Fee-for-Service
This is the traditional kind of health care policy. Insurance
companies pay fees for the services provided to the insured
people covered by the policy. This type of health insurance
offers the most choices of doctors and hospitals. You can choose
any doctor you wish and change doctors any time. You can go
to any hospital in any part of the country.
With fee-for-service, the insurer only pays for part of your
doctor and hospital bills.
This is what you pay:
· A monthly fee, called a premium.
· A certain amount of money each year, known as the deductible,
before the insurance payments begin. In a typical plan, the
deductible might be $250 for each person in your family, with
a family deductible of $500 when at least two people in the
family have reached the individual deductible. The deductible
requirement applies each year of the policy. Also, not all health
expenses you have count toward your deductible. Only those covered
by the policy do. You need to check the insurance policy to
find out which ones are covered.
· After you have paid your deductible amount for the
year, you share the bill with the insurance company. For example,
you might pay 20 percent while the insurer pays 80 percent.
Your portion is called coinsurance.
To receive payment for fee-for-service claims, you may have
to fill out forms and send them to your insurer. Sometimes your
doctor's office will do this for you. You also need to keep
receipts for drugs and other medical costs. You are responsible
for keeping track of your medical expenses.
There are limits as to how much an insurance company will pay
for your claim if both you and your spouse file for it under
two different group insurance plans. A coordination of benefit
clause usually limits benefits under two plans to no more than
100 percent of the claim.
Most fee-for-service plans have a "cap," the most
you will have to pay for medical bills in any one year. You
reach the cap when your out-of-pocket expenses (for your deductible
and your coinsurance) total a certain amount. It may be as low
as $1,000 or as high as $5,000. Then the insurance company pays
the full amount in excess of the cap for the items your policy
says it will cover. The cap does not include what you pay for
your monthly premium.
Some services are limited or not covered at all. You need to
check on preventive health care coverage such as immunizations
and well-child care.
There are two kinds of fee-for-service coverage: basic and major
medical. Basic protection pays toward the costs of a hospital
room and care while you are in the hospital. It covers some
hospital services and supplies, such as x-rays and prescribed
medicine. Basic coverage also pays toward the cost of surgery,
whether it is performed in or out of the hospital, and for some
doctor visits. Major medical insurance takes over where your
basic coverage leaves off. It covers the cost of long, high-cost
illnesses or injuries.
Some policies combine basic and major medical coverage into
one plan. This is sometimes called a "comprehensive plan."
Check your policy to make sure you have both kinds of protection.
What Is a "Customary" Fee?
Most insurance plans will pay only what they call a reasonable
and customary fee for a particular service. If your doctor charges
$1,000 for a hernia repair while most doctors in your area charge
only $600, you will be billed for the $400 difference. This
is in addition to the deductible and coinsurance you would be
expected to pay. To avoid this additional cost, ask your doctor
to accept your insurance company's payment as full payment.
Or shop around to find a doctor who will. Otherwise you will
have to pay the rest yourself.
Questions to Ask About Fee-for-Service Insurance
· How much is the monthly premium? What will your total
cost be each year? There are individual rates and family rates.
· What does the policy cover? Does it cover prescription
drugs, out-of-hospital care, or home care? Are there limits
on the amount or the number of days the company will pay for
these services? The best plans cover a broad range of services.
· Are you currently being treated for a medical condition
that may not be covered under your new plan? Are there limitations
or a waiting period involved in the coverage?
· What is the deductible? Often, you can lower your monthly
health insurance premium by buying a policy with a higher yearly
deductible amount.
· What is the coinsurance rate? What percent of your
bills for allowable services will you have to pay?
· What is the maximum you would pay out of pocket per
year? How much would it cost you directly before the insurance
company would pay everything else?
· Is there a lifetime maximum cap the insurer will pay?
The cap is an amount after which the insurance company won't
pay anymore. This is important to know if you or someone in
your family has an illness that requires expensive treatments.
