found in your benefits summary. However, the good part of indemnity plans is that the majority of them cover most procedures. Indemnity plans pay a good portion of the “usual and customary” charges for the covered visits in your area. The insurer will generally pay roughly 80% of the costs and the insured will pay the remaining 20%. The amount that you would pay is otherwise known as the coinsurance. If the provider charges more than the usual and customary rates then you will clearly have to pay both the coinsurance and the excess charges. Along with the coinsurance most indemnity plans have deductibles as well. These are known as the amounts of the covered expenses you must pay before the insurer will begin to reimburse you for your medical bills. These deductibles could range from $250-500 per year per individual. The higher your deductible, the lower your monthly or quarterly premium will be. Typically these plans have what is commonly known as out-of-pocket maximums. Basically this means that once you have reached your covered expenses amount in one calendar year, for the remainder of the year the insurer will pay the full usual and customary fee. Some policies may even have lifetime limits on their benefits. It is highly recommended that you look for a policy that has a lifetime limit of one million dollars.

Preferred provider organization (PPO’s) is basically the form of managed care that is closest to the indemnity plan. This plan is like the indemnity plan in which it allows you to see your choice of doctor at anytime. A PPO plan provider negotiates discounts with your doctors, hospitals and other providers who will then become part of the PPO care network. Generally when you see a physician in the network you will pay a co-payment and some sort of coinsurance. For example, an insurer may reimburse you 90% of the cost if you see a physician in the PPO network. So after the visit you will only owe 10% of the bill and the co-payment as well. If you choose to see a doctor that is out of the care network you will still receive coverage, but at lower levels. The insurer may only reimburse you 70% of the total bill. This requires you to pay the remaining 30% and a higher co-payment. One good aspect of PPO’s is the ability to make self-referrals. This means that you can see any doctor you want, including any specialists, in or out of the care network, without a referral from a general practitioner. Premiums may also be cheaper than indemnity plans because of the negotiated provider discounts.

Point-of-service plans (POS) combine elements of HMO plans and PPO plans. This plan allows you to use primary care provider (or a general practitioner) to coordinate your care. Or you can always self direct your care at the point-of-service. If you need medical care you will generally have two or three options depending on your specific health plan.

Go through a primary care provider. The services will be covered under HMO-like guidelines meaning just a co-payment will be required.
Have the option to access your care through a PPO provider and the services will be covered under the in-network PPO guidelines. This means a co-payment and a coinsurance will be required.
Obtain services that are outside of the HMO or PPO networks. All services will be reimbursed according to the out-of-network guidelines. Usually a co-payment and a higher coinsurance will be required.