What Type of Health Plan Is Best For Me?
Most plans fall into five basic categories: traditional health insurance, Health Maintenance Organizations (HMOs), Preferred ProviderOrganizations (PPOs), Point-of-Service plans (POSs), and Exclusive Provider Organizations (EPOs). But there are also differences between plans of the same basic type (for example, not all HMOs are the same), so be sure to read all materials provided by your employer and the health plan carefully.
Traditional Insurance
Traditional health insurance is generally the most flexible type of health plan. It allows you to choose any doctor you want to and see specialists without getting approval from a "primary care physician" or "gatekeeper" first. However, depending on the plan, certain restrictions may apply. For example, you may need to get the insurance company's approval before checking into a hospital, unless it is an emergency.
With traditional health insurance, you will usually have to spend a certain amount on medical bills each year before your insurance starts to pay. This is called a deductible. After that, you will have to pay a percentage of each charge, called a co-payment. The insurance company will pay the rest of the charge based on what it considers reasonable. Many insurance plans protect you from large medical expenses by limiting your total expenses in any given year, called your out-of-pocket expenses. There may also be a cap on total benefits--a maximum amount the insurance company will pay in your lifetime.
Traditional health insurance is generally more expensive than other types of health plans and may require you to do more paperwork to file claims.
HMO (Health Maintenance Organization)
There are several types of HMOs. Most will only cover your expenses if you go to a health care provider within their organization (unless it's an emergency or you're out-of-town). They may require that you choose a primary care physician who will coordinate your care. And you will probably have to get approval from that physician before seeing a specialist. You must get approval from the HMO before entering a hospital or receiving some other kinds of non-emergency care.
Most HMOs do not require that you meet a deductible each year and require only a small co-payment (for example, $5 per visit or prescription). Most of the paperwork is handled by the organization.
PPO (Preferred Provider Organization)
PPOs are generally less flexible than traditional health insurance plans but more flexible than HMOs. You can see any health care provider you want to (including a specialist), but your co-payment will be higher if the physician you choose is not a "preferred provider", that is, a physician that the health plan has a contract with.
PPOs will almost always require that you get their approval before entering a hospital. But they are more likely to cover checkups and other preventive medical services than traditional health insurance plans, and most preferred providers will file your claims for you.
POS (Point of Service)
A POS plan is similar to an HMO in that you can see physicians within a network and pay only a small co-payment. But you can also see physicians that aren't in the network and pay a percentage of the charge, after you've met your deductible, as you would with a PPO plan.
There may be restrictions on the services you can receive outside the network with a POS plan. For example, prescription drugs, organ transplants, treatment for infertility, and mental health services may not be included.
EPO (Exclusive Provider Organization)
An EPO is similar to an HMO, except that it is regulated by the California Department of Insurance and generally pays physicians and other healthcare providers differently. EPOs will only cover your expenses if you see a physician that is in the EPO's network, unless it is an emergency.
If you're still not sure which type of plan to choose, you may want to use our checklist of health plan features and services to compare your options...or ask for more information from the health benefits manager at your workplace or a health plan representative. Your physician may also be in a good position to help you compare plans, since he or she is familiar with your health and medical history.
Types of Health Plans, http://www.cmanet.org/PUBLICDOC.cfm/57/5 (last visited Oct. 29, 2007).
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