Health insurance is one of the components of a sound financial plan. It provides financial security for your family by providing financial resources for health expenses in times of life's uncertainties. Today, there are really two primary forms of health insurance plans, indemnity and managed health care. Indemnity plans manage cost, while managed care plans are in the business of managing care.
INDEMNITY PLAN
With an indemnity plan you can use any medical provider. They then send the bill to the insurance company, which pays part of the cost. Usually you have a deductible, which is the amout of the coverage expenses you must pay each year. Once you meet the deductible, most indemnity plans pay a percentage of what they consider the usual and customary charge for the covered services. The insurer generally pays 80 percent of the usual and customary costs and you pay the other 20 percent, which is known as coinsurance.
Indemnity plans can be purely indemnity or they can be coupled with Preferred Provider Organizations(PPO). PPO's simply trade a network for volume. That is, you agree to limit yourself to a set universe of providers in exchange for lower premiums (usually 15-20%). If you go outside the set network for elective care, you are penalized. However, unlike a health maintenance organization(where there would be no coverage), PPO penalties are quite limited.
MANAGED CARE
Managed care plans generally provide comprehensive health services to their members and offer financial incentives for patients to use the providers who belong to the plan. Health Maintenance Organizations are the oldest form of managed care plan. In an HMO, instead of paying for each service that you receive separately, your coverage is paid in advance. For a set monthly fee, HMO's offer members a range of health benefits, including preventive care. HMO's will give you a list from which to choose a primary care physician. Typically, the plan may charge a copayment for certain services. You may find that you have fewer out-of -pocket expenses for medical care-as long as you use doctors and hospitals that participate in or are part of the HMO. Your share may be only the small copayment; generally you will not have deductibles or coinsurance.
Q: What is not covered?
A: While HMO's benefits are generally more comprehensive than the traditional fee-for-service plans, no health plan will cover every medical expense. Very few plans cover eyeglasses, hearing aids, and dental because these are considered budgetable expenses. Very few cover elective cosmetic surgery, except to correct damage caused by a covered accidental injury. Some fee-for-service do not cover checkups. Procedures that are considered experiemental may not be covered either. And some child birth plans cover complications arising from pregnancy, but do not cover normal pregnancy or childbirth. Health insurance policies frequently exclude coverage for preexisting conditions.
Q: How do I compare Plans?
A: After you review what benefits are available and decide what is important to you, you can compare plans. Many things should be considered. These include services offered, choices of providers, location, and cost. The quality of care is also a factor to think about.
Q: How do I compare Services?
A: Look at the services offered by each plan. What services are limited or not covered? Is there a good match between what is provided and what you think you will need?
Q: How do I choose a provider?
A: It's important to know what doctors, hospitals and other medical providers are part of the plan. Are there enough of the kinds of doctors you want to see. If you want to see a specialist, can you refer yourself or must your primary care doctor refer you? Do you need approval from the plan before going into a hospital or getting specialty care?
Q:How do I compare cost?
A: No insurance plan will cover every expense. To get a true idea of what your costs will be under each plan, you need to look at how much you will pay for your premiums and other cost.
- Are there deductibles or copayments you must pay before the insurance begins to help cover your cost?
- After you have met your deductible, what part of your cost are paid by the plan? Does this amount vary by the type of service, doctor, or health facility used?
- Are there any limits to how much you must pay in case of major illness?
- If you are in a network plan, are there penalties for going outside of the network? If so, how much are they?
- If a plan does not cover certain services or care that you think you will need, how much will you have to pay?
- Is there a limit on how much the plan will pay for your care in a year or over a lifetime? a single hospital stay for a serious conditions could cost hundreds of thousands of dollars.
TEN WAYS TO REDUCE HEALTH CARE COST
- Take good care of yourself.
- Practice self-examination and get appropriate health screening
- Become aware of the health risks of diffrent lifestyle choices.
- Know what your medical benefits cover.
- Take an active role in health care decision making
- Ask your doctor about every prescribed medication and medical test.
- Avoid hospitalization whenever possible.
- Save emergency room for emergencies.
- Check your hospital and doctor bills carefully.
- Avoid defensive medicine. Defensive medicine referes to test and services performed to protect physicians from malpractice suits. Ask if they are really necessary and what your options are.