Current Health Plan Choices
With more choices in health plans than ever before, the task of choosing a health plan is becoming ever more complicated. The "best" health plan for yourself, your family or your employees will depend on your specific needs, financial situation and availability of services in your geographical location. Health insurance plans differ significantly in monthly premiums and the availability of participating physicians in your area. There are no health plans that will cover 100% of all your medical expenses, but some paying a much higher percentage than others.
An insurance company can change their plan benefits from year to year, so you should carefully consider the changes announced by your health insurance company to make certain that the changes still meet your individual requirements. Insurance companies will continuously review both claims history and compare this to premiums collected for a specific plan. If the claims on a specific health plan exceed the collected premiums, your insurance company may either reduce the benefits, raise your premiums, or both.
There are many different structures for health insurance plan types. Most of these fall into the two main classes: 1) indemnity (fee-for-service) or 2) managed care. Both plan types require payment of a basic premium, which is how much you or your employer pay to the insurance company in exchange for the benefits offered under the health insurance coverage. In addition to paying the required monthly premium payments, you will also be required to pay your co-payments or co-insurance percentages as explained in your plan benefits details. In choosing your best suited health plan, you will need to analyze both the cost of premium payments as well as your estimated share of cost on rendered health services. Since nobody can predict the future, you might consider reviewing your health care expenses over the past two years in order to give some indication or guidance in what you might expect to be your "normal" health care costs.
Indemnity and managed care plans differ primarily in the availability and access to health care providers and your out-of-pocket costs for covered services. Indemnity plans may offer you the ability to go to provides of your choice, but you share of cost for these services is usually higher. The managed care plans work with a specific network of physicians and hospitals that offer "negotiated" rates that are passed on to the insured. This lowers the share of cost fees that are determined by the co-insurance percentages outlined in your health plan details. In additional, when your health insurance company has special agreements and contracts with a group of health care providers, this also makes claim submittals easier for the insured. Most of the paperwork is handled between the health care provider and the insurance company. Most indemnity plans require that you pay the health care provider and then submit a claim to the insurance company for reimbursement.
More recently, these two types of plans have integrated into plans that offer the consumer an option of choices. Some indemnity plans may provide you access to a specific network of physicians at reduced rates. Some managed care plans will grant you access to physicians outside of their network, but at increased co-insurance percentages without the advantage of negotiated rates.
Below is a more detailed description of the types of health plans that are most commonly available in today's health insurance industry.
Indemnity Plans
An indemnity plan (fee-for-service), you typically have the freedom to use any medical provider of your choice. When you incur health care expenses when using these medical providers, a claim Must be submitted to the insurance company so they will pay their share of the expenses. The claim can be submitted by yourself or your physician. The physician may even be willing to accept and wait for reimbursement from the insurance company, but they have no contractual obligation to do so.
Most all indemnity plans have an annual deductible that must be met before the insurance company is responsible for their share of cost. The share that is paid by the insurance company is based on what is referred to as "Usual and Customary rates" (UCR). This is the amount that the insurance company deems is fair compensation for the services rendered by that physician or hospital. This prevents the health care provider from extorting the insurance company by charging exorbitant rates. Most physicians and hospital will accept payment under UCR. If the provider charges more than the Usual and Customary rates, you will have to pay both the coinsurance and the difference between the UCR and the physicians billed charges.
Various Type of Managed Care Health Plans
Preferred Provider Organization (PPO). A PPO is the form of managed care that most closely relates to an indemnity plan. A PPO makes negotiations with doctors, hospitals, and other providers of health care who have agreed to accept lower fees from the insurer for their services. These lower fees are what is referred to as "negotiated rates." The health care providers that contract with the insurance company at these negotiated rates is referred to as the "PPO Network." This results in your share of cost being lower than if you go to a health care provider that is not part of this network.
If you go to a doctor within the PPO network, you may only be required to make a small co-payment for office visits or prescription drugs. The physician will typically handle all of the paper work between themselves and the insurance company, thus eliminating your need for claims fillings.
If you choose to go outside the network, you will have to meet the deductible and pay coinsurance based on higher charges. In addition, you may have to pay the difference between what the provider charges and what the plan will pay based on UCR. You may also be required to file a claims reimbursement report to the insurance company.
Health Maintenance Organization (HMO). HMOs are the oldest form of managed care plan. HMOs offer members a more comprehensive type of health insurance plan. Office visits are often low co-payment amounts and include preventive health care and lab and radiology fees. There are different types of HMO health plans. If doctors are employees of the health plan, such as those at Kaiser Permanente, and you visit them at central medical offices or clinics, this is commonly referred to as a staff or group model HMO. Other HMOs contract with physician groups or individual doctors who have private offices. These are called individual practice associations (IPAs) or networks.
With an HMO plan, you will be given a list of doctors from which you must choose one as your primary care doctor. This doctor is the "gatekeeper" of your health plan and he coordinates your care, which means that generally you must contact him or her to be referred to a specialist. Referrals are usually limited to other physicians within the same medical group.
Other than during emergency situations, benefits will not be paid by your insurance company if you seek health care outside the network of your primary care physician.
Point-of-Service (POS) Plans. A POS plan is a cross between a PPO health plan and an HMO plan. Like an HMO plan, you will still be asked to select a primary care physician from a list of participating doctors. When seeking health care through your primary care physician, your benefits will be comprehensive and have little out-of-pocket costs to you. But, unlike an HMO plan, you have the right to seek medical treatment outside of the network of your primary care physician. However, there may be deductibles and higher co-insurance percentages charged to you when doing so. The PPO network will still offer you negotiated rates and will allow you to go completely outside of the PPO network, but at an even higher co-insurance percentage.
Health Savings Accounts (HSA) Plans. A Health Savings Account eligible health plan, also referred to as a "High Deductible Health Plan" (HDHP) is a PPO plan, typically with a high deductible of $2,000 or more. The primary advantage is that this type of health plan is that you can deposit the annual deductible amount into a tex-deferred Health Savings Account. Deductions can be made from this savings account in order to cover certain medical expenses without suffering a penalty. Most HDHP plans have fairly low annual out-of-pocket limits. Once your limit has been met, you are covered in full for all covered benefits for the remainder of the calendar year.
Government Assisted Plans
Medicare
Medicare is federally sponsored health insurance for A mericans age 65 or older and people with certain disabilities. If you are currently employed, you are most likely paying into your Medicare fund through payroll tax deductions. Standard Medicare is referred to as Medicare Part A and coverage major medical expenses, such as hospitalization. Medicare Part B has an additional low monthly payment requirement and will provide you additional coverage for less major medical expenses, such as office visits.
Medicaid
Medicaid covers some low-income people (especially children and pregnant women), and disabled people. Medicaid is a joint Federal-State health insurance program that is run by the States.
In some cases, States require people covered under Medicaid to join managed care plans. Insurance plans and State regulations differ, so check with your State Medicaid office to learn more.
* Please refer to our legal terms and conditions for disclaimers pertaining to the content on this page.