Health Insurance

About Health Insurance

In the UK Health insurance policies will often cover the cost of private medical treatments if the National Health Service(NHS) do not pay for them. It will often result in quicker health care with better facilities.

In the U.S., health insurance along with dental insurance is often part of an employer's benefits package. Most countries rely on public funding to ensure that all citizens have universal access to health care.

Health Insurance Types

Health insurance can be broken into two categories:

Traditional indemnity plans, which are now often called fee-for-service plans;
PPO, or Preferred Provider Organizations;
POS, or Point-Of-Service plans;
and HMOs, or Health Maintenance Organizations.

No one type of health care plan is more favourable than the other. It depends on your needs and preferences. Some people enjoy the autonomy offered by fee-for-service plans, while others prefer the low costs associated with closed-panel HMOs. The downside to medical insurance comes as as health insurers compete for business, distinctions among the types of plans may blur.

Traditional Health Insurance

Until 30 years ago, most people had traditional indemnity coverage. Now it's often known as "fee-for-service" Indemnity plans are similar to car insurance - you pay a certain amount of your medical expenses up front in the form of a deductible and afterward the insurance company pays the majority of the bill.

Advances in modern medicine have increased the cost of providing health care, they have also made it possible for people to live longer. These advances caused many insurance companies to look for ways to reduce their costs of doing business, giving managed care the boost it enjoys today.

Fee-for-service

For years, indemnity or fee-for-service coverage was the most popular kind of medical insurance. Under this type of health coverage, you have the choice when it comes to choosing doctors, hospitals and other health care providers. You can refer yourself to a specialist without having to get permission, and the insurance company doesn't get to decide whether the visit was necessary. You don't, however, have complete autonomy. Most fee-for-service medicine is managed to a certain extent. For instance, if you're not already incapacitated, you may need to get clearance for a visit to the emergency room.

On the down side, fee-for-service plans usually involve more out-of-pocket expenses when you need treatment. Often there is a deductible, usually of about £100-£1,2500 depending on the policy before the insurance company starts paying. Once you've paid the deductible, the insurer will kick in about 80 percent of any doctor bills. You have to pay up front and then submit the bill for reimbursement if your provider cant submit the bill directly to your insurer directly.

Under fee-for-service insurance plans, insurers will usually only pay for reasonable medical expenses, taking into account what other practitioners in the area charge for similar services. If your GP happens to charge more than what the insurance company considers "reasonable and customary", you'll probably have to make up the difference yourself. Traditionally, preventive care services like annual check-ups and pelvic exams haven't been covered under fee-for-service plans. But since preventive care can prevent more costly illnesses down later in the plan, insurers are starting to including them.

Fee-for-service plans usually include a ceiling for out-of-pocket expenses, after which the insurance company will pay all of the costs.

Fee-for-service coverage offers flexibility in exchange for higher out-of-pocket expenses, more paperwork and higher premiums.

Managed Care Insurance

Managed care has been around since the 1930s, but it really became popular within the last 10 years. As it grew, it changed, leaving us with three basic types of managed care plans. Today, the majority of people with private health insurance have some form of managed care.

Although there are differences among the different types of managed care policies, also there are some similarities. All managed care plans involve an arrangement between the insurance company and a selected network of health care providers, and they offer policyholders financial incentives to use the healtcare providers in that network. There are usually strict standards for selecting providers and a formal procedure to assure quality care once selected.

Preferred Provider Organizations (PPOs)

One step over the managed care border is the Preferred Provider Organization. These have made arrangements for lower fees with a network of health care providers. These give policyholders a financial incentive to stay within that network.

For example, a visit to a pre approved doctor may mean you'd have a £10 co-pay. Otherwise if you wanted to see an out-of-network doctor, you'd have to pay the entire bill up front and then submit the bill to your insurance company for an 80% reimbursement. Also, you might have to pay a deductible if you choose to go outside the network, or pay the difference between what the in-network and out-of-network doctors charge.

With a PPO, you can refer yourself to a specialist without seeking approval and, as long as it's a pre-approved provider you would still get the same co-pay. Staying within the network means less money coming out of your pocket and less paperwork. Preventive care services may not be covered under a PPO.

Exclusive Provider Organizations are PPOs that look like HMOs. EPOs raise the financial stakes for staying in the network. If you choose a provider not pre-approved, you're responsible for the entire cost of the visit.

Point-of-Service (POS)

Point-of-service policies are similar to PPOs, but they introduce the Primary Care Physician. You'll need to choose your PCP from among the plan's network of doctors.

As with the PPO, you can choose to go out of network and still get some coverage. In order to get a referral to a specialist, though, you usually must go through your PCP. You can still choose to refer yourself, but it'll mean more paperwork and more money coming out of your pocket. If your PCP refers you to a doctor who is out of the network, the plan will pick up most of the cost. But if you refer yourself out, then you'll probably have to deal with more paperwork and a smaller reimbursement. You may also have to pay a deductible if you go outside the network.

POS policies may also cover more preventive care services, and can even offer health improvement programs like workshops on nutrition and smoking, and discounts at health clubs.

Health Maintenance Organizations (HMOs)

When you talk about HMOs, you're really talking about closed-panel HMOs, the least expensive, but less flexible type of health plan. They are also geared more toward members of group plans than individuals.

In exchange for a low co-payment, low premiums and minimal paperwork. A HMO requires that you only see its doctors, and that you get a referral from your primary care physician before you see a specialist. If you can still pick up the phone, you'll need to get clearance before you can visit the emergency room.

Health Insurance

About Health Insurance