There are two basic types of health insurance: fee-for-service (also called indemnity plans) and managed care. Fee-for-service plans generally allow more choice and freedom in choosing doctors, but expect you to pay more out of pocket in return. You’ll have to pay a deductible before the coverage kicks in, and then a portion – normally 20% of each bill. Coverage can be much more limited with these plans so be sure you read and understand all the details.
Managed care plans have become more popular because they tend to be less expensive. Deductibles and co-payments are much lower in exchange for more restrictions on which doctors you can see and still be covered. The different types of managed care plans include HMOs (Health Maintenance Organizations), and PPOs (Preferred-Provider Organizations).
HMO plans: HMOs differ from one another in the way they are organized and how they deliver services. All of them will require you to choose a primary care physician, who will coordinate all of your medical care and decide when to refer you to a specialist. If you choose a doctor outside the network, you’ll pay 100% of bill.
PPO plans: With a PPO, you are encouraged to choose a doctor and other providers from within the plan’s network. If you choose a doctor outside the network, you’ll pay a higher percentage of the bill. Some, but not all, PPOs will require a primary care physician to coordinate your care.
Questions to Ask
Health insurance is one of those things that you really don’t miss until you need it. The harsh reality is that medical expenses have the potential to wipe out your finances if you’re caught uninsured at the wrong time.
If your employer offers health insurance, great! Take advantage of it and do a little research if you’re choosing from multiple plans. If you’re on your own, you’ll likely have to pay more, but it’s still better than nothing. Here’s what to consider when looking at plans:
How much is the deductible? A deductible in insurance speak is the amount you must pay before your insurance company kicks in.
How much does the insurer pay after that? After the deductible is met, how much will you be expected to pay toward costs? Does the insurer pay up to 80%, 75% or something different?
How much is the co-payment? Many plans stipulate a co-payment, which is a set fee that is paid with each visit to the doctor.
How much will you pay for prescriptions?
How much will it cost to see a doctor who is outside the plan’s network?
Is there a lifetime limit on what the plan will pay?
Will you have a choice in doctors?
What is the maximum out-of-pocket total per year (also called a stop loss provision)?
Does the insurer have the right to cancel or not renew your policy?
From insurance line, post Crash Course in Health Insurance
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