Health Insurance 101
Health insurance is of critical importance for obvious reasons. It is essential to have access to affordable medical care to mitigate the risk of financial ruin. There are several kinds of health policies available which can provide different levels of protection.
Group insurance is health insurance offered through an employer. Normally the cost for this kind of insurance through a group plan is much cheaper than those available for individuals.
Individual insurance is coverage purchased by a person not affiliated with a group or employer, generally at a higher price for the coverage than that available from a group health plan.
Health Care Plan Synopsis:
- Health maintenance organization (HMO) – The focus of HMO-based health care is disease prevention, rather than treatment after the fact, by making primary care access simple and affordable. An HMO allows a customer to obtain benefits at fixed prices provides a customer to obtain benefits at a fixed price, but only within an approved networks of health care professionals and organizations. A patient in an HMO needs to see their chosen primary care physician, or gatekeeper, for referrals and approvals for any other more advanced medical attention, such as laboratory studies, specialty referrals and hospitalizations.
- Preferred provider organization (PPO) – An indemnity plan where coverage is provided to participants through a network of selected health care providers (such as hospitals and physicians). The enrollees may go outside the network, but would incur larger costs in the form of higher deductibles, higher coinsurance rates, or non-discounted charges from the providers.
- Point-of-service (POS) plan – A POS plan is an “HMO/PPO” hybrid. POS plans resemble HMOs for in-network services, and behave like PPO's for out of network services.
- Exclusive provider organization (EPO) – A more restrictive type of preferred provider organization plan under which employees must use providers from the specified network of physicians and hospitals to receive coverage; there is no coverage for care received from a non-network provider expect in an emergency situation.
- Flexible spending accounts or arrangements (FSA) – A plan which allows a customer to put away pre-tax salary money to pay for medical expenses. Accounts are offered and administered by employers. Typically, benefits or cash must be used within a given benefit year or the employee loses the money.
- Indemnity plan – Reimburses the patient and/or provider as expenses are incurred.
Coinsurance – A form of cost sharing in a health insurance plan that requires an insured to person to pay a stated percentage or medical expenses after an annual deductible amount is met.
Co-payment – A form of medical cost sharing in a health insurance plan that requires an insured person to pay a fixed dollar amount when a medical service is received. The insurer is responsible for the rest of the reimbursement. This is common in POS and HMO plans.
Deductible – A fixed dollar amount during the benefit period – usually a year – that an insured person pays before the insurer starts to make payments for covered medical services. Plans may have both per individual and family deductibles.