Insurance

What is Health Insurance?

Health insurance is the means of protecting an individual against the cost of medical care due to either accident and/or illness.  Basically, health insurance protects you from the high cost of medical care by providing coverage for certain health care services.

In most cases, an individual must pay a premium to receive health insurance.  A premium is a fee you pay your employer or the insurance company to purchase your health insurance plan.  The amount of the premium is determined by an insurance company where coverage is being obtained.  The cost of a premium is based on many different factors including age, health factors, risks, etc.  Premiums can be monthly, bi-monthly, quarterly, semi-annually, or annually. 

Having insurance doesn’t mean you won’t have to pay for medical care.  Most insurance plans have a deductible and require either co-payments or co-insurance.   In most cases, the cost to have insurance is still far less than the cost of medical care.

Health insurance can be divided into two basic categories: private & public.

Private Health Insurance consists of mainly of commerical companies that are sometimes referred as “carriers”.  These insurance companies offer individual and group plans. 

• Individual Plans are simply insurance plans that is purchased directly by an individual.  Individual plans don’t cover just one person.  In fact, an individual plan may cover one person or the person, their spouse and their family.  The term individual simply means that the policy has been purchased by a single individual not in conjuction with a large group of people.
• Group Plans are insurance plans that are generally purchased by an organization or an employer to cover a larger group of individuals and their families.  Group plans are usually arranged by employers  for their employees and their dependents. 

The following are all private insurers:

• Blue Cross & Blue Shield
• Aetna
• Humana
• Principal Healthcare
• United Healthcare
• AmeriHealth
• Optum Health

Public Health Insurance includes all Federally and State funded programs. 

The following are public health plans:

• Medicare
• Medicaid
• CHAMPUS (Tri-Care)
• Veterans Medical Care
• Federal Employees Health Benefits
• Various other insurance plans.

There are different types of insurance.

There are different types of health insurance.  The two major types of health insurance plans are fee-for-service (known as indemnity) and managed care.  Regardless of the type, each policy can differ widely in terms of coverage and cost.

Fee-for-Service Plans use a payment system where the provider is paid for each service rendered rather than a pre-negotiated amount for each patient.  These insurance plans offer the greatest choices of physicians, hospitals, and other health care providers. 

Managed Care Plans negotiate agreements for fees with physicians, hospitals, and other health care providers to give a range of services to plan members at reduced costs. There are three basic types of managed care plans: preferred provider organizations (PPOs), point-of service (POS) plans, and health maintenance organizations (HMOs).

Types of Managed Care Plans:

• Preferred Provider Organizations or PPO plans combine some of the cost-control advantages associated with managed care with some of the choices associated with fee-for-service plans.  Like an HMO, a PPO charges a co-payment for each office visit. The network of physicians is often much larger than an HMO, and members can refer themselves to physicians outside the approved list, although there is usually a higher co-payment for this service.
• Point of Services or POS plans allow you to choose primary care physicians to coordinate your care. Although the primary care physician usually makes referrals to other providers in the plan, for a service unavailable within the network, you also can refer yourself outside the plan and still receive some coverage. If a physician refers a patient out of the network, the plan pays all or most of the bill. If you refer yourself to a provider outside the network and the service is covered by the plan, you pay the difference.
• Health Maintenance Organizations or HMOs are prepaid health plans. The typical HMO provides a broad range of services. You pay a co-payment for each office visit.  Some HMOs have big medical clinics, with doctors, nurses and therapists on staff. You typically choose a physician from the organization’s roster to coordinate your medical treatment. HMOs tend to provide the least expensive medical coverage with a limited number of physicians to choose from.