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Choosing the Right Plan

1. What Are My Health Plan Choices?

Choosing the right health plan can be very overwhelming and not as easy as it once was?.simply, because there are so many choices. Although there is no one ?best? plan, there are some plans that will be better than others for you and your family?s health needs and budget. Plans differ in both how easy it is to get the services you need and how much you have to pay. Although no plan will pay for all the costs associated with your medical care, some plans will cover more than others.

Virtually all plans today have ways to reduce unnecessary use of health care while keeping down the costs as well. This may affect how easily you get the care you want, but should not affect how easily you get the care you need.

Today, there is a real focus on healthcare ?consumerism?. Health plans are offering members a growing array of ?consumer driven? tools that aim to help those in any kind of health plan evaluate healthcare prices, pick doctors and hospitals that are both cost effective and high in quality, get appropriate screenings and tests, and otherwise better aid in managing their health. Employers, meanwhile, are steering workers toward cheaper drugs, medical services, and providers by offering lower co-payments and other incentives for certain choices. Some experts suggest that the new focus on consumers is not surprising. Health plans, employers, and providers have all tried, and largely failed, to control costs. The trend toward consumerism may actually help reduce overall healthcare costs in the long run---time will tell.

Plans do change from year to year, so you should carefully consider and research each plan. The information provided here will help you do just that. If you get health insurance where you work, you should start with your employee benefits office. The benefits office should be able to tell you what is covered under the plans available. You can also call the plans directly to ask any questions you may have.

Health insurance plans are usually described as either ?indemnity? (fee-for-service) or ?managed care?. These types of plans differ in important ways that are described below. With any plan, however, there is a basic premium, which is how much you or your employer pay, usually monthly, to buy health insurance coverage. Furthermore, there are often other payments you must make, which will vary by plan. In considering any plan, you should try to figure out its total cost to you and your family, especially if someone in your family has a chronic or serious health condition.

The major differences with indemnity and managed care plans are in choice of providers, out-of-pocket costs for covered services, and how bills are paid. Usually, indemnity plans offer more choice of doctors (including specialists), hospitals, and other health care providers than managed care plans. Indemnity plans pay their share of the costs of a service only after they receive a bill. Managed care plans have agreements with certain doctors, hospitals, and health care providers to give a range of services to plan members at reduced cost. In general, you will have lower out-of-pocket costs and less paper work if you select a managed care type plan and a broader choice of health care providers if you select an indemnity type plan.

Over time, as health plans compete for your business, the distinctions between these kinds of plans have begun to blur. Some indemnity plans offer managed care type options, and some managed care plans offer members the opportunity to use providers who are ?outside? the plan. This makes it even more important for you to understand how your particular health plan works.

In addition to the indemnity plans, there are three types of managed care plans: PPOs, HMOs, and POS plans. (all outlined below)

Indemnity Plan:

With an indemnity plan (sometimes referred to as ?fee-for-service?), you pay a pre-determined percentage of the cost of healthcare services, and the insurance company (or self-insured employer) pays the other percentage. For example, you might pay twenty percent for services and the insurance company pays eighty percent. The fees for services are defined by the providers and vary from physician to physician. Indemnity health plans do offer you the freedom to choose any health care provider of your choice. Below offers a list of recommended questions to ask for this ?fee-for-service? insurance plan:

  • How much is the monthly premium? What will your total cost be each year? There are individual rates and family rates.
  • What does the policy cover? Does it cover prescription drugs, out-of-hospital care, or home care? Are there limits on the amount or the number of days the company will pay for these services? The best plans cover a broad range of services.
  • Are you currently being treated for a medical condition that may not be covered under your new plan? Are there limitations or a waiting period involved in the coverage?
  • What is the deductible? Often, you can lower your monthly health insurance premium by buying a policy with a higher yearly deductible amount.
  • What is the coinsurance rate? What percent of your bills for allowable services will you have to pay?
  • What is the maximum you would pay out of pocket per year? How much would it cost you directly before the insurance company would pay everything else?
  • Is there a lifetime maximum cap the insurer will pay? The cap is an amount after which the insurance company won't pay anymore. This is important to know if you or someone in your family has an illness that requires expensive treatments.

Managed Care Plans:

Health Maintenance Organization (HMO): Of all the managed care plans, HMOs have been around the longest. It is generally the least expensive group health option, and also the least flexible. HMOs offer members a range of health benefits, including preventive care, for a set monthly fee if the members agree to use a specific network of providers. HMOs will give you a list of doctors from which to choose a primary care doctor. You need to contact this primary care doctor to be referred to a specialist. With some HMOs, you will pay nothing when you visit doctors. With other HMOs, there will be a co-payment, like $5 or $10, for various services.

There are various kinds of HMOs. If doctors are employees of the health plan and you visit them at central medical offices or clinics, it is a staff or group model HMO. Other HMOs contract with physician groups or individual doctors who have private offices. These are called individual practice associations (IPAs) or networks.

