Health Insurance

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.

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.

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 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.

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.

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.

Choosing wisely
If you have a choice of more than one plan, compare how each plan handles the following:

• Coverage’s
• Co-payments
• Coinsurance
• Deductibles
• Pre-existing conditions
• Limitations on devices, drugs, and access to specialists.