Income. Assess Your Medical Insurance

Assess Your Medical Insurance

Choosing the right healthcare insurance coverage can be daunting and complex. The many different models all have unique features. To get the coverage you need at the best value, assess your situation, know the jargon of the industry and the plans offered, and then determine what works best for you.

Know the Lingo

Health plan documents are full of jargon, but don’t be intimidated. Here are some helpful definitions of terms you may come across:

Cap: The maximum amount the insurance company will pay over a lifetime
Claim form: A form that either you or your healthcare provider must complete and send to the insurance company to receive payment for services rendered
Coinsurance: Percentage of the healthcare bill you have to pay after the deductible
Co-payment (or co-pay): Out-of-pocket charge for a visit to the doctor or hospital
Covered expenses: Those expenses the insurance company agrees to pay for; not all expenses are covered by the plan
Customary fee: The amount most healthcare providers charge for a particular service; sometimes called usual and customary
Deductible: Out-of-pocket expenses before the insurance plan begins paying
Exclusion: Services not covered by the insurance company
In-network: The insurance company selects this list of healthcare providers you can choose from to avoid higher costs
Maximum out-of-pocket expenses: The most you have to pay in a year for deductibles and coinsurance
Out-of-network: Licensed healthcare providers who aren’t on the innetwork list
Premium: Annual cost of the insurance coverage
Third-party payer: Anyone, other than you, who pays for your care

Examine the Types of Healthcare Plans

The two basic types of health insurance plans are traditional care and managed care. The following sections give you the details you need to distinguish between the two.

Traditional care plans

Traditional care insurance is also known as fee for services or indemnity plans. Traditional plans have the following features:

You generally pay higher out-of-pocket expenses at the time of service, including expenses up to a set deductible limit.
After meeting deductible limits, you share the bill with the insurance company. For example, you may pay 20 percent while the insurance company pays 80 percent. You continue sharing the bill until you reach your maximum out-of-pocket expenses; then the insurance company pays 100 percent of your expenses up to its cap.
You may be responsible for keeping track of expenses and submitting requests for reimbursement from the insurance company.
The insurance company pays for only usual and customary expenses. Any additional charges are your responsibility.
Not all insurance companies offer wellness or preventative care with this type of plan.
The insurance company usually has few restrictions on which medical providers, including specialists, you use.
If your plan is considered a catastrophic or high-deductible major medical health plan, it will have lower annual premiums than a plan with a lower deductible.

Traditional plans are becoming increasingly scarce as insurance companies move to the managed care plans outlined in the following section.

Managed care plans

Managed care health plans involve an arrangement between the insurance company and a select network of healthcare providers. These providers are referred to as in-network providers. Most of these plans cover wellness care or preventative care — such as well-baby care, doctor visits, and mammograms — at varying levels.

Three basic categories of managed care are Preferred Provider (PPO), Point of Service (POS), and Health Maintenance Organizations (HMO).

PPO

A PPO allows you the most flexibility to choose your healthcare providers within the managed care options. For that flexibility you or your employer will pay higher costs for insurance than you would with a POS or HMO. Following are some features of PPO plans:

Although your co-pay is usually small, you may have deductibles. If you go outside the network, your co-pay is generally higher and you’re likely to pay a larger portion of the bill yourself.
You can usually see a specialist without getting preapproval from your primary care physician, as long as your specialist is in-network. Going to a specialist out-of-network raises any co-pay amount and your total costs.
If you go out-of-network, you may have to submit claims forms.

POS

POS plans are similar to PPO plans, but you have to choose an in-network primary care physician who manages your care and refers you to a specialist when needed.

Following are some additional features of POS plans:

Insurance premiums for POS plans are typically lower than with a PPO and higher than an HMO.
If you choose to see a specialist without being referred by your primary care physician, you pay more in out-of-pocket expenses.
You may have to file your own claims forms unless you’re being treated by your primary care physician.
Out-of-network providers can be much more expensive. You’ll likely pay 10 percent more out-of-pocket to see an out-of-network provider than you would if you went in-network.

HMO

HMO plans are designed to provide you with quality healthcare at the lowest price. To manage costs, HMOs drastically limit your options for healthcare providers. But they do value preventative healthcare. They realize that prevention is cheaper than treatment. Following are some HMO features:

They usually have the lowest premiums.
These plans are least flexible in the selection of service providers.
Patients must choose an in-network primary care physician who controls referrals. You can’t refer yourself to a specialist or go out-of-network without paying the full cost of the service. And think twice before running to the emergency room. If the reason for your visit isn’t deemed an emergency by your HMO, you could get stuck with the bill.