About Health Insurance

Today, health care costs are high, and getting higher.  Who will pay your bills if you have a serious accident or a major illness?  You buy health insurance for the same reason you buy other kinds of insurance…to protect yourself financially.  With health insurance, you protect yourself and your family in case you need medical care that could be very expensive.  You can't predict what your medical bills will be.  In a good year, your costs may be low.  But if you become ill, your bills could be very high.  If you have insurance, many of your costs are covered by a third-party payer, not by you.  A third-party payer can be an insurance company or, in some cases, it can be your employer.

Types of Health Insurance Plans: (Individual and Group Plans)

HMO: (Health Maintenance Organization) – These plans have a provider network with “in-network” benefits ONLY.  There are no “out-of-network” benefits, so if you seek care from a provider not in the carrier Provider Network, you will pay 100% of the charges.  Most carriers’ Provider HMO networks are “open access” where you do not have to get a referral from your Primary Care Provider to see a Specialist.

POS: (Point-of-Service) – These plans are basically an “HMO” with “out-of-network” benefits which means that you can see a provider who is out-of-network, but you will have higher out-of-pocket costs for this provider.  The Maximum Out-of-Pocket amount for out-of-network benefits is typically 2 – 3 times that of the “in-network” deductible.  Again, most carriers’ Provider POS networks are “open access” where you do not have to get a referral from your Primary Care Provider to see a Specialist.

PPO: (Preferred Provider Organization) – Historically, everyone wanted a PPO plan because there was no requirement to get a referral from your Primary Care provider to see a specialist.  Now that the HMO and POS plans have “open access” Provider networks, the need for a PPO simply increases the monthly premium and the future renewal premiums.  Providers are typically reimbursed at a higher reimbursement rate for the PPO plans as well, which attributes to the higher monthly premiums for the members.

How Your Insurance Policy Works:

Deductible – This amount must be satisfied first by the member before the insurance carrier will begin to “cost-share”.  Typically, you pay towards the deductible when you have inpatient hospital stays, outpatient surgery, advanced digital imaging services, emergency room visits, certain laboratory tests, etc. 

Coinsurance – This is the percentage of “cost-sharing” between the member and the insurance carrier once the deductible has been satisfied in most cases.  The most common coinsurance percentage is 80%/20% where the insurance carrier pays 80% of the remaining contracted charges, and the member pays 20% of the remaining contracted charges.  Each policy has a “coinsurance maximum out-of-pocket” which is the maximum amount of coinsurance the member must pay of the remaining contracted charges. 

Copays – These are a fixed dollar amount of payment for either medical or pharmacy services.  Most common types are office visit copays, emergency room copays, and pharmacy copays.