Explaining Health Insurance Options
Health insurance believe it or not has only been around for the last half century. Among the first plans in the country were the Kaiser Permanente plans in California, and the Chicago plan which is the forerunner of BCBS in Illlinois. Both programs were put together to provide employess with a way to combat the increasing cost of medical care.
Healthcare has changed since the days of family doctors and house calls. Today the rising cost of everything from prescription drugs to diagnostic treatments has us turning to managed care networks for workable health care solutions.
Times may have changed, but there are still a number of good alternative insurance options to consider. Health plans can be broken down into four basic categories, HMOs, POSs, PPOs and Fee-for-Service (Indemnity) Plans.
The Four Basic Health Plans
Health Maintenance Organizations: By choosing an HMO Plan, you'll be paying for your coverage in advance, rather than paying for each health related service separately. For the price of a monthly premium, your HMO will offer you a range of benefits from preventative care to dental or vision coverage.
When it comes to your doctors, more often than not they will be employees of your health plan. You will need to choose what's known as a primary care giver, who will be responsible for coordinating your care your HMO will provide you with a list of providers. The majority of HMO plans require a co-payment for an office visit, a hospital stay, or specialist health service.
HMO's never have been popular in Illinois, and many have ceased doing business, in fact there isn't even a plan left available for individuals, it is a group only option at this point. HMOs's are still popular in the Northeast, and the Northwest.
For a better idea of how an HMO works, check out the article here.
Point of Service Plans: POS plans are HMO's that allow you to control your own health care, rather than insisting on referrals from your primary care physician. Whenever you have a medical need, you'll have three point of service choices.
- Go through your primary care physician, and receive coverage under HMO guidelines.
- Get your care through a PPO provider and receive coverage under PPO's in-network rules.
- Choose the services of a healthcare professional outside of the HMO or PPO networks, and receive coverage under out-of-network rules.
POS plans pop up now and then as an option for groups, but in Illinois they are not currently a popular option for individuals.
For a better idea of how a POS Plan works, check out our article here.
Preferred Provider Organizations: Your PPO Plan negotiates lower overall fee arrangements with an assortment of doctors, hospitals, clinics, and other health providers. Your cost-sharing rate will be lower in-network than out, but you still have the freedom to step out of the network for treatment if you prefer.
For example . . . Your PPO may cover 90% of costs when you receive care from an in-network provider. If you decide to see an out-of-network care provider, your PPO might only reimburse you for 70% percent of your costs. You may also have to cover any difference between what the physician charges and your PPO's negotiated fees.
Illinois is a PPO state, the majority of plans available for both group and individuals are PPO's. That is good news for consumers because PPO's provide the best coverage combined with the freedom to visit any doctor, specialist, or hospital you wish.
For more information on PPO Organizations, read click here.
Fee-for-Service Plans (Indemnity/Traditional): These traditional plans are as simple as they sound. Your Fee-for-Service plan reimburses medical providers for each service you receive on a case by case basis. For example, if you've had to have and an emergency-room x-ray, the hospital will submit a claim to your insurance carrier, who then pays the hospital's fee. Your Fee-for-Service plan requires you to pay an annual deductible before it begins to reimburse you for covered services. It also gives your family the freedom to seek whichever doctors, hospitals and clinics you prefer.
Fee for service plans are great if you reside in an area where PPO providers are scarce. If you live in Illinois you may want to consider it as an option if you are in the rare area where PPO providers are scarce. There is no out of network charges because there is no network, you can visit where ever you want. You do pay a premium for this, and if you are in an area with lots of choices such as Chicago it isn't worth the extra premium since 90% of the providers are in the network anyway.
For more information on how Fee-for-Service plans work, read this article.
The Breakdown
HMOs and Fee-for-Service Plans are on opposite sides of your health insurance spectrum, while POS and PPO plans fall somewhere in between them. HMO's offer the least freedom, followed in order by the POS, the PPO and Fee-for-Service plans. Cost-wise, an HMO is usually the least expensive individual option in the Far West and Northeast, in the midwest if available they are the most expensive.
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