Looking for health insurance but don’t know an indemnity plan from a Preferred Provider Organization? We’ve got you covered.
Trying to wrap your head around all of the different health insurance plans, policies, and types that are available today can be a confusing and daunting task at any time, but it’s especially likely to feel that way when you’re actively--and possibly desperately--shopping for it.
After all, in situations like that, who has the patience or energy to figure out the difference between an indemnity plan and a managed care plan--or, worse yet, the difference between a Preferred Provider Organization, a Health Maintenance Organization, and an Exclusive Provider Organization?
Add in the various “metal level” categories tied to the federal and state-based health exchanges, created as a result of 2010’s Affordable Care Act, as well as the many varieties of supplemental and limited-benefit options that currently are on offer, and you’ve got a lot of information to consider when time is of the essence.
Given all of the above, it may be best to start at the beginning and take a high-level look at the subject. For example, did you know there are two basic “types” of health insurance you’re likely to come across during your search for the perfect plan (for you and any loved ones you may be looking for cover)? Well, there are, and they’re known as indemnity plans and managed care plans.
Sometimes referred to as "fee-for-service” plans, these are the oldest (as in, they were the go-to forms of health insurance before HMOs, PPOs and the like came onto the scene) and most flexible of the health insurance options available today. These plans aren’t tied to a provider network like their managed care counterparts tend to be, which means you’re free to go to whichever doctors, hospitals, and other facilities you prefer. Also, you won’t need one of those pesky referrals should you ever want or need to see a specialist.
There’s a catch to all of this freedom, of course. For starters, while an indemnity plan is likely to cover pretty much any health-related service you may throw at it (as long as it’s included in your contract, of course), it’s unlikely to completely pay for it. Instead, you’ll have to pay a certain, set amount of money—a deductible—each year before your insurance provider starts kicking in its share. After that, you’ll be responsible for just a portion of your healthcare costs (known as coinsurance or co-pays, depending on the situation).
Note: indemnity plans usually don't cover preventive care (birth control, flu shots and the like), and occasionally they don’t cover prescription drugs or psychotherapy, so check with your insurance provider or a licensed insurance agent if you have any questions or concerns related to these areas.
There are many more options when it comes to managed care plans, with Exclusive Provider Organization, Health Maintenance Organization, Point of Service, and Preferred Provider Organization plans being the ones you’re mostly likely to encounter during your insurance-shopping extravaganza.
Here is a bit of information on each of these plans:
These are among the most restrictive of the managed-care options, as you’ll have to use the physicians, specialists, hospitals, and other facilities with the EPO’s approved network of providers if you want the care you receive to be covered by insurance. (Unlike most Health Maintenance Organization plans, though, you won’t be forced to find and name a primary care provider as part of an EPO plan.)
And if you go outside of that network for any sort of health or medical assistance? You probably won’t be reimbursed for it—sometimes even in the case of emergencies.
As mentioned in the blurb above, if you wind up with an HMO plan, you’ll probably begin your relationship with your new insurer by choosing a primary care provider. From then on, that doctor will manage the majority of your healthcare needs.
Other than that, HMO plans are pretty similar to EPOs, as both limit coverage to authorized care that’s provided by physicians, labs, hospitals, etc., that are “in network,” or that have contracts with your insurance company. (Which is to say that you’ll probably be on your own when it comes to paying for unauthorized or out-of-network care, although HMOs tend to be a bit more lenient in this area—in that they’ll sometimes cover a portion of care that’s provided outside their network or they’ll cover emergency treatment done at an out-of-network hospital.)
One attractive quality attached to HMO plans: other than a monthly premium, you’ll probably only have to pay a small deductible (if you have to pay one at all) as well as a similarly small fee—called a copay—whenever you see your primary care provider or otherwise seek medical assistance.
If you’re looking for a health insurance policy that allows for a bit more freedom than the EPO and HMO plans described above, you may want to consider a PPO plan.
That’s because although PPOs push you to use care providers who are part of their network—by letting you pay a smaller deductible for those services—you’re free to seek assistance elsewhere (and without a referral), if that’s what you want to do. You’ll pay a greater share of the costs related to that kind of out-of-network attention, though. (An example of this: your insurer may reimburse you for 80 percent of your in-network costs but just 60 percent of your out-of-network ones.)
If you tossed the components that make up the HMO and PPO plans detailed earlier into a blender, the resulting mixture would look a lot like a POS plan.
After all, much like HMOs, POS plans usually will ask that you name an in-network doctor who will serve as your primary care provider moving forward.
Like PPOs, though, you can venture outside of the insurer’s network of providers to receive care, although you'll probably have to pay a deductible and higher copay in such situations. That said, if you get a referral from your primary care provider for that out-of-network assistance, your POS plan may pay all or some of the resulting costs.
You’ve probably noticed that words like usually, typically, probably, and likely are used quite a few times in the sentences and paragraphs above.
There’s a good reason for that, and it is that the lines between all of these types of health insurance plans—EPOs, HMOs, PPOs, and POSes—often can seem more than a little blurry.
Assuming you’re going through either the federal or one of the state-based health insurance marketplaces (or exchanges) that were created as a result of the Affordable Care Act, you’ll have to do more than just choose between some or all of the plan “types” detailed earlier in this article.
(You can read more about these “health exchanges,” as well as the Affordable Care Act, in our “Understanding the Affordable Care Act” article.)
You’ll also have to choose between the following categories, which are tied to how you and your plan will share the costs of your healthcare:
Note: although catastrophic plans usually have lower monthly premiums than the more comprehensive plans mentioned previously, they only cover your costs after you’ve received quite a lot of care--to the tune of, say, several thousand dollars.
Sometimes, all you want is insurance that will cover specific ailments, diseases, or healthcare settings or situations. A good number of plans, policies, and options offer just that, thankfully, including the following:
These insurance policies tend to cover death, dismemberment, or disability that’s caused by an accident. They also usually cover hospital stays or other medical care and treatment that are associated with an accident.
Insurance companies are sure to differ in how they define some of these terms, by the way, so be sure to check the fine print of any related contract—or talk with an agent or broker--before you sign on the dotted line.
This kind of coverage provides payments, typically on a weekly or monthly basis, if a covered injury or illness disables you in some way.
Also sometimes called “Hospital Confinement Indemnity Coverage,” this kind of insurance pays out if you find yourself in a hospital for whatever reason.
How much of your hospital stay--or any associated costs--is covered, though, will depend on the kind of policy you purchase.
For example, some of these “hospital confinement” policies require that you stay at least one night in a hospital before you can receive a benefit, while other plans allow you to receive a benefit even if you have an out-patient procedure. Also, others may help pay for stays in skilled nursing facilities or even home care.
Accidents happen, as do injuries, illnesses, and other health issues that can result in you or a loved one being placed in an assisted living community or a skilled-nursing facility or even requiring at-home assistance for a period of time. Long-term care coverage can ease some of the costs associated with these “extended care” situations.
Although Medicare pays the majority of the healthcare costs for people aged 65 and older (or those who are younger than 65 and receiving Social Security disability benefits) it doesn’t pay all of them. This coverage can help fill that gap.
These plans and policies cover the diagnosis and treatment of a specifically named disease, like cancer.
Finally, you also can purchase insurance that covers just your dental or vision care needs.
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