INDIVIDUAL & FAMILY COVERAGE FUNDAMENTALS
- I’m looking for health insurance, what are my options? When you purchase an individual policy you first must decide on the type of provider (doctor and hospital) network. In general you have the choice of a policy that utilizes either a PPO (preferred providers) or an HMO (managed care) network. A PPO is a collection of physicians and hospitals that agree to provide care at a reduced cost to PPO members. An HMO is a group of doctors and hospitals that agree to implement cost-savings measures, and are paid a fixed fee by the insurance carriers for providing medical care to HMO members.
- What are the advantages and limitations of an HMO? For you and your family the main advantage of an HMO is your ability to use the provider services with little or no deductible and generally low co-payments. When you are covered by an HMO you only can see doctors within your HMO. You must use a gatekeeper system to obtain a referral to a specialist, and the HMO policy will not pay for specialists outside of the HMO network.
- What are the advantages and limitations of a PPO? When you utilize a PPO you are free to go to any doctor, including specialists, in the PPO network. The contract for payment of medical expenses is between the provider and the insurance company, which means that you cannot be charged more than the lower negotiated rate. If you visit a doctor or hospital outside of the network, the costs to you may be significantly higher. The reason is you will pay the full costs of the medical expense not the negotiated rate.
- I want to keep my doctor, what should I do? The first thing you should consider before selecting any insurance company is whether you doctor(s) is a contacted provider with that carrier. It is also important the carrier has a large provider network of physicians (especially specialists) and hospitals in your specific geographical area.
- If I want to know the maximum I will pay in medical expenses during the year, should I only consider the size of deductible and co-payment in making my decision? No, the real number to consider is the annual maximum out of pocket (OOP) costs offered by the policy. Once you pay this amount, the insurance company pays all the remaining medical expenses incurred during the calendar year. Deductibles and co-payments are nothing more than a down payment on this OOP number.
- Will I pay less in monthly premium if I have everyone on a single family policy? Not necessarily, with many carriers having everyone on the same family policy might be more expensive. The only way to determine the premium is to compare the cost of a family versus individual policies offered by the insurance company.
- I want a plan with maternity benefits, does that cost more? Yes, the cost of maternity benefits offered by individual plans will cost anywhere from 25% to 50% more than plans without maternity benefits.
- I want a plan that covers branded drugs, does that cost more? Yes, plans that cover more than generic drugs cost more than generic drug coverage plans. Not only is the premium higher for those plans but there usually is a separate branded drug deductible of $150 to $750 per year. The drug deductible is separate from you normal medical expense deductible. Some plans have a maximum allowable coverage for drugs plus the deductible.
- I ONLY HAVE ONE REMAINING QUESTION, WHICH IS LESS EXPENSIVE AN HMO OR A PPO? Easy answer, with individual coverage the monthly premium for a PPO tends to be less expensive than an HMO.