PPO Health Insurance plans Follow

Cracking the Health Code

The jargon used in the health insurance industry is so confusing, it’s enough to make anyone feel sick. But you need to learn the essential terms, even if you have group coverage through your employer.

Many health insurance policies require you to pay an annual deductible (the average is around $650). Once your medical bills exceed that annual deductible, the insurer will start chipping in, usually paying 70% to 100% of the costs. You’re responsible for the rest. The percentage you pay is what’s often known as the coinsurance rate. (One warning: Annoyingly, some companies call the part the insurer pays “coinsurance,” so if you’re comparing your policy and your spouse’s, for example, make sure you’re comparing apples to apples.) Whichever way you see this term quoted, you want to make sure the insurer picks up most of the bill. After all, that’s what you’re paying for.

In most cases, instead of paying coinsurance you make a copayment, which is a fixed sum of money that’s usually less than $25. For example, you might have to pay $20 per doctor’s office visit or $15 for a prescription drug refill—always, even after you’ve already met the deductible. (Sometimes you’ll have to make a copayment and pay coinsurance, as well as meet a deductible!)

But many policies have a ceiling (usually $2,000 to $4,000) on the total amount you will have to shell out in any given year. This is called the out-of-pocket limit. If your medical bills get truly enormous, you have the comfort of knowing that the insurance company will pay for everything beyond the out-of-pocket limit. However, many insurers have another limit that protects them. It’s a maximum lifetime benefit, which is the total amount they’re obligated to pay over the life of your policy. This tends to be $1 million or higher, an amount that will likely be enough to take care of your needs even if you get seriously ill.

The Basic Types of Health Insurance

There are so many different health insurance plans out there, truly understanding your own plan will take some effort. The truth is, even if two medical plans have the same deductible, co-payment structure, coinsurance rate, and benefit limits, they may be different. Some exclude certain costs while accepting others, are stricter about allowing you to see a specialist, or simply have a different list of participating doctors. The details of your company’s health insurance options will probably vary somewhat from what I’m going to lay out here, but you can use these descriptions to decode anything in your own plan and make an informed choice if your company offers multiple options.

By far the most common health insurance offering these days is known as managed care, which gives you a list of doctors called a network. If you stick with doctors in your network, your costs will be much lower than if you use doctors outside the network. No matter what, know how the process works so you can get properly reimbursed for all out-of-pocket costs the insurance company should cover.

There are three main types of managed care programs. The most restrictive is the health maintenance organization (HMO). In an HMO you usually have to get permission from your primary doctor—your “gatekeeper”—if you want to see a specialist like a dermatologist or ophthalmologist. (Most HMOs, though, allow you to see in-network OB/GYNs without getting a referral.) Also, your choice of physicians is limited to your HMO’s network. If you prefer to see a specialist outside the network, you’ll usually have to foot the whole bill yourself, although most plans will let you apply for reimbursement afterward. The benefit of HMOs is their low cost: Most plans won’t make you pay any deductible, so your total cost per doctor’s visit is usually limited to your $15 or $20 co-payment.

With a newer, more common type of managed care plan, called a preferred provider organization (PPO), you don’t need permission from your primary doctor in order to see a specialist in your network. But this freedom will cost you. Most PPOs require you to pay an out-of-pocket deductible, typically $500 to $600, before your coverage kicks in. (Many PPOs, however, do cover certain basic medical needs—like a routine checkup, an office visit when you’re sick, or prescription drugs—without forcing you to pay your deductible first. You’ll probably have a co-payment of about $20 in this case.) PPOs also offer you the option of seeking treatment outside your network, but it will be more expensive than sticking to the list. Instead of the flat $20 you’d pay for a visit inside the network, you’ll have to pay 30% to 35% of the total cost of your treatment up to an established maximum (usually $2,000). But not all PPOs work this way. In fact, some require you to pick up 20% to 25% of the bill even for in-network doctors. So read carefully all the details your company gives you.

Another managed care plan, a point-of-service (POS) plan, is usually described as a hybrid between an HMO and a PPO. (I know. This is kind of absurd, but bear with me.) With point-of-service plans, you have plenty of options. You can save money by staying within your network and going through your primary care physician when you need special treatment; as with an HMO, you will pay a flat fee of $15 or $20. Or you can go outside the network and pay 30% or 35% coinsurance (up to a preset ceiling of about $2,000), as with a PPO. Either way, like PPO plans, about half of all POS plans require you to pay a deductible (usually $500 or $750), before they start to pay your medical costs.

While most companies have some sort of managed care plan, a few employers offer an old-fashioned type of insurance once known as an indemnity plan but now more frequently called a conventional plan. (Most of your parents or grandparents had this type of health coverage.) Under an indemnity plan, there’s no network and you’re free to go to any doctor or specialist you choose. That freedom may be welcome, but it’s also made these plans so expensive that over the past two decades they’ve become a rarity. Only about 10% of all companies now even offer this type of coverage.

If you’re in an indemnity plan, the rules are pretty simple. Once you meet the annual deductible, the insurer will pay 70% to 100% of your medical expenses. As with managed care plans, out-of-pocket limits put a ceiling on how much money you’ll have to pay for health care in any given year, and maximum lifetime benefits put a ceiling on how much money the insurer will pay over the life of your policy.