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Health Maintenance
Organizations (HMOs)
Health maintenance organizations are prepaid health plans. As
an HMO member, you pay a monthly premium. In exchange, the HMO
provides comprehensive care for you and your family, including
doctors' visits, hospital stays, emergency care, surgery, lab
tests, x-rays, and therapy.
The HMO arranges for this care either directly in its own group
practice and/or through doctors and other health care professionals
under contract. Usually, your choices of doctors and hospitals
are limited to those that have agreements with the HMO to provide
care. However, exceptions are made in emergencies or when medically
necessary.
There may be a small copayment for each office visit, such as
$5 for a doctor's visit or $25 for hospital emergency room treatment.
Your total medical costs will likely be lower and more predictable
in an HMO than with fee-for-service insurance.
Because HMOs receive a fixed fee for your covered medical care,
it is in their interest to make sure you get basic health care
for problems before they become serious. HMOs typically provide
preventive care, such as office visits, immunizations, well-baby
checkups, mammograms, and physicals. The range of services covered
vary in HMOs, so it is important to compare available plans.
Some services, such as outpatient mental health care, often
are provided only on a limited basis.
Many people like HMOs because they do not require claim forms
for office visits or hospital stays. Instead, members present
a card, like a credit card, at the doctor's office or hospital.
However, in an HMO you may have to wait longer for an appointment
than you would with a fee-for-service plan.
In some HMOs, doctors are salaried and they all have offices
in an HMO building at one or more locations in your community
as part of a prepaid group practice. In others, independent
groups of doctors contract with the HMO to take care of patients.
These are called individual practice associations (IPAs) and
they are made up of private physicians in private offices who
agree to care for HMO members. You select a doctor from a list
of participating physicians that make up the IPA network. If
you are thinking of switching into an IPA-type of HMO, ask your
doctor if he or she participates in the plan.
In almost all HMOs, you either are assigned or you choose one
doctor to serve as your primary care doctor. This doctor monitors
your health and provides most of your medical care, referring
you to specialists and other health care professionals as needed.
You usually cannot see a specialist without a referral from
your primary care doctor who is expected to manage the care
you receive. This is one way that HMOs can limit your choice.
Before choosing an HMO, it is a good idea to talk to people
you know who are enrolled in it. Ask them how they like the
services and care given.
Questions to Ask About an HMO
· Are there many doctors to choose from? Do you select
from a list of contract physicians or from the available staff
of a group practice? Which doctors are accepting new patients?
How hard is it to change doctors if you decide you want someone
else? How are referrals to specialists handled?
· Is it easy to get appointments? How far in advance
must routine visits be scheduled? What arrangements does the
HMO have for handling emergency care?
· Does the HMO offer the services I want? What preventive
services are provided? Are there limits on medical tests, surgery,
mental health care, home care, or other support offered? What
if you need a special service not provided by the HMO?
· What is the service area of the HMO? Where are the
facilities located in your community that serve HMO members?
How convenient to your home and workplace are the doctors, hospitals,
and emergency care centers that make up the HMO network? What
happens if you or a family member are out of town and need medical
treatment?
· What will the HMO plan cost? What is the yearly total
for monthly fees? In addition, are there copayments for office
visits, emergency care, prescribed drugs, or other services?
How much?
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Preferred
Provider Organizations (PPOs)
The preferred provider organization is a combination of traditional
fee-for-service and an HMO. Like an HMO, there are a limited
number of doctors and hospitals to choose from. When you use
those providers (sometimes called "preferred" providers,
other times called "network" providers), most of your
medical bills are covered.
When you go to doctors in the PPO, you present a card and do
not have to fill out forms. Usually there is a small copayment
for each visit. For some services, you may have to pay a deductible
and coinsurance.
As with an HMO, a PPO requires that you choose a primary care
doctor to monitor your health care. Most PPOs cover preventive
care. This usually includes visits to the doctor, well-baby
care, immunizations, and mammograms.
