Americans are barraged with medical health insurance information from all directions. From Medicare Supplements to Advantage plans, group insurance to PPOs, the process of evaluating your options and choosing policies can be very confusing.
Health insurance isn’t one-size-fits-all. Your current health, budget and individual needs all factor into determining which policy is best for you, and that could be a very different policy than the one best suited to a family member or friend. A fundamental understanding of the kinds of insurance that are offered and what each might cover is useful in identifying which plan works best for each individual.
Traditional medical insurance policies, also known as fee-for-service or 80/20 plans, entitle the insured to go to any physician rather than restricting them to a particular network of providers. In these plans, the insurer generally pays 80 percent of the medical treatment costs and the insured pays the remaining 20 percent. If the policy has a deductible, this amount must be paid in full by the insured before the insurer pays for any treatment.
With these plans, the lower your monthly premium is, the greater the deductible is going to be. The insurer will usually restrict healthcare providers from charging more than the established reasonable and customary rates for your area, which caps your potential financial obligations, adding another benefit to the policy.
HMOs and PPOs
With an HMO, or Health Maintenance Organization, the insured pays a regular monthly premium in return for comprehensive healthcare. There’s often a small copayment for doctor’s visits (usually varying from $20 to $50), along with a somewhat greater copay or deductible for hospitalization. Upfront expenses are considerably simpler to calculate and manage with an HMO as opposed to a fee-for-service plan. However, an HMO introduces the idea of a gatekeeper, because within an HMO, you have to select a doctor who is part of the plan’s network and that doctor will approve your requests to see specialists. If you travel a great deal, make sure to find out exactly what the terms are in the event you require an out-of-network physician. Generally, if there is an in-network provider in the area, there will be no benefit paid for seeing one who is outside the network.
A PPO, or Preferred Provider Organization, can be viewed as a mix of HMO and fee-for-service plan. You’ll usually use medical service providers who are members of the network, but the PPO will still pay a portion of your expenses even if you visit a healthcare provider who is outside the network. The benefit paid for out-of-network treatment is often significantly less than that paid for in-network treatment.
These are just a few of the health insurance policy options available. A number of additional options exist including high-deductible plans combined with health savings accounts and even, for some, catastrophic/major medical plans. It’s a good idea to discuss all of these options with an industry professional so you can be sure you make the best choice for you and your family.