Health insurance is something that people need at all ages and at every stage of their lives. Typically of course healthcare needs, and the necessity of good insurance to cover them, increase as a person ages. However, accidents and illnesses are equal opportunity villains and they can strike the young, and even the healthy without much warning. That is why having adequate health insurance is a must. Yet health insurance is also something which frightens a lot of people because at first glance it can seem confusing and people may worry that if they make the wrong decision it could have very dire consequences for them. We want to do everything we can to alleviate those fears and make the process of getting health insurance as easy to understand and simple as possible for our clients. Let’s take a closer look at some of the fundamentals of health insurance.
Types of Health Insurance
Fee-For-Service – With this type of health insurance the patient sees the doctor of their choice and after services are performed fees are billed.
Managed Care – With this type of health insurance the patient is more restricted in terms of what doctor they can see and they are part of a larger, integrated health plan. Managed care is currently the most common type of health insurance and there are several different plan types.
Types of Managed Care Plans
Health Maintenance Organizations (HMOs)
In an HMO doctors, hospitals, and insurers all participate in an integrated business arrangement. The HMO provides medical treatment on a prepaid basis. That means that HMO members pay a monthly fee regardless of how much treatment they receive. When a patient joins an HMO they must choose their primary care physician and this physician must be consulted before they can seek treatment with a specialist.
HMOs offer several advantages. For instance since the monthly fees are the same regardless of use, there tends to be an emphasis on preventive care. Patients will usually seek out medical help as soon as they have any concerns, since it won’t affect their cost. There also isn’t typically a lifetime maximum benefit. That means that patients don’t need to worry about maxing out their coverage.
However, many patients are frustrated by the tight control that the plan exercises on them. They may find it difficult to get referrals for specialists and they have to first go through their primary care physician. If they get treatment from non-HMO providers then those costs will generally not be covered.
Preferred Provider Organizations (PPOs)
PPOs are another type of managed care health plan. With this type of plan the hospitals and doctors provide services to members of the plan at a discounted rate. Unlike with HMOs the services are not prepaid. Instead patients pay for the services as they are used. If the patients go to out of network doctors and hospitals they do not receive the PPO discount.
The benefits of the PPO plan are that patients do have more flexibility than with an HMO. For example it is not required that a patient see a primary care physician before seeking a specialist. However, there is usually a financial incentive to do so and patients will typically receive greater discounts if they first receive a referral. Another benefit is that there are often limited out-of-pocket expenses. Many PPO plans cap out-of-pocket expenses.
One drawback to a PPO plan is that visiting doctors or hospitals outside of the PPO network is generally much more expensive. Thus if the doctor of your choice is not in the plan you may not be able to see him or her without incurring financial penalties. There is typically also more paperwork on the part of the patient required with a PPO than with an HMO.
Point of Service (POS)
The POS plan is a hybrid of the HMO and PPO types of plans. It incorporates characteristics of both plans. For example like an HMO when you use a doctor or physician inside of your preferred network there is often no deductible or co-pay. As with an HMO you must also set up a primary care physician when you sign up for the plan. However, if you go outside of your network then the plan functions more like a PPO and you will be responsible for a deductible and co-pay, but still have access to out-of-network care.
The advantages of using a POS style plan is that you have more freedom while still being able to benefit from lower deductibles and co-pays. You also don’t have to see a primary care physician before seeking care from a specialist. In many cases you will also still enjoy a capped set of out-of-pocket expenses.
However, there are also some drawback to the POS plan. For example the higher costs of the deductible and co-pays for using doctors and hospitals outside of the plan network can add up and get quite expensive. In order to use a specialist within the network you also still need to receive a referral from your primary care physician.
While this may seem like a lot to digest at first, it is actually fairly straightforward and easy to understand once you are able to sit down with an agent and go over everything. The type of plan you end up choosing will depend largely on your needs and concerns. It might also be influenced by the area you live in and your access to different doctors and hospitals. It is important to make an informed decision about your health insurance coverage and we want to do everything we can to help you. Please don’t hesitate to contact us with any questions or to compare various types of plans.