In a PPO, you can use doctors who are not part of the plan and
still receive some coverage. At these times, you will pay a
larger portion of the bill yourself (and also fill out the claims
forms). Some people like this option because even if their doctor
is not a part of the network, it means they don't have to change
doctors to join a PPO.
Questions to Ask About a PPO
· Are there many doctors to choose from? Who are the
doctors in the PPO network? Where are they located? Which ones
are accepting new patients? How are referrals to specialists
handled?
· What hospitals are available through the PPO? Where
is the nearest hospital in the PPO network? What arrangements
does the PPO have for handling emergency care?
· What services are covered? What preventive services
are offered? Are there limits on medical tests, out-of-hospital
care, mental health care, prescription drugs, or other services
that are important to you?
· What will the PPO plan cost? How much is the premium?
Is there a per-visit cost for seeing PPO doctors or other types
of copayments for services? What is the difference in cost between
using doctors in the PPO network and those outside it? What
is the deductible and coinsurance rate for care outside of the
PPO? Is there a limit to the maximum you would pay out of pocket?
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Medicare
Medicare is the Federal health insurance program for Americans
age 65 and older and for certain disabled Americans. If you
are eligible for Social Security or Railroad Retirement benefits
and are age 65, you and your spouse automatically qualify for
Medicare.
Medicare has two parts: hospital insurance, known as Part A,
and supplementary medical insurance, known as Part B, which
provides payments for doctors and related services and supplies
ordered by the doctor. If you are eligible for Medicare, Part
A is free, but you must pay a premium for Part B.
Medicare will pay for many of your health care expenses, but
not all of them. In particular, Medicare does not cover most
nursing home care, long-term care services in the home, or prescription
drugs. There are also special rules on when Medicare pays your
bills that apply if you have employer group health insurance
coverage through your own job or the employment of a spouse.
Medicare usually operates on a fee-for-service basis. HMOs and
similar forms of prepaid health care plans are now available
to Medicare enrollees in some locations.
Some people who are covered by Medicare buy private insurance,
called "Medigap" policies, to pay the medical bills
that Medicare doesn't cover. Some Medigap policies cover Medicare's
deductibles; most pay the coinsurance amount. Some also pay
for health services not covered by Medicare. There are 10 standard
plans from which you can choose. (Some States may have fewer
than 10.) If you buy a Medigap policy, make sure you do not
purchase more than one.
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Medicaid
Medicaid provides health care coverage for some low-income people
who cannot afford it. This includes people who are eligible
because they are aged, blind, or disabled or certain people
in families with dependent children. Medicaid is a Federal program
that is operated by the States, and each State decides who is
eligible and the scope of health services offered.
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Disability
Insurance
Disability insurance replaces income you lose if you have a
long-term illness or injury and cannot work. This is an important
type of coverage for working-age people to consider. Disability
insurance does not cover the cost of rehabilitation if you are
injured. Check your major medical insurance to see if it is
covered there.
Some employers offer group disability insurance and this may
be one of the benefits where you work. Or you might be eligible
for some government-sponsored programs that provide disability
benefits. Many different kinds of individual policies are also
available.
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Hospital
Indemnity Insurance
This insurance offers limited coverage. It pays a fixed amount
for each day, up to a maximum number of days. You may use it
for medical or other expenses. Usually, the amount you receive
will be less than the cost of a hospital stay.
Some hospital indemnity policies will pay the specified daily
amount even if you have other health insurance. Others may coordinate
benefits, so that the money you receive does not equal more
than 100 percent of the hospital bill.
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Long-Term
Care Insurance
Long-term care insurance is designed to cover the costs of nursing
home care, which can be several thousand dollars each month.
Long-term care is usually not covered by health insurance except
in a very limited way. Medicare covers very few long-term care
expenses. There are many plans and they vary in costs and services
covered, each with its own limits.
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