Self-Employed
STEP 2: CHOOSE A HEALTH PLAN PRODUCT AND POLICY THAT
BEST MEET YOUR NEEDS.
Once you have prioritized the costs and services you
want from a plan, you now need to decide the type of health plan and policy
that best meets your needs.
COMMON TYPES OF HEALTH PLANS
What type of health care coverage will work best for
you and your family? Your decision will depend on cost, provider choice, and
the types of health care services offered in the health plan product.
From a practical standpoint, the cost factor likely
will be very important to you. Health plan costs vary greatly. Make sure you
understand the costs of the various plans that are available and compare them.
There are two major types of health plan products:
indemnity or fee-for-service and
managed
care.
Fee-for-Service
An
indemnity
plan allows you to use any medical provider or hospital. You or the health
care provider submits the bill to the insurance company, which will pay for
part of it. Usually you first pay a
deductible
and then your insurance picks up the remaining balance.
Once you meet the deductible, most
indemnity
plans pay a percentage of what they consider the "usual and customary"
charges for covered services. The insurer usually will pay 80% of the health
care cost and the individual usually pays 20% of the health care cost. The plan
may not pay for provider charges deemed higher than usual or customary rates.
In this case, the individual pays those outside costs.
Managed Care Health Plans
There are three types of major
managed
care health plans. These health plans generally provide comprehensive
health services to their participants and offer financial incentives for
patients to use the providers who belong to the plan. Plan participants often
are required to pay a low-cost
co-payment for
each medical service received. Often a member's health coverage is paid in
advance (pre-paid care). Fees and reimbursement for health care provider and
hospital services are negotiated when purchasing the health plan.
Health Maintenance
Organizations
Health maintenance organizations
(HMOs) generally
provide participants with access to a fairly strict
network of
health care providers for services such as
preventive
care and medical treatments. Although participants do not have to pay a
deductible, there is usually a monthly premium, and participants often need to
pay only a small co-pay at the time the medical
service is delivered and for prescriptions.
The
HMO covers 100% of
the medical services provided. Participants are often required to select a
primary care
physician, who coordinates a participant's treatment and who can refer him
or her to specialists within the
HMO
network as
needed. If a participant selects health care services out of the "network," he
or she usually will be responsible for 100% of the medical care costs.
Preferred Provider Organizations
Preferred provider organizations
(PPO) are similar
to HMOs in that they offer participants a
network of
health care providers and require participants to pay a
co-payment for
individual medical services. Unlike
HMOs,
PPOs allow
participants to seek care outside the network. Using an
out-of-network
provider, however, typically increases the required co-payment. Also unlike
HMOs,
PPOs don't require
participants to have a
primary care
physician or a
referral to
be treated by a specialist.
PPOs often require
deductibles and have higher co-payments than
HMOs, but they
also offer a broader choice of health care providers and services.
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Point-of-Service Plan
The point-of-service (POS) plan is a combination of
HMOs and
PPOs. It offers
participants more freedom to choose their own health care providers and
services, combined with the lower cost of an
HMO.
As with an
HMO,
POS participants
must select a primary care physician within a defined health care
network. This
physician can make
referrals to
specialists within and outside of the
network.
Similar to an HMO,
there is no deductible for
in-network
care, and participants are only required to pay a small
co-payment at
the time of service.
If medical care is provided outside of the
network, the
participant will be responsible for first meeting a
deductible
and then paying for either a percentage of the incurred expenses not covered by
the POS plan or
the difference between what the health care provider charges and what the
health plan deems to be a "reasonable and customary" cost for the service.
COMMON HEALTH PLAN POLICIES
Major Medical
This policy provides benefits for most medical
expenses, up to a certain maximum amount, whether an individual receives
services in or out of the hospital. It is often referred to as "comprehensive
coverage."
Basic Hospital
Just the basics, such as room and board and
miscellaneous hospital expenses, are covered under this policy. Expenses
related to emergency room care, surgery, outpatient treatment, or non-hospital
related health services are typically not covered.
Basic Hospital Medical-Surgical
These policies provide the same coverage as a basic
hospital policy plus a benefit for emergency room care and surgery.
Short-Term Major Medical
Short-term insurance is a non-renewable, inexpensive
source of coverage. This
health
insurance coverage has policies that range from 1 to 12 months and is a
good option if COBRA is not available and a job
with benefits will start within a few months. Plans typically provide lists of
doctors who decrease patients'
co-payment but
allow patients to visit other doctors for a higher out-of-pocket fee. Charges
vary, but typically range from $30 to $150 a month, depending on factors that
include co-payment structure and
deductibles.
Accident Only
Coverage extends only for injury from an accident and
excludes sickness. Benefits may be paid for death, disability, dismemberment,
or hospital and medical expenses.
Disability Income Protection
This is sometimes called "loss of time insurance." The
coverage provides periodic payments to replace income actually or potentially
lost when the insured is unable to work because of sickness or injury.
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