Which type of health insurance is right for you?- Questions About Health Insurance

Whether you are eligible for group insurance or choosing an
individual plan, you should carefully compare costs and coverage.
Be sure to compare:
1. Premiums.
2. Coverage/benefits.
3. Access to doctors, hospitals, and other providers.
4. Access to after hours and emergency care.
5. Out-of-pocket costs (coinsurance, copays, and
deductibles).
6. Exclusions and limitations.
Even if you do not get to choose your health plan—for example, if
your employer offers only one plan—you still need to understand
your coverage. What kind of services are covered by the plan? What
steps do you need to take to get the care you and your family
members need? When do you need prior approval to ensure
coverage for care (for example, elective hospitalization for scheduled
surgery)? How are benefits paid; do you have to submit a claim?
Make sure you understand how your plan works. Don’t wait until
you need emergency care to ask questions.
5If you are choosing between indemnity and managed care plans,
remember that they may differ in several important ways, including:
• How you access services.
• How you obtain specialty care.
• How much and sometimes how you pay for care.
Despite these differences, indemnity and managed care plans share
some features. For example, both types of plans cover a wide array
of medical, surgical, and hospital services. Most plans offer some
coverage for prescription drugs. Some plans also have at least partial
coverage for dentists and other providers.
The major difference between indemnity (nonnetwork
based coverage) and managed care
plans (network-based coverage) concerns
choice of doctors, hospitals, and other
providers; out-of-pocket costs for covered
services; and how bills are paid.
Be sure to check on the physicians and hospitals
that are included in the plan.
Indemnity Insurance
This type of coverage offers more flexibility in choosing doctors and
hospitals. Usually, you can choose any doctor you wish, and you
can change doctors at any time. Although you usually will not need
a referral to see a specialist or go for x-rays or tests, you may need
paperwork, such as your medical records, from your primary care
physician. Be sure to ask your doctor if there’s any paperwork that
you will need to take with you.
If you have indemnity insurance, your plan only pays part of your
medical bills. You are responsible for the rest. Your out-of-pocket
costs are likely to be higher for certain services than with some
managed care plans. Usually, you will need to spend a certain
amount each year before your plan begins to pay benefits. This
amount is called a deductible.
Deductibles are the amount of the covered expenses you must pay
each year before your plan starts to reimburse you. Deductibles
might range from $100 to $300 per year per covered person or $500
or more per year for a family.
If you have an indemnity plan, you may have more paperwork to do.
Some doctors will submit the claim for you. Once the doctor receives
payment from the insurance company, he or she will bill you for the
difference. With other doctors, you will have to pay the entire bill
and file a claim with your insurance company to be reimbursed.
Indemnity insurance pays a portion of the bill—usually 80 percent,
after the deductible has been met, although this may vary. You pay
the remainder, usually 20 percent of the total bill. This is called
coinsurance.
Indemnity policies typically have an out-of-pocket maximum. This
means that once your expenses reach a certain amount in a given
calendar year, the fee for covered benefits typically will be paid in full
by your insurance plan. If your doctor bills you for more than the
reasonable and customary charge, you possibly may have to pay a
portion of the bill. If you have Medicare coverage, there are limits on
how much a physician may charge you above the usual amount.
There also may be lifetime limits on benefits paid under the policy.
Most experts recommend that you look for a policy with a lifetime
limit of at least $1 million. Anything less may not be sufficient.
Managed Care
More than half of all Americans who have health insurance are
enrolled in a managed care plan. Managed care plans usually cover a
wide range of health services. With these plans, costs are lower when
patients use the doctors and other providers who participate in the
plan (network providers).
In most cases, you will not have to fill out any insurance forms or
submit any claims to the insurance company when you useDeductibles are the amount of the covered expenses you must pay
each year before your plan starts to reimburse you. Deductibles
might range from $100 to $300 per year per covered person or $500
or more per year for a family.
If you have an indemnity plan, you may have more paperwork to do.
Some doctors will submit the claim for you. Once the doctor receives
payment from the insurance company, he or she will bill you for the
difference. With other doctors, you will have to pay the entire bill
and file a claim with your insurance company to be reimbursed.
Indemnity insurance pays a portion of the bill—usually 80 percent,
after the deductible has been met, although this may vary. You pay
the remainder, usually 20 percent of the total bill. This is called
coinsurance.
Indemnity policies typically have an out-of-pocket maximum. This
means that once your expenses reach a certain amount in a given
calendar year, the fee for covered benefits typically will be paid in full
by your insurance plan. If your doctor bills you for more than the
reasonable and customary charge, you possibly may have to pay a
portion of the bill. If you have Medicare coverage, there are limits on
how much a physician may charge you above the usual amount.
There also may be lifetime limits on benefits paid under the policy.
Most experts recommend that you look for a policy with a lifetime
limit of at least $1 million. Anything less may not be sufficient.
Managed Care
More than half of all Americans who have health insurance are
enrolled in a managed care plan. Managed care plans usually cover a
wide range of health services. With these plans, costs are lower when
patients use the doctors and other providers who participate in the
plan (network providers).
In most cases, you will not have to fill out any insurance forms or
submit any claims to the insurance company when you use
in-network providers. Usually, you will pay a copay (typically $10
to $20 for an office visit) each time you go to the doctor or hospital
or fill a prescription. Your copay may vary depending on whether
you see your primary care doctor or a specialist and whether you
receive a generic or brand name prescription drug.
Most managed care plans have a list of drugs that they cover, called
a formulary. Your copay for prescription drugs will probably
depend on whether you are getting a generic drug, a brand name
formulary drug, or a brand name drug not on the plan’s formulary.
For example, the copay might be $10 for a generic drug, $25 for a
formulary drug, and $40 for a brand name non-formulary drug. Be
sure to check the formulary of the plan you are considering to make
sure it will cover any routine prescription drugs that you and your
family members take.
Some managed care plans have a mail-order pharmacy option. This
means that you send your doctor’s prescription for routine
maintenance drugs (for example, blood pressure medicine, drugs to
control blood sugar, and other drugs used on a regular basis) to the
mail order pharmacy. In most cases, you will receive a 3-month
supply of your medication by return mail. You still pay a copay, but
your cost may be lower than it would be at a local retail pharmacy.
If you choose to enroll in a managed care plan instead of an
indemnity plan, you may have lower out-of-pocket expenses for
health care, as long as you see doctors who are part of the plan (innetwork
providers).
There are three main types of managed care plans:
• Health maintenance organizations (HMOs).
• Preferred provider organizations (PPOs).
• Point-of-service plans (POS).
All three types of managed care plans have contracts with doctors,
hospitals, and other providers. They have agreed on certain fees
with these providers. As long as you get your care from a plan
provider, you typically will be responsible only for any cost-sharing
your plan requires.
Health Maintenance Organizations
HMOs have long been known for a focus on prevention and
wellness. Traditionally, HMOs required that you receive most of
your care from one primary care physician who is aware of your
total health picture. If you belong to an HMO, usually you must
receive all of your medical care from network providers, except in
emergencies. HMOs usually have flat copayments rather than
deductibles and co-insurance and no lifetime limits on coverage.
After you enroll in an HMO, you typically will need to select a
primary care physician who will be responsible for coordinating all
of your care. Primary care physicians may be family practice
doctors, internists, pediatricians, obstetricians-gynecologists, or
general practitioners.
If you become ill, your primary care doctor will see you first, unless
it is an emergency. Your primary care doctor will give you a referral
if he or she thinks you need to see a specialist. Usually, your HMO
will not provide coverage for a specialist unless you have this referral.
In most cases, you must see a specialist who participates in your
HMO. Sometimes, in special circumstances, HMO patients may be
referred to providers outside the HMO network and still receive
coverage.
If you need to be admitted to the hospital and it is not an
emergency, you may have to obtain precertification from your plan.
In most cases, your physician or hospital will take care of this for
you. Non-emergency hospital care may not be covered without
precertification. In case of an emergency admission, you or a family
member, your doctor, or your hospital will need to contact your
plan within a certain timeframe (usually within 48 hours of
admission) to obtain written confirmation of coverage for the
hospital stay.

