The basics of health insurance:
Individual and family health insurance?
Individual and family health insurance is a type of health insurance coverage made available directly to individuals and families rather than through employer groups or organizations.
What is the best health insurance plan for you?
The plan that works best for you and your family may be different than the best plan for someone else. There is no single perfect plan for everyone.
Do you need long-term coverage or short-term coverage?
If you are in between jobs for one to six months, short-term coverage may be the best option. If you need coverage for more than six months, the stability and increased benefits offered through an individual and family health insurance plan may better fit your needs.
Do you need basic coverage or more comprehensive coverage?
Some insurance plans offer basic coverage (i.e., primarily inpatient hospitalization and outpatient surgery coverage) in case of a major accident or illness. Basic coverage insurance plans generally have a lower monthly premium than plans with more comprehensive coverage. These plans and may be appropriate for people who intend to use their insurance primarily in the event of a serious accident or illness.
Comprehensive coverage plans may include benefits like preventative care, physician services, prescription drug benefits, and routine office visits. These insurance plans typically have a higher monthly premium and may be appropriate for people who intend to use their insurance on a regular basis.
Would you rather pay for your services before you use them or when you use them?
Plans with a higher monthly premium generally have a lower co-pay at the time of a doctor visit which may be more economical if you expect frequent doctor visits such as with small children..
If you aren’t likely to use your health insurance frequently a higher-deductible plan with a lower monthly premium may be the best option.
How important is easy access to health care specialists?
Some health insurance plans require you to coordinate your care through a primary care physician and usually obtain a referral from your primary physician before you may see a specialist.
If you prefer direct access to specialists you may wish to consider a different type of plan.
Do you have a specific doctor or hospital that you would like to visit for healthcare?
Some insurance plans use provider networks. You'll want to make sure your favorite doctor or hospital is included in the network before purchasing a particular health insurance plan.
How much of your own money can you afford to pay out-of-pocket in case of a serious illness or injury?
What kinds of individuals and family insurance plans are available?
Individual and family health insurance plans are usually described as either indemnity or managed-care plans. Major differences include the choice of healthcare providers, out-of-pocket costs, and how bills are paid.
In general, you'll have less paperwork and lower out-of-pocket costs with a managed care health insurance plan and a broader choice of healthcare providers with an indemnity plan.
Indemnity plans. Most indemnity plans offer a broader selection of healthcare providers than managed- care plans. Indemnity plans pay their share of the costs for covered services only after they receive a bill which means you may have to pay up front for your medical services and then obtain reimbursement from your health insurance company.
Managed-care plans. There are several different types of managed-care health insurance plans. These include Health Maintenance Organization (HMO), Preferred Provider Organization (PPO) , and Point of Service (POS) plans.
Managed-care plans often use of healthcare provider networks. Healthcare providers within a network agree to perform services for managed-care plan patients at pre-negotiated rates and usually submit the claim to the insurance company for you.
How does a Health Maintenance Organization (HMO) plan work?
HMO plans typically enable members to have lower out-of-pocket healthcare expenses but offer fewer choices to physicians or hospitals than other health insurance plans. A primary care physician (PCP) is required and will take care of most of your healthcare needs. Before seeing a specialist a referral is needed from the PCP.
HMO plans also generally have coverage for a broader range of preventive healthcare services than other plans. A deductible before coverage starts may not be required and co-payments may be minimal. With an HMO plan, you typically don't have to submit any of your own claims to the insurance company. However, in most cases you do not have coverage for services received by non-network providers or for services received without a proper referral from a PCP.
How does a Preferred Provider Organization (PPO) plan work?
Most members of a PPO plan use the insurance company's network of preferred doctors and hospitals. These healthcare providers have been contracted to provide services to members of the health insurance plan at a discounted rate. Generally an annual deductible is to be paid before the insurance company starts covering any medical bills.
With a PPO plan, services received by an out-of-network physician are usually covered at a lower percentage than services rendered by a network physician.
How does a Point of Service (POS) plan work?
A POS plan combines features offered by HMO and PPO plans. As with an HMO, members of a POS plan are required to choose a primary care physician (PCP) from the plan's network of providers. Services received by your PCP generally are not subject to a deductible and, like HMOs, POS plans typically offer coverage for preventive care visits.
A higher level of coverage for services rendered or referred by your PCP are usually given where services received by a non-network provider may be subject to a deductible and covered at a lower level.
How does an indemnity plan work?
A traditional indemnity plan offers a choice of doctors and hospitals but involves higher out-of-pocket costs and more paperwork. You may see the doctors and specialists of your choice with no referrals required. Although you may choose to get the majority of your basic care from a single doctor, you will not be required to choose a primary care physician.
With an indemnity plan you may be required to pay an annual deductible before the insurance company begins to pay on your claims. Once your deductible has been met, the insurance company will generally pay your claims at a set percentage of the usual, customary and reasonable (UCR) rate for the service. The UCR rate is the amount that healthcare providers in your area typically charge for any given service. You may be required to pay up front for services and then submit a claim to the insurance company for reimbursement.
How does a Health Savings Account (HSA) work?
Legislation establishing HSAs took effect on January 1, 2004. HSAs and HSA-eligible health insurance plans are becoming more popular. Here are the basics:
A HSA is a tax-favored savings account that may be used in conjunction with a HSA-eligible high deductible health insurance plan to pay for qualifying medical expenses.
Usually the monthly premium on a HSA-eligible high deductible plan is less expensive than the monthly premium for a lower-deductible health insurance plan.
Contributions to a HSA may be made pre-tax up to certain annual limits.
Funds in the HSA may be invested at your discretion. Unused funds remain in the account and accrue interest tax-free year-to-year.
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