Choosing Among Many Types of Health Plans
Health insurance has changed a lot in the last few years. HMOs, PPOs, major medical, fee-for-service, and HSAs - there are a lot of different health plans to choose from, and the differences can be dramatic.Health plans can (and do!) differ widely in all the key areas: coverage, cost, and details of care.
How Health Plans Differ
I'll try to explain in the simplest possible terms how different health plans work, and, most importantly to you, how they affect the health care that you receive.
First of all, you should know that health insurance policies fall into two broad categories:
- managed-care health plans and
- indemnity health plans (also known as "fee-for-service").
The major distinctions between these two types of health plans can be traced back to different approaches to health care.
Basically, you can either choose to focus on prevention, and pay less for coverage (managed care), or you can pay more, and be completely covered no matter what happens (indemnity or "fee-for-service").
What Does This Mean Exactly?
Under the more traditional indemnity health plans, the emphasis is on patient choice, patient responsibility, and immediate patient care, resulting in a more "complete" level of coverage (priced accordingly, of course.)
With the (relatively) newer managed care plans, specifically HMOs, the emphasis is more on preventative medicine and lower costs.
To confuse matter further, today there are many health plans that combine aspects of both "coverage philosophies". The newest options, PPO and POS plans, fall somewhere in between pure indemnity and pure managed care. (These "mixed" types are becoming the most popular health plans.)
In addition, HSA plans, or medical savings account plans, is actually more a means of paying for coverage than a health plan in it's own right.
But what exactly do these different approaches mean for you, the patient?
What kind of care do health plans cover?
This seems like a rhetorical question (they cover medical care, right?), but different health plans can have very different approaches to care.
Indemnity insurance, the "original" type of health plan, focuses on the treatment of unexpected illnesses, and usually allows a patient total control over choice of physician.
In return, patients accept responsibility for keeping receipts and medical bills and for completing the claims procedure and filling out the paperwork.
Managed care, which is becoming the more well-known category of health plans, has a different focus. Under these health plans, emphasis is on preventative care and keeping medical costs low.
This means that routine check-ups are more likely to be covered, but that patient choice over care givers will be more limited. And the burden of paperwork falls on the insurer.
Is "managed care" a bad word?
Managed health care plans, especially HMOs, have received much media criticism in the past, but they are often considerably less expensive (and therefore a more appealing) than traditional indemnity health plans. But as with everything else, you get what you pay for...
So which type of plan is "best" for you?
There's no easy answer. Health insurance is always a compromise between cost and protection, and you need to look at both your needs and your financial capabilities when you evaluate a policy.
Unless you already know exactly what coverage you require, I recommend you take a minute to learn about all these different health plans. Each kind suits a certain type of person, and you'll feel more comfortable making this big decision if you've got a handle on your options.
Fee for Service Health Plans Cover Everything - At a Price
Indemnity insurance, the traditional fee for service health care, has gradually become less prevalent as managed care becomes the norm. However, if you value flexibility in care and don't mind spending a little extra money for full coverage, it may be the best policy for you.
Your Coverage With Fee For Service Health Care
Fee for service health care offers you unlimited choice. You control your choice of physician and facility, from primary caregiver to specialist, surgeon and hospital. Flexible coverage also means immediate treatment for medical emergencies or unexpected illness.
But fee for service health plans do have care restrictions. They do not traditionally cover preventative medicine, so check-ups, office visits and shots (among a few other services) are your responsibility. This can make indemnity insurance impractical for a large family that requires a lot of routine visits and preventative care.
Your Costs With Fee For Service Health Care
Choice does not come cheap. While it's hard to predict the annual cost of health care under an indemnity insurance plan, there are a few costs that come pretty standard:
- a monthly health insurance policy premium.
- a yearly deductible before your health insurance begins to contribute.
- a per visit coinsurance, or percentage of health care expenses.
As a rule, health care services not covered by your health insurance policy (like check-ups) also don't count toward satisfying the deductible.
Of course, not all fee for service health plans are created equal. There are various levels of coverage available.
Basic, Comprehensive, & Major Medical Insurance
There are three kinds of indemnity insurance coverage:
- Basic health insurance
- Major Medical insurance
- Comprehensive insurance
Basic health insurance includes:
- Hospital room and board and hospital care.
- Some hospital services and supplies such as x-rays and medicine.
- Surgery, whether performed in or out of the hospital.
- Some doctor visits.
Major Medical insurance includes:
- Treatment for long, high-cost illnesses or injuries.
- In-patient and out-patient expenses.
Comprehensive insurance is a combination of the two. The cost of your plan will vary with the level of coverage. Major medical insurance, for example, though popular, can carry a hefty price tag.
Bottom line: fee for service health plans offer choice and security. But these advantages are reflected in the cost of indemnity insurance. Your other option?
Managed care - which is up next.