Today, some HMOs do not follow this “primary care model.” So, if
you are considering a traditional HMO, it is important to compare
the features and requirements among the various HMO plans that
are available to you.
Preferred Provider Organizations and Point-of-Service Plans
PPOs and POS plans combine features from both fee-for-service
and HMOs. PPOs and POS plans offer more flexibility than
HMOs in choosing physicians and other providers. POS plans have
primary care physicians who coordinate patient care, but in most
cases, PPOs do not. Premiums tend to be somewhat higher in
PPOs and POS plans than in traditional HMOs.
Generally, the greater the emphasis on in-network care, the lower
the premiums and the more comprehensive the benefits will be.
Consumers and employers make tradeoffs, deciding which is more
important: a greater choice of providers or a lower premium.
If you are enrolled in a PPO or POS plan, your out-of-pocket
expenses will be less if you use a provider who is part of the plan (a
network provider). However, you will still get some reimbursement
if you receive a covered service from a provider who is not in the
network. In this case, your reimbursement will be at a lower level
than if you used an in-network provider.
If you choose to go out of network for your care, you may have to
meet a deductible before your plan begins to pay benefits. Also, you
may have to pay the bill yourself and submit paperwork to the plan
for reimbursement of covered expenses.
If you are in a PPO, you will not need a referral to see a specialist or
get other types of care, but you may need to take some paperwork
with you. Be sure to ask your doctor if you will need a written order
or other documentation when you are referred to a specialist,
laboratory, or other provider.
When you go out of the plan’s network for care, PPOs and POS
plans work like fee-for-service plans and charge you coinsurance.

For PPOs, this coinsurance may be different than the coinsurance
charged for in-network providers. Also, you may have to pay the
total cost of care right away and then file a claim with your
insurance company to get the allowable reimbursement for out-ofplan
care.