Health Insurance - An Overview
There are a number of health insurance options available to everyone, whether you are part of a group, such as a company, or an individual, buying health insurance on your own. There are essentially two broad classes of plan - managed care plans (HMOs & PPOs) and fee-for-service plans (also known as indemnity plans.) In today's climate, health insurance is a necessity. Rising costs of treatment, hospitalization and prescription drugs mean that it's critical to protect yourself in the event that you need significant medical care. Expenses coupled with the loss of income could easily create major financial problems.
Health Insurance - Managed Care Plans - HMO
HMO stands for Health Management Organization. These are typically the lowest cost health care plans available. The trade-off is flexibility. If you have HMO coverage, this means that you must use physicians who are in your insurance provider's HMO network. In addition, you are assigned a primary-care physician who serves as your point of entry into the healthcare system. All specialist visits are preceded by a visit to your primary care physician who will then refer you to an in-network specialist.
Your out of pocket expenses are typically limited to a 'co-payment' which is a flat fee per appointment that typically ranges from $5-$20 per visit. Some HMOs will allow you to go out of network but will require you to pay a portion of the bill. Typical splits are 30% out of your pocket, 70% covered by the insurance company. This is typically referred to as a Point of Service (POS) option. (POS plans are explained below.)
If you are in relatively good health, are price-sensitive and don't have a strong preference about who your physician is, HMOs may be the right option for you.
Health Insurance - Managed Care - PPOs
PPO stands for Preferred Provider Organization. This is typically a large network of doctors with whom insurance companies have pre-negotiated rates. If you elect a PPO plan it will be more expensive than an HMO, but you will be able to go directly to any doctor in the network without a referral. Networks are typically fairly large and this options represents a good trade-off between choice and price for most people. Similar to HMOs, these plans operate on a co-payment basis and may also provide POS options which allow you to go out of network.
Health Insurance - Fee for Service (Traditional Indemnity Plans)
If you have a doctor whom you are not willing to give up and they are not part of a HMO or PPO network, then you will probably select indemnity plans. These typically split the cost of care with you. Your portion is normally 20% with the insurer covering the remaining 80%. Most plans will require you to meet a certain annual deductible before they begin reimbursements. If you're not price-sensitive and are very particular about your physician, this is the way to go.
Health Insurance - Questions to Ask
Choosing the right health plan is a major decision and one you should thoroughly research and evaluate before you choose. The questions below are intended to be a very general guide as opposed to a comprehensive list. While it may be galling to pay every month for something you don't necessary use all the time, it's hard to put a price on your health and well-being.
What Is Covered?
- How do basic policies and procedures around basic plan benefits such as physician visits, specialist visits, hospitalization etc. work?
- What additional services are covered and how do those plans work? (This includes things like chiropractic care, preventive care, vision, dental, counseling etc.)
What are Your Insurance Needs?
- Do I value choice or am I price sensitive?
- How frequently do I visit my doctor?
- How do I feel about needing a referral from a primary care physician?
- How do I feel about limits on my treatment?