If Your Employer Offers Health Insurance

Whether your employer lets you choose your health plan or not,you’ll need to be smart about your coverage. Here are some suggestions:

Evaluate your managed care options carefully. Some companies allow employees to choose between an HMO and a PPO or POS plan. (They might even offer an indemnity plan.) Though it might be tempting to go with the cheapest plan, there are some serious trade-offs to consider. Depending on which network you sign up for, you may have to wait several days, if not weeks, to see a specialist. You may find that your doctor is less apt to prescribe expensive lab tests than doctors you have visited in the past. As I mentioned earlier, you may have to get permission from your primary physician before you can see a specialist, such as an allergist or a cardiologist. In the case of HMOs, if you want to see an out-of-network physician, you will have to cover all or much of the cost yourself. And in the case of a high-deductible plan, you’ll have to pay at least $1,000 up front before the insurance kicks in at all. That gives you an incentive to avoid going to the doctor, which could cost you (and your health) more in the long run. (For more details on these plans, see the box on the following pages.) If your company offers different plans, speak to a few of your coworkers about their experiences before you make a decision. If you already have a regular doctor, find out if he or she belongs to any of the networks your company offers. If not, ask him or her to join. Finally, with premiums and expenses rising, don’t assume the plan you used last year is still the best choice. Reevaluate annually. Know what’s covered by your plan. Some cover everything from prescription drugs to physical therapy sessions to chiropractic adjustments, while others cover a limited range of services. All are required to treat physical and mental health care the same. If you want to know the details, check your insurance company’s website. For about six months on my first job, I didn’t know that all I had to do was show my company insurance card at the drugstore to get my prescription medication for just $5. Not too swift. You’ll also need to understand your plan’s reimbursement policies. Many plans cover 70% to 80% of what they consider “usual, customary, and reasonable” out-of-network charges. If your doctor charges $100 for a checkup but your plan specifies that $60 is the reasonable and customary charge for a doctor in your area, the plan will reimburse you for $48 (80% of $60), leaving you to pay the remaining $52 yourself. If you know this in advance, you can explain the situation to your doctor and ask for a discount. Some doctors are surprisingly flexible. See if you can get a higher deductible and pay a lower premium. Some companies have a fixed deductible for all employees. A few base your deductible on your income, while others let you pick from two or more options. No matter how your employer sets your deductible, you should find out if you can raise it to keep your premium costs down. Again, you need to make sure you have enough savings to cover that deductible. Ask about waiting periods or exclusions when you start a new job. If you have any chronic medical problems, known in the insurance world as preexisting conditions, find out if your company insurance plan will cover you for these ailments immediately. Some plans will have a delay of up to 12 months, but most HMOs don’t have any waiting period. And if you’re transferring directly from a job where you had health insurance (or coming directly off of your parents’ coverage), any waiting periods probably will not apply to you, thanks to the Health Insurance Portability and Accountability Act of 1996 (HIPAA). The Department of Labor has created a good overview of how this works; take a look here. Find out the cost of covering pregnancy. If you’re considering having a baby within the next couple of years, find out about maternity benefits and pediatric care. Many managed care plans offer attractive deals. There is usually no deductible with an HMO as long as you stay in the network. Every doctor visit, the full cost of delivery, the hospital stay, and well-baby care are almost completely covered. (I know someone who paid just $5 for all her pregnancy care needs!) Because PPOs tend to have a deductible and will make you pay coinsurance on top of that, you’ll probably end up paying quite a bit more. On the flip side, if there are any complications that require specialists or a longer hospital stay, a PPO can get pricey, but you may be glad to have a broader range of specialists to choose from. What to Look For in an Individual Health Policy

If you don’t have coverage through a group plan, you’ll have to buy insurance on your own. An individual policy is often expensive, but if you know what you’re looking for and you do some research, you can find a decent deal. Your goal is to find coverage that will help you pay for a major medical problem. Policies that cover anything more may be prohibitively expensive, depending on where you live. You may find it necessary to pay for routine medical services with your own money and to rely on your health insurance to protect you only in case of a medical catastrophe.

If you’ve developed an illness or condition that would otherwise make you uninsurable, you’re probably entitled to individual coverage if you had insurance at your last job within the last couple of months. That’s because your right to be insured is protected by HIPAA. The gist: Once you’ve exhausted your 18 months of COBRA coverage, you are entitled to guaranteed-issue individual coverage (GIIC). The premiums for GIIC can be very high, but some states will subsidize them, making them somewhat more affordable. Call or email your state insurance agency for more information.

For a good brochure that spells out your rights, get a copy of the Department of Labor’s publication Your Health Plan and HIPAA . . . Making the Law Work for You.

No matter where you get a policy, make sure it doesn’t offer such skimpy protection that it’s worthless. Try to find a policy that meets these conditions:

It covers at least 80% of your hospital, surgery, and in-hospital doctor bills once you meet the deductible. Ideally, you’d be able to find a policy that covers 100%, but this type of coverage can be prohibitively expensive. With a policy that covers 80%, you’ll have to pay the remaining 20% out of your own pocket. To avoid getting hit with tremendous medical expenses, look for a policy that caps your annual out-of-pocket costs at around $3,000 (or whatever you can comfortably afford after paying the deductible). It has a maximum lifetime benefit of at least $1 million. A lifetime cap is the dollar[...]