What are your health insurance options

With several different types of health insurance to choose from, which health plan is best for you and your family? This guide may help you decide from among the various plans:

 

What's the difference between indemnity coverage and managed care? Generally speaking, a traditional indemnity, or "fee-for-service," plan allows people to see any provider they choose, including specialists. A managed care plan, by contrast, typically restricts access to a pre-selected network of doctors and hospitals. Managed care members generally encounter less paperwork, because there are no claim forms to fill out.

 

How do out-of-pocket costs vary? Usually, indemnity plans pay a portion of the bill after the policyholder meets an annual deductible. After that, the plan pays some percentage of the "usual and customary charge" for that service. A popular example: The plan may cover 80 percent of usual and customary charges, and the policyholder pays the remaining 20 percent plus any amount exceeding the usual and customary rate. In managed care, providers have agreements to provide services to plan members at a reduced cost. Usually, there is no annual deductible; only co-payments when members see a doctor or go to the hospital.

 

Within managed care, what are my options? The main types of managed care plans are the health maintenance organization (HMO), the preferred provider organization (PPO) and the point-of-service (POS) plan.

 

What is an HMO? An HMO is the oldest form of managed care. These plans offer a range of health services, including preventive care. In exchange, HMO providers receive a prepaid, monthly fee for providing all the care you and your family will need. That fixed-fee arrangement is designed as an incentive for providers to deliver appropriate medical care before health problems become serious. HMO members usually have no claims forms to fill out and, generally, no annual deductible to meet. There may be a nominal co-payment for seeing a physician or going to the emergency room.

 

What is a PPO? A preferred provider organization is a type of managed care plan with certain indemnity features. The PPO negotiated with doctors, hospitals and other providers to accept discounted fees for providing health services, including some preventive care. Members may choose to see providers within the PPO network or pay extra to go outside the network. There may be a co-payment on certain services and perhaps a deductible and "coinsurance" - a percentage of medical expenses. Members who see non-network doctors and hospitals will pay a deductible and coinsurance based on higher charges. In addition, the member may have to pay the difference between what the provider charges and what the plan will reimburse.

 

What is a POS plan? A point-of-service plan combines features of an HMO and a traditional indemnity plan. Each time the member needs a service, he or she decides whether to stay within the HMO network or go outside the network for an additional cost. In other words, that decision is made at the "point of service." By seeing HMO providers, the member keeps out-of-pocket costs to a minimum. When the member goes out of network, deductible and coinsurance requirements apply.

 

SOURCES: Agency for Healthcare Research and Quality, Rockville, Md. October 24, 2005.