Insurance Facts & Definitions
When choosing an insurance plan, you must decide what is most important to you. No single policy covers everything. Your aim should be to insure yourself and your family against the most serious and financially disastrous losses that can result from an accident or illness.
Ask yourself these questions
- How comprehensive do I want coverage of healthcare services to be?How do I feel about policy limits or choice of doctors or hospitals?How do I feel about using a primary care physician (PCP) and the need to obtain referrals to seek specialist care?How important is the cost of services?
- How much am I willing to spend on premiums and other health care costs, such as deductibles and co-insurance?
Also think about whether the services a plan offers meets your needs:
- Are you thinking about starting a family?Do you have any chronic health conditions or disabilities?Do you travel frequently?
- Will you be traveling outside the United States and does the carrier provide worldwide coverage?
After you ask yourself these questions and find out what is important to you in a health insurance policy, you can begin to compare plans. You should consider plan benefits, choice of providers, and costs.
Plan Benefits
Look at the covered services offered by each plan. What services are limited? What services are not covered (exclusions)? What are your options if you disagree with a plan's decision on medical care or coverage (your appeals process).
Choice
What medical providers and hospitals can you use? Do you need to work through a Primary Care Physician (PCP)? Do you need approval prior to going to the hospital or to have out patient surgery (pre-certification) for insurance coverage?
Costs
No health insurance plan will cover every expense. Here are some things to look at:
Are there deductibles that you have to pay before the insurance begins to cover your expenses? After you have satisfied your deductible, what part of your costs are paid by the plan? Does the amount that the plan will pay vary by the type of service, doctor, or health facility used? Are there co-payments? Is there a maximum limit on how much the plan will pay for your care in a year? Per accident or illness? Over a lifetime? If your plan uses a network/primary care physicians, and you use a provider outside your network, how much will you have to pay out of pocket? Is a non-network service covered at all?
Types of Plans and Definitions
Indemnity Plan
With an Indemnity Plan (fee-for-service), you can use any doctor or hospital. You or they can send the bill to the insurance company. Usually you have a deductible to pay each year before the insurance carrier starts paying. Once you have "satisfied" the deductible, most indemnity plans pay a percentage of the "Usual and Customary" charge for covered services. The insurer generally pays 80% of the Usual and Customary Charge and you pay the other 20%. This is known as co-insurance. If the provider charges more than the Usual and Customary rates, you will have to pay both the co-insurance and the difference. Many indemnity plans do not pay for preventative care and wellness services.
Managed Care
The alphabet soup of managed care terms can be confusing. These plans have been in Maine for several years now and are rapidly replacing the traditional indemnity plans. Managed care plans are concerned with keeping you healthy, a departure from the indemnity plans which rarely cover preventative care issues. One current drawback to managed care plans is the lack of doctors and hospitals available in certain areas ("networks").
Out-of-network claims are often paid on a balance-billing system. This means that the carrier will pay the out-of-network doctor the same amount that they would have paid an in-network doctor. Any difference will be passed on to you as the insured, unless you can personally negotiate with the provider to reduce or eliminate that difference. This can mean a substantial amount of money due over and above any deductible and co-insurance. The least restrictive type of managed care plan is the Preferred Provider Organization (PPO); while the most restrictive is the Health Maintenance Organization (HMO). As you move up the healthcare continuum from least restrictive to most restrictive, you receive a higher level of benefits with less out-of-pocket to the insured, but you loose the freedom of choice to select any provider.
Preferred Provider Organization (PPO)
A PPO is a form of managed care closest to an indemnity plan, and the least restrictive of the managed care options. As long as you stay within the list of doctors and hospitals in the network, you will receive the highest level of benefits. You do not need to name a primary care physician (PCP), nor do you need to obtain a referral before seeing a specialist. Depending on the plan, in-network may have no deductible. Almost all plans have a better co-insurance amount for in-network services (for example, in network is covered at 80% and out-of-network is covered at 60%). Sometimes there is a separate hospital deductible for out-of-network hospital services.
One very important question to ask a PPO carrier (especially if you are living in Northern Maine) is what happens if there are no doctors in the network in the area in which you live? Some carriers will allow you to see an out-of-network physician and treat it as an in-network visit. Other carriers will make no exception and if the closest network doctor is 150 miles away, that is where you must go to seek services. Even if permission is granted to go out-of-network with benefits payable at the highest level, you are often still responsible for any balance billing.
Point of Service (POS)
A Point of Service Plan operates as an HMO in-network and a traditional indemnity plan out-of-network. You do name a primary care physician and use the PCP as your healthcare "gatekeeper." Your PCP will refer you to other providers in the plan, but you can also refer yourself outside the plan and still get some coverage. If your doctor (PCP) refers you outside the network, the plan still pays all or most of the bill. If you refer yourself to a provider outside the network and the service is covered by the plan, you will have to pay co-insurance. There is a strong incentive to stay in the network, but at least there will be some coverage for out-of-network services.
Health Maintenance Organizations (HMO)
The HMO is the oldest form of managed care. It is the most restrictive but generally has the highest level of benefits. HMOs offer members a range of health benefits, including preventative care, for a set monthly fee. HMOs will give you a list of doctors from which to choose a Primary Care Physician (PCP). Your PCP coordinates your care and all services (with three exceptions) must have a referral from that doctor or the claim will not be paid. This includes visits to specialists, hospitalization, surgery, and tests by specialists. Most companies have a copy of your referrals sent to you. If you do not receive a copy or if the information contained in the referral is not correct, call your PCP immediately. Also, it is possible to obtain a referral for multiple visits to a specialist. For example, your PCP may issue you a referral for 5 visits to a specialist. When you have seen the specialist 5 times, and if treatment needs to continue, a new referral will be needed.
There are, however, three areas where you may self-refer in an HMO:
- Women can self refer their annual gynecological exam (keep in mind, however, that you still must use a network GYN specialist). Two other important notes about your annual GYN exam: a. If your GYN advises that a mammogram is needed, and if it is done at a separate site or as a separate billing by your gynecologist, you will need to obtain a referral for the mammogram from your Primary Care Physician. b. During your gynecological exam (and eye exam, see item #3), if your specialist requires further testing or follow-up visits, then a referral from your PCP must be obtained.You may self-refer to a chiropractor. The number of how many visits you may have on a self-referred basis is up to your insurance carrier, so make sure you check on this.
- You may self-refer for eye exams (eye exams may not be a covered expense under your insurance policy, so check this benefit out as well).
This was intended to be a brief and general summary with regard to health insurance. It was not intended to cover all the specifics of different plans and carriers. Please check your benefits carefully!
