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Health insurance ... it's on everybody's mind, and for good reason. First, it's vitally important if you want to protect yourself against the financial consequences of medical care. Second, the choices you make for funding health care expenses will directly affect how your care is delivered. And finally, with a growing array of policy choices, buying health insurance is anything but simple.
That said, here's the breakdown.
A traditional or indemnity plan is the most flexible in terms of customer choice. You choose your doctors and hospitals, set your co-insurance and deductible, and choose your stop-loss, or the dollar point where the insurance company assumes responsibility for all charges. Indemnity plans are becoming more popular as people grow frustrated with managed care.
Now, a managed care plan contains costs through more efficient use of services. In this category, you have health maintenance organizations (HMOs) and preferred provider organizations (PPOs).
HMO patients pay fixed costs for medical care from member health care providers. In return, your HMO takes care of all your health care needs. Of course, some have been criticized for impersonal treatment and for limiting patient medical options in order to control costs.
Generally, HMOs offer lower hospitalization rates and broader coverage, such as routine physicals and medical screenings. The downside is, you can only get treatment within a network of providers. If you seek care outside the network, the HMO will not cover the cost, except in certain emergencies.
Many members tolerate these inconveniences because of lower out-of-pocket expenses. You never pay a deductible or coinsurance. Instead, you pay a fee or co-payment typically no more than fifteen dollars per office visit. And there's usually a minimal charge for preventive care, like routine physicals and blood screenings.
Next up, we have PPOs. With this plan, doctors negotiate a discount for services with a Preferred Provider organization. In return, the PPO passes these discounts on to the policyholder. Co-payments for outpatient medical services generally range from ten to forty dollars. Deductibles are used only for outpatient surgeries and inpatient services.
When choosing an HMO, PPO or indemnity plan, consider whether the plan excludes pre-existing conditions or requires waiting periods for specific benefits, the out-of-pocket costs, the plan's history of rate increases, and the financial stability of the organization.
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