Medical Insurance, this term is interchangeably used in
place of Health Insurance. Obtaining medical insurance is anything but simple with
so many plan choices, types, and costs of coverage.
However, defending against the financial consequences of a huge
medical bill is imperative for everyone. If you become ill or injured, without
adequate medical insurance, your assets could be seriously depleted. Even a quite
short stay in the hospital can cost $20,000 or more.
Two types of managed care systems are health maintenance organizations (HMOs)
and preferred provider organizations (PPOs).
With the intention of controlling care quality and costs, create
financial incentives for subscribers to use the contracted physicians and
facilities, these organizations contract with physicians and medical facilities
and require providers to bear some financial risk for care.
Medical Insurance: HMO (Health Maintenance Organizations)
HMO patients pay predetermined costs for medical insurance from
health care providers belonging to the HMO. Rather than paying every time a
service is delivered, HMO subscribers agree to pay periodic fees.
In return,
HMOs look after all their subscribers' health care needs. When compared with usual
indemnity plans, they offer several cost advantages.
They rely on economies of scale to see that resources are
used effectively and that care is coordinated at one location. They also
involve less administration, thus reducing expenses.
Since they lay emphasis on
preventive care, HMOs tend to offer broader coverage such as routine physicals
and medical screenings. HMOs also generally offer lower hospitalization rates.
Need of members in order to get treatment within the specified
provided network is the downside to HMOs. The HMO will not cover your care if
you decide to obtain medical treatment outside the network except in certain
emergencies.
Even then, a member must notify the plan regarding the emergency immediately
possible. If you are in an emergency on vacation in another country, you might
not be covered.
Moreover, in order to control costs, or for impersonal
treatment and assembly-line care, some HMOs have been disapproved of limiting
their patients' medical choices. Since their out-of-pocket expenses are lower, many
HMO members tolerate these drawbacks.
HMOs do not require paying a deductible or coinsurance unlike
traditional indemnity plans. As an alternative, you pay a fee (your
"co-payment"), naturally no more than $15 for an office visit and
there is usually a minimal charge for preventive care for example routine physical
exams and blood screenings.
Medical Insurance: PPO (Preferred Provider Organization)
PPOs are contractual arrangements that provide services at a
reduced price to a group of patients. Unlike HMOs, which are prepaid systems,
PPO providers operate on a fee-for-service basis, like traditional indemnity
arrangements.
With those who contract for the providers' services, such as
employers, unions, and insurance companies, the rates have been pre-negotiated.
The "preferred" group of doctors is guaranteed a
specific volume of patients in return for their discounted rates. Unlike HMOs,
PPOs allow you to use primary care providers outside the PPO network.
In order
to use doctors in the preferred group, patients however, are given financial
incentives to use doctors. These include small or no deductibles and lower
coinsurance payments.
Medical Insurance: Point-of-Service Plan
A variation of a PPO is called a point-of-service (POS)
plan. With a POS, the medical care is channeled by means of the patient's
primary care physician. Since only this doctor may refer the patient to other
medical professionals, medical care decisions and their cost are under stricter
control.
When choosing among HMOs, PPOs, and POSs, think about the
following issues:
- What
is the plan's history of rate increases? (Some organizations may quote low
prices at first.)
- Is the
organization financially stable?
- Does
the plan exclude pre-existing conditions and need waiting periods for
specific benefits?
- What
are the out-of-pocket costs you must bear for each plan alternative?
Group and Individual Medical Insurance
Most private health insurance are sold as group medical
insurance, which is provided by either employers or certain other
organizations. Insurers discount the premiums since many people and their
families are covered by one overall policy.
If your employer doesn't offer
group coverage, you may be eligible to join a group organized by a fraternal,
professional or trade association.
If you become unemployed, you may be able to retain your
group health insurance by converting it to an individual medical expense
policy. However, your coverage may not be as extensive as under the group
policy.
If you leave a job or switch to reduced hours, you can
continue your employer's coverage through the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA).
Under COBRA, this coverage is for you, your spouse, and
qualified dependents for up to eighteen months. For your spouse and dependents
only, this period can be extended for up to thirty-six months if you die or
become divorced.
Once you become eligible for another group plan, the
continued coverage will end. Once you leave a job, your employer must provide
you with information describing your options under COBRA.
If you decide on an individual health insurance policy, coverage can be as
much as 15 percent to 40 percent higher than comparable group coverage.
Deductibles, co-payments, and out-of-pocket expenses also will be higher. Alternatively,
you are allowed to pick the deductibles, coinsurance arrangements, and health
care providers.
Prior to enrolling in any health plan, find out which
services are covered and how much you will pay in deductibles and coinsurance. Because
of a pre-existing medical condition, if you are unable to get an individual
policy, many states offer health insurance risk pools, which provide coverage
for high-risk groups.
Related Articles:
|
