Types of health plans

There are many types of health insurance and health service plans. Here are very brief descriptions of those that are most often used:

Managed care plans

There are different types of managed health care plans. Most of them have lower premiums and co-payments (co-pays) than fee-for-service insurance. (Co-payments are the amount you must pay at the time of service, usually a flat fee for office visits or other services.) Coinsurance may also be less (this is a percentage of the bill you must pay even after you’ve paid the yearly deductible amount.) Premiums, co-pays, and co-insurance amounts can differ between managed care companies and even between services within the same company. There’s usually no need to file claim forms.

Some managed care plans employ their own doctors and run their own hospitals. Others require members to use a primary care provider who coordinates all of the patient’s care and serves as a “gatekeeper” for care from specialists. The gatekeeper is usually a primary care doctor who’s responsible for the overall medical care of the patient. This doctor organizes and approves medical treatments, tests, specialty referrals, and hospitalizations. For example, if you need to see an expert like a lung specialist, you would need a referral from your primary care doctor before the specialist sees you. Otherwise your plan may not pay.

Under some plans, members must use only the services of certain providers and institutions that have contracts with the plan. Some plans do not require prior approval (also called pre-authorization), but do require that members choose providers from a particular list or network of providers. When you choose to go outside the network for care, you might have to pay an extra fee, or even pay for the full service with no help from your health insurance plan.

Many different types of institutions and agencies sponsor managed care plans, not just insurance companies. These include employers, hospitals, labor unions, consumer groups, the government, and others. It helps to know all the ins and outs of the plan and how it will affect your care.

These are the most common types of managed care plans:

• Health maintenance organizations (HMOs): The HMO will usually cover most expenses after a small co-pay. HMOs often limit your choice of providers to those within their approved provider network. This means you have to check their listing to be sure the doctor you want to see is one of their doctors. If not, the payment will not be covered, and you may have to change to a different type of health plan to have the doctor’s services paid. Or, you may have to switch to one of the approved doctors on their list.
• Point-of-service plans: A point-of-service plan (POS) is a type of HMO. The primary care doctors in a POS plan usually refer you to other doctors in the plan or network. If your doctor refers you to a doctor who’s not in the plan (out of network), you should check to see if the plan will pay all or part of the bill before you go. But if you choose a doctor outside the network, you will have to pay co-insurance, even if the service is covered by the plan. Co-insurance is what you must pay in addition to what the insurance company pays for each service. It’s usually a certain percentage of the cost. For example, the insurance company may pay 80% of the bill and you have to pay the other 20%.
• Preferred provider organization: The preferred provider organization (PPO) is a hybrid of fee-for-service (below) and an HMO. Like an HMO, there are only a certain number of doctors and hospitals you can use to get the most coverage. When you use those doctors (sometimes called preferred or network providers), most of your medical bills are covered. When you don’t use these providers, the PPO makes you pay more of the bill out of your own pocket. So you pay more to choose providers that are not in the network.

Fee-for-service plans

Fee-for-service plans are the least restrictive plans that offer the most choice in medical providers. They are also called indemnity or traditional health plans. If you have this type of health insurance, you can choose any doctor, change doctors any time, and go to any hospital anywhere in the United States.

You pay a monthly fee, called a premium. Each year, you also have to pay a certain amount of your medical costs (known as the deductible) before your insurance will start to pay. After you have met your deductible, your insurance will pay a set percentage of your bills for medical care for the rest of the year. You may have to fill out forms and send them to your insurer to get reimbursed (paid back) for medical costs you have already paid. Sometimes the doctor’s office will do this for you, and then send you a bill for the amount your insurance didn’t cover. You also need to keep receipts of drugs and other medical costs. You are responsible for keeping track of your own medical expenses and the payments that are made by you and your insurance company. This can help you greatly if there is a dispute about payments or other problems in the future.