Fee-for-Service (or Indemnity)
Plans
With this traditional plan, you can make an appointment with almost any medical
provider. After your visit, you or your provider sends your claim to the
insurance company. If you have met your deductible for the year, then the
Fee-for-Service plan will pay a percentage of the bill – usually 80%. You pay
for the other 20%, known as coinsurance. Few purchase this traditional type of
plan. Why? Because it's expensive.
Managed Care
This term refers to types of health insurance plans that provide health care
services at a lower cost. The key to these lower costs? Members of managed care
plans must adhere to certain rules designed to lower the cost of medical care.
Types of Managed Care:
Health Maintenance Organizations (or HMOs)
With an HMO, you receive a range of health benefits for a set fee. Generally,
there are no deductibles – but most plans require a small copay per office visit
(around $10-25). You must choose a primary care physician from the plan’s list.
This doctor becomes your “gatekeeper” for all your medical needs. This is the
doctor you call or see when you are sick, and he or she will refer you to a
specialist or other providers within the HMO network. With most HMOs you will
not receive benefits if you go out-of-network, except for emergency care.
Types of HMOs:
Staff Model HMO
A form of HMO in which doctors are employees of the HMO and you see them at a
central medical facility.
Individual Practice Associations (IPAs)
Here, an HMO contracts with outside physician groups or individual doctors who
have private practices. This means the HMO network will include doctors in
various locations rather than only at a central facility.
More Types of Managed
Care:
Preferred Provider Organization (PPO)
This isn't an HMO, but it is another type of managed care. In this system, you
may seek treatment from an approved network of providers, or may see other
providers outside the network. Usually, you will pay small copay and satisfy a
deductible before benefits are paid. Then you’ll pay a set coinsurance amount.
It’s less expensive to visit one of the providers in the plan’s list. You can go
outside the plan’s list, but your share of the bill will be higher.
Point of Service (POS)
A hybrid of the HMO and PPO is known as a POS plan. Like a standard HMO, your
primary care doctors make referrals to other providers within the plan. But if
you want to go to a physician outside the network without consulting your
primary care doctor, the POS plan will pay a predetermined amount of the bill
and your share of the bill will be higher than it would if you stay in-network.
These plans usually cost more in monthly premiums than straight HMOs, but they
give you the flexibility to call any doctor – within the plan or not.
Choosing wisely
If you have a choice from more than one plan, compare how each plan handles the
following:
Coverages
Co-payments
Coinsurance
Deductibles
Pre-existing conditions
Limitations on devices, drugs, and access to specialists.
Health Savings Accounts
Health Savings Accounts (HSAs) are a relatively new way for Americans to pay for
their healthcare. Like an IRA, the money deposited into an HSA is completely
tax-deductible. These accounts, however, can be accessed whenever individuals
need them to pay for qualified healthcare expenses. In the meantime, their money
earns tax-free interest for future medical costs.
Wondering about some of the terms used in health insurance?
Here are some common terms and definitions.
Copay:
A fixed dollar amount you pay at the time services are rendered. Typical copays
are for office visits, prescriptions, or hospitalizations.
Coinsurance:
A specified percentage of the cost of treatment the insured is required to pay
for all covered medical expenses remaining after the deductible has been met.
Deductible:
The portion of your health care that you pay before insurance starts covering
it. Typically, the higher the deductible, the lower the premiums.
Pre-existing condition:
An illness, disease or condition an individual has at the time of enrollment in
a health care plan. Pregnancy is not a pre-existing condition.
Premiums:
The monthly or quarterly payments paid for health insurance.
Catastrophic coverage:
This plan pays hospital and medical expenses above a certain (usually high)
deductible. The maximum lifetime limit may be high enough to cover the cost of a
catastrophic illness.
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