Agency Template

Learn About

Go To--> Learn About | Financial Benefits

Article: Guide To Financial Benefits

Private Health Insurance

Table of Contents
  1. Social Security Benefits
  2. Medicare
  3. Medicaid
  4. Family Medical Leave Act (FMLA)
  5. Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA)
  6. Omnibus Budget Reconciliation Act of 1989 (OBRA)
  7. Health Insurance Portability and Accountability Act (HIPAA)
  8. Private Health Insurance
  9. Long Term Disability (LTD) Insurance
  10. Long Term Care Coverage and Financing

Health Maintenance Organization (HMO) Plans
Preferred Provider Organization (PPO) Plans
Indemnity Plans
Point of Services (POS) Plans
Self-Insured Trusts/Self-Funded Plans
Medical Savings Accounts (MSA)

 

Health Maintenance Organization (HMO) Plans

HMO plans have contracts with a specific network of physicians and other medical providers. Individuals must obtain services from HMO approved lists. As a member of an HMO, an individual is assigned a primary care doctor who is responsible for his/her care. If an individual wishes to receive care from a specialist, it is necessary to get a referral from the primary care physician. As long as an individual sees doctors within the HMO network, only a small co-payment per visit is charged. Most other costs are covered by the plan. There are no deductibles or claim forms involved when care is received within the plan.

If an individual wants to see a doctor outside the HMO network for a second opinion or for other medical care, a written authorization from the HMO medical group is required. If an individual's request to receive treatment or to see a specialist outside of the plan is denied by the HMO, it is possible to appeal.

Preferred Provider Organization (PPO) Plans

PPO plans have contracts with a specific list of physicians or other medical providers. When an individual sees a doctor who is on the list, the PPO will pay 80 percent to 100 percent of the medical bills once the individual has paid the annual deductible. When medical care is received from a doctor not on the list, the plan will require an individual to pay a higher deductible and/or co-payment. Although many plans require an individual co-payment, once the annual out-of-pocket maximum is met, the plan will pay 100 percent of covered expenses for the rest of the year.

Indemnity Plans

Indemnity plans allow an individual to choose any doctor or hospital when seeking medical care. These plans typically have a deductible that must be paid before the plan will begin to pay for any medical expenses. Once the deductible is met, the health plan will pay a percentage of the medical expenses (normally 70-80 percent of the bill). The percentage of a medical bill that the health plan will pay is called co-insurance. The percentage of a medical bill for which the individual is responsible is called the co-payment or patient liability. As indemnity plans vary greatly, an individual must verify the requirements of the plan as it relates to his or her anticipated needs.

Although many plans require an individual to pay a co-payment, once the annual out-of-pocket maximum is met, the plan will pay 100 percent of covered expenses for the remainder of the year. If, for example, the out-of-pocket maximum is $2,000 annually, the insurance plan will pay 100 percent of an individual's claim for that year once the out-of-pocket maximum amount has been paid.

Back to Top

Point of Services (POS) Plans

A POS plan is the most versatile type of plan and provides two to three tiers (points) of coverage. As a member of a POS plan, an individual can move between these different tiers of coverage each time care is received.

  • Tier 1 will function the same way as an HMO. If an individual chooses to receive care through a primary care physician, he/she will be responsible for only a small co-payment and no annual deductible. The primary care physician can refer the individual to other specialists within the network.
  • Tier 2 functions the same way as a PPO. An individual can self-refer to any doctor in the PPO network. The insurance will pay a certain percentage of the medical charge and the individual is responsible for an annual deductible and co-payments.
  • Tier 3 functions the same way as an indemnity plan. An individual can self-refer to a provider of his/her choice outside the network. The insurance will pay a lower percentage of the medical charge than is paid in Tier 2. The individual will be responsible for a higher annual deductible and co-payment than that of Tier 2.

Although many plans require an individual to pay a co-insurance, the individual is required to pay this percentage only until the annual out-of-pocket maximum has been met. If, for example, the out-of-pocket maximum is $2000, the insurance plan will pay 100 percent of an individual's claim for that year once this amount has been paid.

Self-Insured Trusts/Self-Funded Plans

These are plans in which a large company or union covers an individual's medical expenses with funds set aside to pay health claims. Since this type of coverage is less regulated, there is a great deal of variation among policies. If an individual is a member of a self-insured trust, he/she should review the benefits thoroughly to determine what is covered. For most self-insured plans, benefits for pre-existing conditions are severely limited during the first year of coverage while certain medical conditions may not be covered.

Back to Top

Medical Savings Accounts

A medical savings account is not an insurance plan. It is a way of making coverage more affordable for people who traditionally have high health insurance costs. Its official name is Archer MSA.

The plans work as follows: Rather than pay a high monthly premium for a policy with a low deductible and low co-pays, you opt for a high deductible policy (to help in the event of an emergency or major expense) and make regular deposits into a medical savings account (to cover the minor expenses). Deposits made toward the medical savings plan are 100 percent tax-deductible, and can be used towards any out-of-pocket medical expense, like satisfying your deductible, covering office visits, etc. Any medical savings account funds you don't use will remain in the account, drawing interest on a tax-favored basis, until needed for future medical expenses or retirement.

The benefits of medical savings accounts can be substantial, but their availability is limited. Only those employed by a business of 50 persons or fewer (including the self-employed) qualify.

Health Insurance In-depth
Health Insurance Indepth is a resource site with descriptions of each health insurance plan. It also provides tips on evaluating and selecting a plan that is right for you and lists rules that health insurance companies must follow in each state.

HealthInsuranceSort.com
HealthInsuranceSort.com is a resource site designed to help consumers understand and find health insurance plans, including individual, small group health, or temporary health insurance. The service also has free quotes and side-by-side comparisons of leading health insurance providers.

Last Updated on 12/27/2017

Friday, September 18, 2020