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Ask WomensFinance? : Answer |
Q: Are there
Different Types of Health Insurance?
A: There
are three different types of health insurance plans: managed care, indemnity (also known
as fee-for-service plans), and government-sponsored health plans such as Medicare and
Medicaid.
Managed Care Plans
Managed care plans normally offer a cost advantage over traditional health insurance
plans. In exchange for lower costs, your choice of health care providers is limited to an
approved network of physicians.
There are three main types:
- Heath Maintenance Organization (HMO). With HMOs, you receive managed
care in return for a fixed monthly fee from you or your employer. All your medical care
comes from a single provider, so you're limited to selecting physicians affiliated with
the HMO. If you need to see a specialist for any reason, you have to first go through your
HMO and primary care provider. HMOs have the advantage of lower co-payments and reduced
paperwork. The only disadvantage is the limited physician network from which you can
seek treatment. This could prove disruptive if you have to switch doctors.
- Preferred Provider Organization (PPO). PPOs are similar to HMOs and
fee-for-service plans. An employer provides this type of plan by setting up contracts with
a group of health care providers. By arranging such a network, the employer is able to
keep health care costs low for both you and your health care provider. However, there is
still some flexibility within the plan. You're allowed to see doctors outside the network
as long as your willing to pay higher costs for the service.
- Point-of-Service (POS). Some HMOs will offer a fee-for-service type
plan known as Point-of-Service. With this type of plan, you're allowed to seek care
outside the approved network of physicians. But in order to do so, you must be willing to
pay a higher monthly fee and a higher co-payment for any services you receive.
Indemnity Plans
Fee-for Service plans are
still the most popular choice for individual health care. With this type of arrangement,
you pay a monthly fee to your insurance company. You also pay a deductible before your
insurance company pays for their share of the bill. Deductibles typically range from $100
to $1000. The higher your deductible, the lower your premium.
Many companies label their plans 80/20 or 90/10. The first number is the
percentage amount the insurance company is going to pay (80% in the first case). The
second number is what you'll pay above and over any deductible (20%). Your portion is
called a co-payment. In exchange for higher premiums, indemnity plans normally
offer a broader network of health care providers.
Government
Health Plans
- Medicare. Government-run program that provides health care for people
age 65 and over and those who have permanent kidney failure or certain disabilities.
Medicare consists of Part A and Part B coverage. Part A covers hospital inpatient care,
home health services, skilled nursing, and hospice care. If you're eligible for social
security benefits, you automatically qualify for Part A coverage. Part B requires you pay
premiums for services such as diagnostic tests, ambulance transportation, outpatient care,
and emergency room visits. Part B pays 80% of covered services. You're responsible for
paying the remaining 20% plus a $100 deductible for each calendar year. The 1999 Part
B monthly premium is $45.50. This amount is automatically deducted from your social
security payment unless you decline Part B coverage.
Medigap.
Medigap is private insurance designed to help you pay for costs not covered by Medicare
including coinsurance and deductibles. There are 10 standard types of medigap policies.
Each offers a different combination of benefits.
Medicaid. Program run jointly by Federal and State governments.
Provides health coverage for certain low-income and needy families, the elderly, and other
disabled persons. Covers inpatient and outpatient hospital services, nursing services,
home health care, pre-natal care and delivery services for pregnant women. Operates on a
vendor program where direct payments are made to the health care provider.
Congressional Omnibus Budget Reconciliation Act (COBRA). COBRA is not
insurance. It's a law that allows you to maintain health care coverage should you lose or
leave your current job under special circumstances -- disability, spouse's death (and you
were covered under their group coverage), downsizing, or age. With COBRA, you keep interim
coverage until you've completed your transition. After that, you may be allowed to convert
your old plan to an individual policy with the same carrier. Your new coverage will
probably be more expensive and carry fewer benefits than your original plan.
Choosing a Health
Plan
When it comes to health care
coverage for you or your family, you must be able to distinguish between the various plans
and evaluate them. Here are some things you should look for when shopping for health
insurance.
1. What type of plan suits your needs?
- Health Maintenance
Organization (HMO).
- Preferred Provider
Organization.
- Point-of-Service.
- Indemnity (Fee-for-Service).
- Medicare.
- Medicaid.
2. What does the
plan offer?
- Specialty care.
- Emergency care.
- Prescription drugs.
- Counseling services for
mental health.
- Dental services.
- Vision care.
- Obstretical-gynecological
services
- Family planning services.
- Home health,
skilled-nursing, or hospice care.
- Hospitalization/Surgery.
- Physical Exams.
- Preventive care.
- Family Planning.
- Extended care.
- Mammograms.
- Physical therapy.
- Pre-existing conditions.
3. How does the
plan compare?
- In terms of service?
- Is it accredited?
- Insurance ratings?
- Number and choice of health
care providers in the network?
- Where are health care
providers located in relation to where you live?
- Deductibles and co-payments?
- Premiums?
- Quality of medical care?
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