Hearts & Minds - Information for ChangeSM Factors in Choosing Your Health Insurance

There are three main types of health coverage. This article can help you choose which one may be best for you.

A dizzying amount of information is available for choosing a health care plan. Different situations require different solutions. For those who are employed and in good health, health care costs may be small and manageable. For the self-employed and those with current health problems there may be more at stake in picking the right plan.

Group insurance may be available at work or through family members and their jobs. Generally, the employer will cover much of the cost. Because expenses are spread over a large group of people, the price can be significantly lower than individual insurance.

If your employer’s plan is inadequate for your needs or unavailable to you, you can purchase an individual insurance plan. Individual plans may not cover as wide an array of illnesses as a group plan, so it is important to shop around. One option is to get a non-cancelable policy or guaranteed renewable policy, which means that as long as you pay the monthly premium, you keep your policy.

Both group and individual insurance plans have different types of coverage, such as a Fee-for-Service, Health Maintenance Organization (HMO), and Preferred Provider Organization (PPO), explained below.

Fee-for-Service
This provides more choice, but usually costs much more. It is best for those who travel often, wish to pick their own doctor or specialist without restrictions, and don’t mind keeping paperwork and receipts. Generally, you will be required to pay a monthly premium, reach a yearly deductible, and share the burden of costs with the insurer. This is known as coinsurance and may mean you pay 20% of the bill while the insurer covers the rest. Some plans offer a “cap” where the insured pays a limit of out-of-pocket expenses, say $3,000 a year, and the insurer pays anything additional.

HMO
This prepaid health plan typically offers less choice but lower costs. It is in the interest of the HMO to prevent possible illnesses from getting serious because you only pay a fixed amount per month. Generally there is a co-payment of $10 - $50 for each doctor visit, medical test and hospital stay. Although monthly premiums tend to be lower, the drawback is that the HMO limits which doctors you can see and often requires prior permission before seeing a specialist. Sometimes HMOs seek to avoid paying for treatments that can improve your quality of life but are not absolutely necessary. If that happens, there is usually an appeal procedure.

PPO
This is basically a combination of an HMO and Fee-for-Service. The PPO offers a limited network of doctors that the insured can choose from. When you stay in-network, typically you pay only a small co-payment, as with HMOs. If you decide to use an out-of-network doctor, you can still be covered, but may be required to pay more of the bill than if you used an in-network doctor.

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by Joseph Pope
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http://www.heartsandminds.org/health/coverage.htm - latest text changes December 27, 2005

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