In all, if you belong to an HMO, the plan only covers the cost of charges for doctors in that HMO. If you go outside the HMO, you will pay the bill.

Critics of HMOs address concerns as to a lack of selection of primary care physicians, ?assembly line? medicine, and denial of adequate referrals in the event of disease or illness. Critics often claim that an HMO may deny claims and may make health care decisions based upon a pure profitability standpoint as opposed to decisions driven by providing the best level of care for its patients.

However, HMOs are valuable in providing good care for many members. Many HMO organizations take very good care of their members health care needs while managing costs.

Preferred Provider Organization (PPO): A PPO is a form of managed care closest to an indemnity plan. A PPO has arrangements with a network of selected doctors, hospitals, and other providers of care who have agreed to accept lower fees from the insurer for their services. As a result, your cost should be lower than if you go outside the network. PPO doctors as well as plan members themselves can make referrals to other doctors, even doctors outside the plan.

If you go to a doctor within the PPO network, you will pay a co-payment (a set amount you pay for certain services, say $10 for a doctor or $5 for a prescription). Your coinsurance will be based on lower charges for PPO members.

If you choose to go outside the network, you will incur larger costs in the form of higher deductibles, higher coinsurance rates, or non-discounted charges from the providers.

Point-of-Service (POS) Plan: A POS plans are like a hybrid of HMO and PPO plans. It is a form of managed care that allows an individual to choose between services from a provider in the plan network or outside of the network, with varying levels of reimbursement. Generally, you pay less for in-network care. For out-of-network care, you usually pay a deductible and coinsurance.

All of these health plans vary greatly in benefits and out-of-pocket expenses, so it is important to review your health insurance choices wisely and try to find the best policy to fit your circumstances.

2. Where Do I Get These Health Plans?

Individual Policies: If your company does not offer group policies or you are self-employed, you may need to buy individual health insurance through an agent. As a general rule, individual policies do not offer near the benefits and protection you can get through job-based coverage and it will cost more. People enrolled in individual plans pay premiums that are more in line with their expected health costs, so the premiums will be higher for those who are older or less healthy.

Group Policies: You may be able to get group health coverage, either indemnity or managed care, through your job or the job of a family member. Most employers allow you to change your health plan once a year during an open enrollment period. However, once you choose a plan, you must keep it for a year. You should always discuss your choices and limits with your employee benefits office.

Medicare: Medicare is a Federal Health Insurance Program that allows insurance coverage to Americans that are age 65 or older and people with certain disabilities. In many parts of the country, people covered under Medicare now have a choice between managed care and indemnity plans. They may also switch their plans for any reason. However, they must officially tell the plan or the local Social Security Office, and the change may not take effect for up to 30 days. People with Medicare, family members, and caregivers should visit Medicare.gov, the official U.S. Government site for people with Medicare, for the latest information on Medicare enrollments, benefits, and other helpful tools.

Medicaid: Medicaid is a joint state and federal program for public assistance to eligible people, regardless of age, whose income and resources are insufficient to pay for healthcare. In some cases, states require people covered under Medicaid to join managed care plans. Insurance plans and state regulations differ, so check with your state Medicaid office to learn more.

Pre-Existing Conditions: A pre-existing condition is a medical condition diagnosed or treated before joining an insurance plan. In the past, health care given for a pre-existing condition often has not been covered for someone who joins a new plan until after a waiting period. However, a new law called the Health Insurance Portability and Accountability Act (HIPAA), has changed the rules. Under the law, which went in to effect in July 1997, a pre-existing condition is covered without a waiting period when you join a new group plan if you have been insured the previous 12 months. This means that if you remain insured for 12 months or more, you will be able to go from one job to another, and your pre-existing condition will be covered, without additional waiting periods, even if you have a chronic illness.

If you have a pre-existing medical condition and need to purchase health insurance, it is wise to check with your employer first. Familiarize yourself with your rights, and then talk with private insurers regarding the various options.

3. Health Insurance Plans?What Benefits Do They Offer?

The majority of Health plans today provide basic medical coverage, but the details are what can matter and really make the difference. The best plan for you may not be the best plan for someone else. As you analyze your plan options, make sure you find out how each handles the following:

  • Prescription Drug Coverage
  • Regular physical exams and health screenings
  • Care by specialists
  • Emergency and hospital care
  • Mental health care and counseling
  • Services for drug and alcohol rehabilitation
  • Maternity care
  • Dental services
  • Vision care
  • Preventive care
  • Physical therapy
  • Ongoing care for chronic (long term) diseases, conditions, or disabilities
  • Home health, nursing home, and hospice care
  • Chiropractic or alternative healthcare
  • Experimental treatments

It is equally important to understand what is not covered as knowing what is covered on your individual or family health insurance plan. You will want to review each plan?s exclusion?s list to find out what is not covered and to see if any condition you currently have or expect to have in the future is included on that list.

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