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HEALTH INSURANCE - Page 2

Sources of Health Insurance Coverage (continued)

9. Coverage purchased by individuals through private insurers. If you are not able to secure coverage through any of the above-noted sources, coverage can, in many instances, be purchased through private insurers. Depending on the kind of coverage you select, the cost of private coverage is generally quite high.

10. Coverage provided on an indigent basis. If you do not have healthcare coverage, and you cannot afford to pay for your medical expenses at all, hospital and government programs will provide emergency care free of charge. This is not an ideal situation, but generally care will be available.

Types of Health Insurance Plans

Whether or not a medical expense is covered by a particular healthcare plan, to what extent it is covered, and where treatment is available is dependent on many factors, including the type plan, the type of coverage included in the plan and the many exceptions and exclusions contained in most plans. The amount of possibilities is endless. However, a good starting point is understanding the basic types of coverage that are generally available through private plans (either group or individual), with respect to both who provides required care and at what cost, as well as what types of required care are covered.

1. Individual and family health insurance plans are usually described as either "indemnity" or "managed-care" plans. Generally, the major differences are about choice of healthcare providers, out-of-pocket costs and how healthcare bills are paid. There may also be differences on whether pre-approval is required for certain tests, and if you will need referrals from your primary doctor to see a specialist. With any type of plan you choose, make sure you understand what services are covered, and what doctors and hospitals are covered by your plan. If unsure, always ask if the healthcare services are covered before undergoing treatment.

a. Indemnity plans generally offer a broader selection of healthcare providers (both doctors and hospitals) compared to managed care plans. Indemnity plans pay their share of the costs (usually a percentage of reasonable and customary charges for the service provided) for covered services only after they receive a bill. This means that you may have to pay the doctor, hospital or lab first, and then obtain reimbursement from your health insurance company. However, compared to managed-care plans described below, you generally have a broader choice of healthcare providers with an indemnity plan.

b. There are several different types of managed-care health insurance plans. These include HMO, PPO, and POS plans. Managed-care plans typically make use of healthcare provider networks. Healthcare providers within a network agree to perform services for managed-care plan patients at pre-negotiated rates, and will usually submit the claim to the insurance company for you. In general, there is less paperwork and lower out-of-pocket costs with a managed care health insurance plan, compared to an indemnity plan.

c. As a member of a Preferred Provider Organization (PPO), you will be expected to use the insurance company's network of preferred doctors and hospitals. These healthcare providers have been contracted to provide services to the health insurance plan's members at a discounted rate. Usually you will be able to see doctors and specialists within the network at your own discretion. Payment of an annual deductible is usually required before the insurance company starts covering your medical bills. You may also have a co-payment for certain services, or be required to cover a certain percentage of the total charges for your medical bills. With a PPO, services provided by an out-of-network physician are usually covered at a lower percentage, than services provided by a network physician.

d. Health Maintenance Organizations (HMO’s) typically provide members with lower out-of-pocket healthcare expenses, but also offer less flexibility in the choice of physicians or hospitals than other health insurance plans. You are generally required to choose a primary care physician. This physician will take care of most of your healthcare needs. Before you can see a specialist, you'll need to obtain a referral from your primary physician. With an HMO you will usually have coverage for more preventive healthcare services than you would through another type of plan. You may not be required to pay a deductible before coverage starts, and co-payments are generally small. Usually, you do not have to submit any of your own claims to the insurance company. Coverage for services by non-network providers, or for services rendered without a proper referral from your primary physician, is generally not included.