Just as most consumers purchase insurance on the their autos and homes to protect their property and themselves in the case of an accident; many individuals, likewise, insure themselves and their families against unforeseen expenses arising from illness, injury or accidents.
Today, with health care costs rising dramatically each year, even relatively simple medical procedures can run into the thousands of dollars. However, it is not just the cost of medical care that is rising. The variety of care available is also increasing.
In order to reduce the risk of unexpected health care costs, private health insurance companies now offer an array of health insurance programs and plans, that vary widely in terms of coverage, costs and benefits.
Although at first glance some health insurance plans and policies may seem the same, after reviewing the technical language, you may discover they are quite different. Because of the often difficult-to-understand terminology, exclusions, and limitations, contained in these polices, it is frequently said that few purchases made by consumers are more confusing or require more careful study.
Health insurance coverage is available from commercial insurance companies; hospital and medical service plan providers, like Blue Cross and Blue Shield; and health maintenance organizations (HMOs) like HealthNet, PacifiCare and Kaiser, etc.
Other forms of health insurance are provided specifically for members of the military, elderly (Medicare), federal civilian employees, veterans of military service, and other special interest groups like American Indians and Alaskan natives.
Health insurance can be purchased on an individual or group basis. Group health insurance, generally available through an employer, may also be offered by other various organizations such as federal societies, labor unions, college health departments, and rural and consumer health cooperatives. The employer usually pays part or all of the costs for the group health insurance available to employees. However, since the protection provided by group health insurance varies from plan to plan, it is wise to check with you employer’s personnel office or the union office, to find out exactly what coverage and benefits are available to you.
If your group health insurance does not fully cover all of your health needs or you are self-employeed, then you may need to supplement your coverage with an individual plan. Individual insurance can be suited to your particular needs and provided by the insurance company or agent of your choice. Because coverage and costs of such policies vary from company to company you should shop around and compare the prices as well as benefits offered before making a decision to purchase.
Medical Expense Plans— pay expenses incurred for diagnosis and treatment of medical conditions
Payments may be made to YOU or your medical provider directly, if you “assign” your benefits to them. The policy or employer benefit booklet will detail the terms and conditions of what is covered and what is not covered. Read this contract BEFORE you need to use the plan and ask your agent or employer to explain anything which is unclear to you.
Full freedom-of-choice plans allow you to choose any doctor and hospital. These policies call for a “deductible.” This means that you must pay a stated amount first, before the insurance company begins paying benefits. The deductible commonly runs from $100 to several thousand dollars; and the rule here is the higher the deductible you are willing to accept, the lower the cost of your insurance. “Co-insurance”- the part of the medical costs you are obligated to pay with your insurer, is also involved.
For example, most freedom of choice plans will pay 75% to 85% of all eligible medical costs above the deductible, you pay the remainder. In other words, a medical cared bill totaling $10,000 of eligible expenses would leave you paying $1,500 to $2,500 above the deductible. These policies that require you to pay a portion of the costs above the deductible, usually feature a “stop loss” provision. This is the point where you stop sharing the costs with the insurance company and the insurance company pays all the bills at 100% for the balance of the current calendar year.
Preferred Provider Organizations (PPO) Plans allow the insureds to choose a doctor or hospital from a list of “preferred” providers in order to receive maximum benefits. If you go to a doctor or hospital who is not a member of the preferred list, the plan will cover a lessor percentage of the costs. PPO plans have many of the same features of freedom-of-choice plans including coinsurance and stop loss provisions. Check with the insurance carrier BEFORE you use the plan to determine if your physician or hospital is a contracting provider with your plan. Also, it is your responsibility under these types of plans to make sure your doctor refers you to other “preferred” providers.
Health Maintenance Organizations (HMOs) were formed with the idea of controlling health costs and providing preventive health care before members become ill. HMOs are comprised of hospitals, doctors and allied medical personnel who have contracted to provide health care to members in return for a pre-paid monthly charge.
When joining an HMO, members select a doctor, the “primary care physician,” from a list provided by the HMO. Typically family practitioners, internists, and pediatricians; these doctors manage all medical care including referrals to specialists and whether further lab tests or x-rays are needed. The system is designed to eliminate any unnecessary care which would ultimately increase total health care costs.
HMO’s provide incentives for individuals to seek medical care. Office visits are provided for small copays- usually $10 or $15. Prescriptions are available for small copays also. Hospital expenses are usually covered at 100% for little or no copays. With an HMO, you do not have the option of going to a medical provider who is NOT part of the HMO network. HMO’s are available on both a group and individual basis.
Medicare— A federal program which provides medical coverage for people over the age of 65 and for those who are permanently disabled. Contact your local Social Security office for more information and enrollment instructions.