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Picking a health plan

by Michelle Martin, InsWeb

All health plans are not created equal. And there's no rule of thumb for which ones are good and which ones aren't. The best plan for one person may not work at all for another. The best plan for you will depend on just what kind of health care you need, whether you have family members and what their needs are, and a few other personal factors.

Features and options vary widely among types of plans more so than among companies providing the plans. Where things vary among companies is usually cost - depending on your personal circumstances, some companies' rates may be less than others.

Since many people buy health insurance through their employers, that adds another variable - some employers pick up more of your health care bill than others. (Since that can add up to a bundle, that makes asking about health benefits a good idea during job searches.)

But you don't need to be an expert, or even spend a lot of time, to figure out which plan type is best for your needs. Understanding which type of plan offers the things you want should make a decision pretty easy. Here's a rundown of the main differences among plan types:

HMOs

A Health Maintenance Organization (HMO) is like a club for both patients and health care providers. Subscribers to an HMO receive medical services from participating physicians, clinics and hospitals. An insurance company sets up an HMO and gets a group of doctors to participate. Everybody agrees on certain costs and charges, which lets the insurance company control expenses and give you lower prices. But if you join an HMO and your previous doctor isn't a member, you can't bring him or her with you. HMOs work like this:

  • You choose a primary care physician (PCP) from a list of participating doctors. He or she is your personal doctor, who you see for routine medical care like annual exams and health issues. If you need to see a specialist, be hospitalized, or have lab or X-ray work, your doctor will refer you to a provider or facility.
  • Your doctor must give authorization for those services to be covered by your HMO. You may have to pay some portion of the cost (called a co-payment) for each office or hospital visit, such as $15 per doctor visit, regardless of what the services cost.
  • You may have to pay extra for some services (emergency room, mental health and chemical dependency services, for example).
  • You do not have to fill out claim forms, which makes this a relatively simple system.

PPOs

PPOs offer choices and access, but there is typically a cost associated with that freedom that is higher than HMO costs. Like an HMO, it is a network, but rather than choosing a primary care physician, you can see any health care professional in the network any time you choose to make an appointment. You don't need referrals for specialists or other services. You can even see professionals outside the established PPO network, but if you do so, your portion of the costs will be higher. PPOs work like this:

  • You will have choices to make about your insurance options within the PPO system when you enroll. Your choices will apply to you and any dependents you enroll in the plan, and can usually only be changed once a year during "open enrollment" periods.
  • You'll receive a list of participating medical professionals, which you can use to find health care. Or you may continue to see anyone you already use.
  • You may have to pay a portion of the cost for each office or hospital visit, regardless of how much the visit costs. Your portion is the "co-payment."
  • You may have to pay extra for some services (emergency room, mental health and chemical dependency services, for example).

Point-Of-Service

These plans combine characteristics of HMOs and PPOs. You choose a primary care physician who controls all aspects of care, including referrals to specialists. All care received under that physician's guidance (including referrals) is fully covered. Care received by out-of-plan providers is reimbursed, but you have to pay a significant co-payment or deductible. So basically, you decide each time you need medical care whether you want to use your plan as an HMO or a PPO.

Traditional Indemnity/Major Medical

This is the least restrictive option of the three main plan types. TI lets you see any licensed health care professionals for anything covered by the insurance. You choose deductible and other options when you enroll, and those apply to you and any dependents you enroll in the plan. TI works like this:

  • The deductibles you choose apply to each person enrolled in the plan (so if you and a spouse enroll and select a $250 deductible, you each must pay $250 in medical expenses before your plan starts paying further costs each year). But companies typically set a maximum of two or three deductibles per family.
  • Costs that exceed your deductible are covered by a coinsurance plan, so you and the insurance company share the cost for services covered by the policy. For example, with an 85/15 provision, the insurance company pays 85% and you pay 15%.
  • After you meet your deductibles, coinsurance maximums apply that protect you from skyrocketing bills.

You may have to pay extra for some services (emergency room, mental health and chemical dependency services, for example).


 


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