Health insurance protects against the costs of medical services and are programs that help pay for medical expenses.
Whether your employer gives you a choice for
Health Insurance or you need to purchase your own
private health coverage, it is crucial that you understand your health insurance choices and pick the health insurance plan that’s best for you and your family. It can be a matter of life or death!
Here are some questions you should ask yourself when choosing health insurance:
1. How affordable is the cost of care?
- What is the monthly health insurance premium I will have to pay?
- Should I try to insure most of my medical expenses or just the large ones?
- What deductibles will I have to pay out-of-pocket before my health insurance starts to pay?
- After I have met my deductible, what percentage of my covered medical expenses are paid for by my health insurance?
- How much more will I pay and what is covered if I use doctors outside the health insurance company’s network?
2. Does the Health Insurance Plan cover the services I am likely to use?
- Are the doctors, hospitals, laboratories and other medical providers that I use in the health insurance company’s network?
- If I want to use a doctor outside the network, will the health insurance plan permit it?
- How easily can I change primary-care physicians if I want to?
- Do I need to get permission before I see a medical specialist?
- What are the procedures for getting care and being covered in an emergency situation, both at home or out of town?
- If I have a pre-existing medical condition, will the health insurance plan cover it?
- If I have a chronic condition such as diabetes, asthma, cancer, AIDS or alcoholism, how will the plan cover it?
- Are the prescription medicines that I use covered by the medical plan?
- Does the health insurance plan cover alternative medical therapies such as acupuncture or chiropractic treatment?
- Does the plan cover the costs of delivering a baby?
What are my health insurance choices?
There are essentially three types of health insurance coverage options.
The differences include things like the choice of providers, out-of-pocket costs for covered services and how bills are paid. There is no one “best” health insurance plan for everyone.
Some plans are better than others for you or your family’s health care needs, but no one health insurance plan will pay for all the costs associated with your medical care. Always review your specific available choices with your employer, a health insurance professional, or the appropriate government agency.
Types of Health Insurance
Here is a brief description of the types of health insurance available:
A. Managed Care Options
B. Indemnity Plans
C. Government-Sponsored Health Insurance
A. Managed Care Options
Health Maintenance Organizations (HMOs) offer access to an extensive network of participating physicians, hospitals and other health care professionals and facilities. You choose a primary care doctor from a list provided by the HMO and this doctor coordinates your health care. You must contact your primary care doctor to be referred to a specialist. Generally, you pay fewer out-of-pocket expenses with an HMO, but you are usually charged a fee or co-payment for services such as doctor visits or prescriptions.
Point-of-Service (POS) Plans are indemnity-type options in which the primary care doctors in the POS plan usually make referrals to other providers within the plan. If a doctor makes a referral out of the plan, the plan pays all or most of the bill. However, if you refer yourself to an outside provider, the service may still be covered by the plan, but you may be required to pay co-insurance.
Preferred Provider Organizations (PPO) charge on a fee-for-service basis. The participating doctors, hospitals and health care providers are paid by the insurer on a negotiated, discounted fee schedule. Costs are lower if you use in-network healthcare services, but you have the option of going out-of-network. Be advised that if you choose an out-of-network provider, you will generally be required to pay the difference between what the provider charges and what the plan pays. It should be understood that you will pay more in out-of-pocket expense for an out-of-network physician than an in-network physician.
B. Indemnity Plans
Cafeteria/Flexible Spending Plans are employer-sponsored health insurance plans that allow the employee some choice in his or her own employee benefit package, choosing between one or more employee benefits and/or cash.
Indemnity Health Insurance Plans allow you to choose your health care providers and go to any doctor, hospital or provider for a set monthly premium. Your health care providers are reimbursed on the basis of services rendered. A deductible may apply. There may also be an annual limit on out-of-pocket expenses, so when an individual or family reaches the limit, the insurance covers the remaining eligible medical expenses in full. Sometimes these plans impose restrictions on covered services and may require prior authorization for hospital care or other expensive services.
‘Basic and Essential’ Health Plans provide limited health insurance benefits at a considerably lower cost. If you buy this, it is extremely important to read the policy description carefully because these health insurance plans don’t cover some basic treatments, such as chemotherapy, certain prescriptions and maternity care. Furthermore, rates vary considerably because, unlike Indemnity Plans or a Managed Care Option, premiums are community rated and are based on age, gender, health status, occupation or geographic location.
Health Savings Accounts (HSAs) are a recent alternative to traditional health insurance. HSAs are generally a savings product that you manage. HSAs enable you to pay for qualified health expenses, and you can start saving for future qualified retiree medical expenses on a tax-deferred basis as well.
These plans can potentially
reduce health insurance premiums because HSAs are typically associated with higher deductible plans. Your qualified yearly-allowed account contribution establishes a one-time yearly tax deduction for that amount off the top of your gross income for that particular year.
HSAs cover your annual qualified out-of-pocket medical expenses up to and until your plan’s deductible is met for the year. You make all decisions about how to spend the money within the plan’s parameters. If managed properly, an HSA account with funds left over for the year can be rolled over to the next year’s account. Just remember, once a contribution is made into an HSA account it cannot be take out and used for any other purpose without penalty other than for qualified medical expenses.
As with many other plans, once you meet your plan’s deductible for the year the insurance company picks up its portion of the remainder of your covered medical expenses for the year according to your plan’s terms.
High-Deductible Health Plans (HDHP) are sometimes referred to as catastrophic health insurance coverage. An HDHP can be a less expensive alternative health insurance plan that kicks in only after a high deductible is met.
C. Government-Sponsored Health Insurance
Medicaid is a federal/state public assistance program. It is administered by the states for people whose income and resources are insufficient to pay for health care or private insurance. All states have Medicaid programs, though eligibility levels and coverage benefits vary.
Medicare is a federal government program for people 65 and older, or those with certain disabilities, that pays part of the costs associated with hospitalization, surgery, doctors’ bills, home health care and skilled-nursing care.
State Children’s Health Insurance Program (SCHIP) is administered at the state level and provides health care to low-income children whose parents do not qualify for Medicaid. SCHIP may be known by different names in different states.
Military Health Care includes TRICARE/CHAMPUS (Civilian Health and Medical Program of the Uniformed Services) and CHAMPVA (Civilian Health and Medical Program of the Department of Veterans Affairs) as well as care provided by the Department of Veterans Affairs (VA).
State-specific Plans are available for low-income uninsured individuals. These plans are known by different names in different states.
Indian Health Service (IHS) is a Department of Health and Human Services program offering medical assistance to eligible American Indians at HIS facilities. In addition, the HIS helps pay the cost of selected health care services provided at non-HIS facilities.
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Disclaimer: Content and illustrations represented and provided here-in are for informational purposes only. This information should not be misconstrued to be considered Insurance or Binder Coverage for Insurance. Always consult a licensed insurance agent in the state of Texas for specific insurance coverage types and needs analysis as insurance policies in Texas vary.
Sources used to gather content for this Article and all Articles provided in this Series include:
The Costlow Insurance Group, Inc. /
www.costlowinsurance.com
a. The Insurance Information Institute /
http://www.iii.org
b. The Texas Department of Insurance /
http://www.tdi.state.tx.us
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