These days, most health insurance is sold through a wide assortment of health insurance plans. Health insurance is not necessarily the same thing as a health plan. To use a familiar analogy, the plan is the “bottle” in which the insurance is packaged.
Health insurance itself is really a form a risk management in which you transfer the risk of need for medical care to some otheragency–in this case, the health insurance company. The monthly premium is what you pay the insurance company to assume the risk for your medical expenses.
When you shop, you find that most health insurance companies, such Blue Cross, Anthem, Aetna, Tonik, and Humana, to name just a few, are selling a selection of health insurance plans. There are now many kinds of plans (or ways of bottling the insurance). Many policies are written as individual health plans and other policies are designed as family health insurance intended to cover the entire family. Here are the three most common, general categories of managed care:
- HMO–Health Maintenance Organization
- PPO–Preferred Provider Organization
- POS–Point of Service
Just exactly what are PPOs, HMOs, and POSs? How are these plans alike, and how are they different? They are all forms of managed health plans. In order to shop effectively for the best health insurance plans, you need to know what these terms mean. Again, PPO means preferred provider organization; HMO means health maintenence organization, and POS means point of service. These are also known as managed care plans. That’s because the insurance attempts to handle all health care needs under one “plan.”
In general, managed care plans provide their members with health care from within a network of providers who are contracted with that particular inurance company. What this means for you is that as member, you can only go to those health care providers (doctors, hospitals. other facilities) who participate with that particular network. Managed care plans also handle all billing and paperwork associated with the submission and filing of claims. In turn, of course, they also determine your cost sharing. Cost sharing refers to any copayments, coinsurance, and deductibles that you would have to pay at the time of service.
A health maintenance organization generally provides the least expensive medical care. HMOs offer medical services in exchange for a fixed monthly premium. However, HMO clients have no freedom to choose their own doctors and hospitals and can only use providers in the HMO network. Doctors belonging to a particular HMO normally refer patients to other HMO doctor members, and a referral from an HMO primary care doctor is needed in order to see a specialist.
A preferred provider organization, or PPO, allows its members greater lattitude in choosing which doctors they can see. Physicians within a PPO make referrals, but the members can refer themselves to doctors and specialists including those outside of the plan. However,though members have the freedom to go outside of the PPO and will still receive coverage, they will pay more for seeing providers out side of the PPO network.
In a point of service plan (POS), Primary care doctors refer members to other doctors, usually within the plan, but members can refer themselves outside of the plan, though they will pay more. If POS doctors refer a patient outside of the plan, the POS usually pays most of the fee. Participants in these plans choose their own doctors and hospitals, and can refer themselves to whatever doctor or specialist they choose.
The type of health plan or plans that you choose–and it might not even be one of the kinds mentioned–will depend on your personal needs, income, and geographical location. Some plans, such as Tonik Health Insurance, are available in only a few states,whereas Blue Cross, Aetna, and Humana are more commonly available. Generally, though, most plans will accomodate personal, individual needs as well as the needs of a family. As you are shopping, keep in mind that health insurance, just like all insurance, is protection, and you want the best protection. The better your understanding of the kind of protection you need, the better your choice of health insurance plan will meet your specific needs.