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Health Insurance Types

Health insurance can be divided into two broad categories:

Traditional and managed care. Within these categories, there are four basic types of plans:

  • Traditional compensation plans, now often called service fee plans;
  • PPO or preferred provider organizations;
  • Point of sale, or service point plans;
  • And health funds or health maintenance organizations.

There is no one type of health care plan better than the other. It really depends on your needs and preferences. Some people enjoy the independence that service fee plans provide, while others prefer the low costs associated with closed patient funds. Also, while health insurance companies compete for business, discrepancies between types of plans can be blurred.

Traditional health insurance

Until about 30 years ago, most people had traditional compensation coverage. These days, it is often referred to as a "service fee". Compensation plans are a bit like car insurance: you pay a certain amount of your medical expenses up front in a discount form, and then the insurance company pays most of the bill.

Advances in modern medicine have increased the cost of providing medical care and made it possible for people to live longer. These developments have led many insurance companies to find ways to lower the costs of doing business, giving managed care the support it enjoys today.

Service charges

For years, compensation or service charge coverage was the norm. Under this type of health coverage, you have complete independence when it comes to choosing doctors, hospitals, and other health care providers. You can refer to any specialist without permission, and the insurance company cannot decide if a visit is necessary. You do not have complete independence. Most medications are administered by a service to some extent. For example, if you are not yet disabled, you may need to get permission to visit the emergency room.

On the downside, service fee plans generally involve more out-of-pocket costs. There is often a discount, usually between $ 200 and $ 2,500 before the insurance company begins to pay. Once the deductible amount is paid, the insurance company will receive approximately 80 percent of any doctor's bills. You may have to pay in advance and then send the payment invoice, or your provider may invoice your insurance company directly.

Under fee-for-service plans, insurance companies generally pay only to cover reasonable and customary medical expenses, taking into account what other professionals in the region do for similar services. If your doctor charges you more than the insurance company believes is "reasonable and reasonable," you may need to make up the difference yourself. Traditionally, preventive care services, such as annual checkups and pelvic exams, have not been covered by service fee plans. But while the evidence is mounting that preventive care can prevent more costly illnesses in the future, some insurance companies include them.

Rate plans for the service often include a cap for out-of-pocket expenses, after which the insurance company will pay 100 percent of the costs. It goes without saying that the ceiling is usually very high.

In summary, fee-for-service coverage provides flexibility for higher out-of-pocket costs, more paperwork, and higher premiums.

Managed care

Managed care has been around in one form or another since the 1930s, but it has taken off in the past ten years. As it grew, it evolved, leaving us with three basic types of managed care plans. Today, most people with private health insurance have some form of managed care.

Although there are important differences between the different types of managed care plans, there are some similarities. All managed care plans include an agreement between the insurance company and a select network of health care providers, and provide document holders with significant financial incentives for service providers to use that network. Generally, there are explicit criteria for selecting service providers and a formal procedure to ensure quality care.

Preferred Organizations (PPO)

One step beyond the limits of managed care is organizing preferred providers. PPOs have arranged for lower rates with a network of health care providers. PPOs offer policyholders a financial incentive to stay within that network.

For example, a visit to an in-network doctor could mean you have a $ 10 share fee. If you want to visit an out-of-network doctor, you will need to pay the bill in advance and then send it to your insurance company to get 80% refund. Also, you may have to pay a discount if you decide to leave the network or pay the difference between what doctors in and out of network charge.

With PPO, you can go to a specialist without getting approval, and as long as it's provided with the network, you can enjoy the same common rate. Staying online means getting less money out of pocket and less paperwork. Preventive care services may not be included in the PPO.

Exclusive provider organizations are PPOs that look like your health funds. EPOs increase the financial risk of staying online. If you choose an out-of-network provider, you are responsible for the full cost of the visit.

Point of Service (POS)

Service point plans are similar to PPOs, but offer a doorman or primary care physician. You will need to choose your primary care provider from the plan's network of doctors.

As with PPO, you can choose to leave the network and continue to receive some type of coverage. However, to obtain a referral to a specialist, you should generally consult your primary care provider. You can still choose to refer, but this will mean more trouble and more money out of pocket. If your primary care provider refers you to an out-of-network doctor, the plan should pay the higher cost. But if you mention yourself, you probably have to deal with more paperwork and less compensation. You may also have to pay a discount if you leave the network.

POS plans may also cover more preventive care services and may also offer health improvement programs, such as nutrition and smoking cessation workshops, and discounts at health clubs.

Health maintenance organizations (HMOs)

Most of the time, when you talk about health funds, you are really talking about closed health funds, the cheapest and least flexible type of health plan. It also tends to be directed at members of group plans rather than individuals.

In exchange for a lower copayment (or sometimes no copayment), lower insurance premiums, and minimal paperwork, the Sickness Fund requires that you only see your doctors and obtain a referral from a primary care physician before seeing to a specialist. If you are still able to pick up the phone, you may need to obtain a permit before visiting the emergency room.

The patient fund may have central medical offices or clinics (such as those used by Kaiser Permanente), or it may consist of a network of individual practices. In general, you should see HMO-accredited doctors or pay the full cost of the visit yourself. Health funds have a reputation for covering preventive care services and health improvement programs.