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Which Health Insurance Type
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If not, please go back to the previous step and spend some time assessing what is important to you and your family.
Having a clear understanding of your needs will help you stay focused and will help you select the health insurance type that fits your needs.
So take a few minutes to
complete the checklist in Step 2.
Okay, are you ready?
In this section, you will learn about the various types of health insurance plans: Fee-For-Service, HMOs, PPOs, and POS and how they differ from each other.
Just don’t let these acronyms and terms turn you off. Remember these are merely labels.
What is important is that you understand the general characteristics of each health insurance type in terms of how they affect your access to health care providers, services, and costs.
You’ll find all this information on this section, as well as highlights of the key advantages and disadvantages of each health insurance type. And hopefully, you will begin to get a sense of which health insurance type fits your needs better.
Let’s begin…
There are two (2) major types of health insurance:
FEE-FOR-SERVICE
Fee-For-Service is the traditional kind of health insurance policy, also called called “Indemnity Plan.”Access to health care providers: Fee-For-Service plan offers you the most choices of health care providers and hospitals.
With this health insurance type of plan, you can make an appointment with any doctor or change doctors at anytime. You may also go to any hospital in any part of the country.
Health Care Services: There are three kinds of fee-for-service coverage: basic, major medical an comprehensive plans.
Basic protection covers the cost of hospital room and care while you are in the hospital, as well as other hospital services and supplies, such as x-rays and prescribed medicine. Basic coverage also covers the cost of surgery, whether it is performed in or out of the hospital, and some doctor visits.
Major medical insurance covers only high-cost medical treatment for long and major illnesses and injuries.
There are policies that offer both basic and major medical coverage in one plan. This is called a "comprehensive plan." Check your policy to make sure you have both kinds of protection.
Cost/Cost Management: With a fee-for-service policy, you are primarily responsible for keeping track of your medical expenses. You will need to keep receipts for prescription drugs and other medical costs.
And to receive reimbursement, you or sometimes your doctor will have to fill out forms and submit claims to your insurance company.
Keep in mind that your insurance company will only reimburse you or your doctor for “covered” medical expenses, as outlined in your policy. You pay for the rest.
How much reimbursement you will receive depends on your deductibles and coinsurance. Here’s what you can expect to pay:
- Premiums – the fixed, regular (monthly, quarterly, or annual) payment you make to your insurance company
- Deductible – a certain amount of money that you pay each year before your insurance company begins to pay for covered medical expenses. Not all expenses count toward your deductible. So check your policy for those covered expenses. Annual deductibles may be $250 or more per individual or $500 or more per family. Usually, the higher the deductibles, the lower the premium.
- Coinsurance – Your share of the covered medical expenses, after you have paid your annual deductible. While coinsurance rates vary, fee-for-service policies typically reimburse your doctor bills at 80% of what is considered “usual, reasonable and customary charge” (the prevailing cost of a medical service within a geographic area).
Fortunately, most fee-for-service policies have an out-of-pocket maximum. This is the most you will have to pay for covered medical expenses in one calendar year.
Once you have reached this amount, your insurance company will begin to pay for the covered benefits (considered usual, reasonable and customary) in full.
There may be lifetime limits however on the benefits paid for by your health insurance company under the policy. So experts recommend that you look for a policy whose lifetime limit is at least $1 million. Anything less may not be enough to cover major medical needs and emergencies.
There are also limits as to how much your insurance company will pay for your claim if both you and your spouse file for the same claim under two different group health insurance plans. A coordination of benefit clause limits benefits under two plans to no more than 100 percent of your allowable medical expense.
Advantages: The freedom it offers in letting you choose your own doctor, see any specialist, and go to any hospital at any time, without the need for a referral.
Disadvantages: Most people do not like FFS primarily because it is expensive. In addition, it requires you to track your medical expenses, keep receipts and fill out forms before any claims are paid to you.
Fee-for-Service may be right health insurance type of plan for you if you like the freedom of choosing your own doctors, particularly for treatment of a medical condition.
MANAGED CARE
Managed care plans are types of health insurance that provide health care services at lower costs.Managed care plans are able to lower health care costs through financial arrangements and by utilizing a network of providers and influencing how much health care you use.
For example, if you need to go to a hospital, you will first need to
get an approval from your insurance company to make sure that the hospitalization is needed.
Without this approval, you may not be covered for the hospital bill and will end up paying the medical expense.
Below are the three types of Managed Care Plans. Let's explore each one of these plans.
Health Maintenance Organization (HMO)
Health maintenance organizations are prepaid health insurance type of plans. As an HMO member, you and your family receive a wide variety of...more
Preferred Provider Organization (PPO)
PPO or Preferred Provider Organization is another type of managed care plan. It is a combination of...more
Point of Sale Plan (POS)
POS is a managed care plan that combines the lower cost of HMO with the freedom of...more
When you're done reviewing each one, you may
proceed to Step 4.
Step 1: Know the Health Insurance Terms.
Step 2: Assess Your Health Insurance Plan Needs.
Step 3: Which Health Insurance Type is Right for You?
Step 4: Where to get Health Insurance Coverage.
Step 5: Get the Best Health Insurance Quote Available.
Step 6: Make the Right Health Insurance Choice.
Step 7: Submit your health insurance application.
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