Health Insurance 

Introduction to Health Insurance

 

Health insurance covers the payment of medical costs incurred by you, such as doctor's fees, hospital bills, and other expenses that can include medical tests and prescriptions.

 

Types of Health Plans

HMOs

 

Health Maintenance Organizations (HMOs) are managed care plans that provide health care services through networks of doctors, hospitals, and other health care providers. As a member you must select a primary care physician who oversees your medical care and provides referrals to specialists.

When you access the HMO network, you pay designated copays for doctor visits, prescription drugs, emergency visits, and inpatient hospital stays. Generally, you will not be responsible for a deductible (an amount you must pay each year before the health plan begins to cover your health care costs) or coinsurance (a percentage of the charges). An in-network provider cannot bill you for any balance after the copay is met.

 

PPOs

 

Preferred Provider Organizations (PPOs) are managed care plans that allow you to obtain health care services through in-network preferred providers or out-of-network providers. The PPO will typically reimburse a higher percentage of the cost of your health care services if you use in-network providers.

When you access the PPO network, you typically pay a copay for covered services. You may be responsible for a percentage of the overall cost (coinsurance) as well. When you use an out-of-network provider, you will typically pay a deductible and a higher percentage of the charges.

The PPO will base its reimbursement percentage on the usual and customary amount–the amount it typically contracts with providers to pay for the service. You will be responsible for your percentage of the usual and customary amount plus any remaining balance charged by the health care provider.

 

POS

 

A Health Maintenance Organization with Point-of-Service Option (POS) is a managed care plan that combines aspects of an HMO and a PPO. Generally, you are required to choose a PCP and obtain a referral from that doctor before making an appointment with other doctors in the network. The POS will typically reimburse a higher percentage of the cost of your health care services if you use in-network doctors.

When you access the HMO network, you will be responsible for copays. When you use an out-of-network provider, you will pay a deductible and a percentage of the charges. The reimbursement for your healthcare services will be based on the plan’s usual and customary amount. You will be responsible for your percentage plus any remaining balance charged by the health care provider.

 

Fee-for-Service

 

Traditional insurance plans, also known as Fee-for-Service insurance, partially pay for the medical services you receive. Unlike managed care plans, Fee-for-Service insurers typically do not negotiate contract amounts with providers. Instead, the insurer bases its reimbursement percentage on the usual and customary charges for the service. You will be responsible for your percentage plus any remaining balance charged by the health care provider.

 

Chart

 

Health Maintenance Organization (HMO)

HMO with Point-of-Service (HMO/POS)

Preferred Provider Organization (PPO)

Exclusive Provider Organization (EPO)

Network –         Is the network open or closed?

Closed – consumers must use network doctors, hospitals, and specialists except in limited circumstances such as emergencies.

Open – consumers may use in-network providers or out-of-network providers.

Open – consumers may use in-network providers or out-of-network providers.

Closed – consumers must use network doctors, hospitals, and specialists except in limited circumstances such as emergencies.

Limits            Are there limits on choice of doctors, hospitals, or specialists?

Typically require consumers to choose a primary care physician (PCP) from the HMO’s network. With exceptions, consumers must obtain a referral before seeing other doctors in the network.

Typically require consumers to choose a PCP and obtain a referral before seeing other doctors in the network.

Many PPOs permit consumers to see any network doctor without a referral. Some PPOs require consumers to choose a PCP and obtain a referral before seeing other doctors in the network.

Some EPOs permit consumers to see any network doctor without a referral.

Payments     How do the plans and consumers share costs?

Consumers pay designated copays for covered services when accessing the HMO network. Some HMOs require consumers to meet a deductible before paying for services. Consumers do not typically pay coinsurance.

Consumers pay designated copays for covered services when accessing the HMO network. Some HMOs require consumers to meet a deductible before paying for services.

Consumers typically pay a copay for covered services when accessing the PPO network. Consumers may also pay a percentage of the total cost of the service.

Consumers may pay copays or coinsurance for covered services when accessing the EPO network. Many EPO plans require consumers to meet a deductible before paying for services.

Balances –       Is the consumer responsible for remaining balances?

A network provider cannot bill a consumer for any remaining balance after the consumers meets their copay.

Consumers are responsible for any remaining balance when using out-of-network providers.

Consumers are responsible for any remaining balance when using out-of-network providers.

Consumers pay entire cost of out-of-network services.

Incentives –     Is there an incentive to use network providers?

Out-of-network services are not covered in a closed network.

Typically reimburse a higher percentage of the cost when using in-network providers.

Typically reimburse a higher percentage of the cost when using in-network providers.

Out-of-network services are not covered in a closed network.

 

 

Health Plan Costs

There are several types of costs associated with health insurance. Understanding these costs can help you anticipate your yearly healthcare expenses.  To avoid billing surprises, contact your health plan and provider for coverage and cost information prior to a service or procedure.

 

Premium

 

A premium is the monthly cost to participate in a health plan.

 

Deductible

 

A deductible is the yearly amount you must pay before your plan will contribute to a covered service. The deductible may not apply to certain services like routine doctor visits.  Often you will have an in-network deductible, an out-of-network deductible, and a pharmacy deductible.  Your in-network deductible can range between $0 and $6,300 for an individual policy. 

 

Copayment

 

A copayment is a fixed amount you must pay for a covered service. For example, your plan may require you to pay $25 to see your primary care physician.  Plans typically do not count your copays toward your annual deductibles.

 

Coinsurance

 

Coinsurance is the percentage of the cost of a service for which you are responsible. For example, your plan may require you to pay 20% of the cost of a service and it will cover the remaining 80%.  Typically your plans will have different in- and out-of-network coinsurance levels.  For example, your plan may have 20%/80% in-network coinsurance levels, but 40%/60% out-of-network coinsurance levels.  Typically EPOs and HMOs will require you to pay 100% of your out-of-network  expenses.   

 

 

To avoid billing surprises, contact your health plan and provider for coverage and cost information prior to a service or procedure.

 

PLEASE NOTE: If you receive care from an out-of-network provider, you may be responsible for the difference between the usual and customary amount (or allowable amount) that your plan pays for the service and the amount the provider charges for the service.

 

For more information on healthcare billing, click HERE.

For more information on mediation for certain out-of-network claims, click HERE.

 

HMO/PPO Brochure

hmo and ppo brochure cover                

CHOOSING AN INDIVIDUAL HMO OR PPO PLAN THAT IS RIGHT FOR YOU

There are many things to consider when shopping for health insurance. With this in mind, this publication provides an overview of HMOs and PPOs, two common types of managed care plans, and describes advantages and disadvantages of each.  A pdf version is available here.