Types of Health Insurance Money Saving Tips, Ideas and Advice to Save on Your Healthcare Costs

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HEALTH INSURANCE - Page 2

Types Of Healthcare Plans

Whether or not a medical expense is covered by a particular healthcare plan, to what extent it is covered, and where treatment is available is dependent on many factors, including the type plan, the type of coverage included in the plan and the many exceptions and exclusions contained in most plans. The amount of possibilities is endless. However, a good starting point is understanding the basic types of coverage that are generally available

through private plans (either group or individual), with respect to both who provides required care and at what cost, as well as what types of required care are covered.

1. Individual and family health insurance plans are usually described as either "indemnity" or "managed-care" plans. Generally, the major differences are about choice of healthcare providers, out-of-pocket costs and how healthcare bills are paid. There may also be differences on whether pre-approval is required for certain tests, and if you will need referrals from your primary doctor to see a specialist. With any type of plan you choose, make sure you understand what services are covered, and what doctors and hospitals are covered by your plan. If unsure, always ask if the healthcare services are covered before undergoing treatment.

a. Indemnity plans generally offer a broader selection of healthcare providers (both doctors and hospitals) compared to managed care plans. Indemnity plans pay their share of the costs (usually a percentage of reasonable and customary charges for the service provided) for covered services only after they receive a bill. This means that you may have to pay the doctor, hospital or lab first, and then obtain reimbursement from your health insurance company. However, compared to managed-care plans described below, you generally have a broader choice of healthcare providers with an indemnity plan.

b. There are several different types of managed-care health insurance plans. These include HMO, PPO, and POS plans. Managed-care plans typically make use of healthcare provider networks. Healthcare providers within a network agree to perform services for managed-care plan patients at pre-negotiated rates, and will usually submit the claim to the insurance company for you. In general, there is less paperwork and lower out-of-pocket costs with a managed care health insurance plan, compared to an indemnity plan.

c. As a member of a Preferred Provider Organization (PPO), you will be expected to use the insurance company's network of preferred doctors and hospitals. These healthcare providers have been contracted to provide services to the health insurance plan's members at a discounted rate. Usually you will be able to see doctors and specialists within the network at your own discretion. Payment of an annual deductible is usually required before the insurance company starts covering your medical bills. You may also have a co-payment for certain services, or be required to cover a certain percentage of the total charges for your medical bills. With a PPO, services provided by an out-of-network physician are usually covered at a lower percentage, than services provided by a network physician.

d. Health Maintenance Organizations (HMO’s) typically provide members with lower out-of-pocket healthcare expenses, but also offer less flexibility in the choice of physicians or hospitals than other health insurance plans. You are generally required to choose a primary care physician. This physician will take care of most of your healthcare needs. Before you can see a specialist, you'll need to obtain a referral from your primary physician. With an HMO you will usually have coverage for more preventive healthcare services than you would through another type of plan. You may not be required to pay a deductible before coverage starts, and co-payments are generally small. Usually, you do not have to submit any of your own claims to the insurance company. Coverage for services by non-network providers, or for services rendered without a proper referral from your primary physician, is generally not included.

e. A Point of Service plan (POS) combines some of the features offered by HMO and PPO plans. As with an HMO, members of a POS plan are required to choose a primary care physician from the plan's network of providers. Services provided by your primary doctor are typically not subject to a deductible. Also, like HMO’s, POS plans typically offer coverage for preventive care visits. However, services provided by a non-network provider may be subject to a deductible, and will likely be covered at a lower level. If services are rendered outside of the network, you'll likely have to pay up-front and submit a claim to the insurance company yourself.

2. Healthcare coverage plans are also described by the types of medical services they provide. Generally, you must have a separate plan for each type of medical service to have coverage for that type of service. Most of the time, plans are categorized as follows:

a. General healthcare plans usually include coverage for doctor’s visits (either primary care or specialists) hospital stays, in-patient or out-patient surgery (doctors and hospitals/clinics), lab and diagnostic tests, and some rehabilitative services. What percentage of the cost is covered, who you can receive services from, out-of-pocket costs, etc. are dependent on the specific plan.

b. Prescription plans provide coverage for prescription medicines. Some plans offer coverage only at pharmacies, while other plans also provide mail order prescription coverage which will generally save money. How much of the cost of prescriptions, and what type of prescriptions are covered varies by plan.

c. Dental plans provide coverage for expenses related to routine dental work, as well as special procedures. Severe injury or disease is usually covered under general healthcare plans.

d. Vision and eye care plans provide coverage for routine eye doctor visits, for prescription eye wear, and for some eye care treatments. Extensive injury to eyes, or severe eye diseases, are usually covered under general healthcare plans.