Health Insurance
Information Page
What is individual
and family health insurance?
Individual
and family health insurance is a type of health
insurance coverage that is made available to individuals and
families, rather than to employer groups or organizations. Given
the option, most people would prefer to have their employer
provide group health insurance coverage. But,
if this is not an option for you, it is still important for
you to seek coverage. You may be pleasantly surprised with the
variety and affordability of the individual and family health
insurance options available. What kinds of individual and family
insurance plans are available?
Individual and family
health insurance plans are usually described as either "indemnity"
or "managed-care" plans. Put broadly, the major differences
concern choice of healthcare providers, out-of-pocket costs
and how bills are paid.
Typically, 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
that you may have to pay up front and then obtain reimbursement
from your health insurance company).
There are several
different types of managed-care health insurance plans. These
include HMO, PPO, and POS
plans. Managed-care plans typically make use of healthcare provider
networks. Healthcare providers within a network agree to perform
services for managed-care plan patients at pre-negotiated rates
and will usually submit the claim to the insurance company for
you. 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.
How does
a PPO plan work?
As a member of a
PPO (Preferred Provider Organization) plan, you'll be encouraged
to use the insurance company's network of preferred doctors
and hospitals. These healthcare providers have been contracted
to provide services to the health insurance plan's members at
a discounted rate. You typically won't be required to pick a
primary care physician but will be able to see doctors and specialists
within the network at your own discretion. You will probably
have an annual deductible to pay before the insurance company
starts covering your medical bills. You may also have a co-payment
for certain services or be required to cover a certain percentage
of the total charges for your medical bills. With a PPO plan,
services rendered by an out-of-network physician are typically
covered at a lower percentage than services rendered by a network
physician.
How does
an HMO plan work?
Though there are
many variations, HMO (Health Maintenance Organizations) plans
typically enable members to have lower out-of-pocket healthcare
expenses but also offer less flexibility in the choice of physicians
or hospital than other health insurance plans. As a member of
an HMO, you'll be required to choose a primary care physician
(PCP). Your PCP will take care of most of your healthcare needs.
Before you can see a specialist, you'll need to obtain a referral
from your PCP. With an HMO you'll likely have coverage for a
broader range of preventive healthcare services than you would
through another type of plan. You may not be required to pay
a deductible before coverage starts and your co-payments will
likely be minimal. With an HMO plan, you typically won't have
to submit any of your own claims to the insurance company. However,
keep in mind that you'll likely have no coverage whatsoever
for services rendered by non-network providers or for services
rendered without a proper referral from your PCP.
What is a
co-payment?
A "co-payment"
or "co-pay" is a specific charge that your health
insurance plan may require that you pay for a specific medical
service or supply. For example, your health insurance plan may
require a $15 co-payment for an office visit or brand-name prescription
drug, after which the insurance company often pays the remainder
of the charges.
What is a
deductible?
A "deductible"
is a specific dollar amount that your health insurance company
may require that you pay out-of-pocket each year before your
health insurance plan begins to make payments for claims. Not
all health insurance plans require a deductible. As a general
rule (though there are many exceptions), HMO plans typically
do not require a deductible, while most Indemnity and PPO plans
do.
What is coinsurance?
Coinsurance is the
term used by health insurance companies to refer to the amount
that you are required to pay for a medical claim, apart from
any co-payments or deductible. For example, if your health insurance
plan has a 20% coinsurance requirement (and does not have any
additional co-payment or deductible requirements), then a $100
medical bill would cost you $20, and the insurance company would
pay the remaining $80.
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