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Assessing Your Employer's Health Insurance Options
Confused about which medical plan to choose? This mini-guide will explain the basics of your health care insurance options, including the difference between HMOs, PPOs, and indemnity coverage, and give you some smart suggestions for evaluating and selecting a plan that's right for you.
Selecting a health insurance policy is a matter of balancing the cost of a plan with the amount of coverage you need and the degree of choice you want.
You never had to think about health insurance before the HR
rep at your new job started talking about deductibles,
exclusions, co-payments, and out-of-pocket expenses. Now she
wants to know which plan you're going to enroll in -- the
HMO? the PPO? the POS? the fee-for-service?
This mini-guide will explain the basics (the difference between HMO and PPOs, for starters) and give you some smart suggestions for selecting a plan that's right for you or evaluating the plan offered by your employer.
What's the difference?
While your employers may offer you this kind of traditional plan, the majority of health care plans available to consumers are managed care plans, in which members are served by specific networks of doctors and hospitals. Managed care is a relatively new system in the United States. It was designed with the intention of managing the rising costs of health care in this country and, at the same time, to regulate the care you receive. There are three major types of managed care plans: HMOs, PPOs, and POS plans.
All employers with more than 25 workers are now required by federal law to offer an HMO plan to its employees. The main differences between managed care options - HMOs, PPOs, and POS plans - are the freedom of choice of providers and the amount of "gatekeeping" there is to specialty services. Let's take a closer look at the options.
HMO Plans HMOs, which stands for Health Maintenance Organizations, are prepaid health plans that provide services within one physician/hospital network. HMOs give members a list of doctors from which to choose a primary care physician. This doctor coordinates your care, which means you generally must contact him or her to be referred to a specialist. If you receive care from a network doctor, you are charged only a co-pay for each visit, usually $5 or $10. If you receive care without a primary care doctor's referral, or obtain care from a non-network member, you receive no reimbursement. HMOs are the most restrictive managed care plan, but they often have the lowest premiums.
PPO Plans A PPO, or Preferred Provider Organization, contracts with various doctors and hospitals in the community. Unlike an HMO, you may choose to see a doctor who is not included in the plan, in which case you have to meet your deductible and pay coinsurance based on higher charges.
POS Plans Many HMOs offer an indemnity-type option called a POS, or point-of-service, plan. A POS plan is like an HMO in that enrollees are assigned to a primary care doctor within the POS network. But like a PPO, POS enrollees can go out of the network for medical care by paying a larger share of the cost.What's the same?
With any health plan, there is a basic premium, which is how much you or your employer pay, usually monthly, to buy health insurance coverage. Group plans, like the ones offered through employers, are usually the most affordable. In addition to the premium, there are other payments that you or your employer will have to make, and these vary by plan.
Most plans provide basic preventative health care coverage,
but the details are what counts. The best plan for someone
else may not be the best plan for you. For each policy you
are considering, find out how it handles these
Choice The degree of freedom you have in selecting a doctor or hospital depends on the type of plan you select. How much choice you want is a personal decision.
Trade-offs What trade-offs are you willing to make? Selecting a health insurance policy is a matter of balancing the cost of a plan with the amount of coverage you need and the degree of choice you want. Consider all three elements in your decision.
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