Health insurance types explained
What is managed care?
These plans have a more direct control over the cost of health care by requiring policyholders to get consent before undergoing more expensive treatment. If you ignore these controls and see a specialist of your choice or go to a hospital for treatment, you may not be able to recover the cost from the insurer.
What is a fee-for-service plan?
This health insurance offers you the most freedom of choice, allowing you to pick your own doctor and hospital. But these plans only pay a part of the total bill with you paying both a deductible and, in some cases, a further percentage of the total cost. Many operate as indemnity policies. You pay and then reclaim. The basic policies only cover the cost of the room and nursing services. Major medical insurance plans covers a list of the more expensive treatments.
What is a deductible?
This is the amount you pay before anything is claimable from the insurer. The usual deductible is $250 with $500 cap for a family. Remember not all the expenses you pay count toward the deductible.
Health Maintenance Organizations (HMOs)
You pay a monthly premium and the HMO arranges for you to receive treatment through a network of doctors, clinics and hospitals under contract. Your choices are limited and there are usually co-payments. With this type of health insurance, you pick a primary care physician who then acts as a gatekeeper for access to all other services.
Point-of-Service Plans (POS)
This is an indemnity option within the HMO system. If your primary care doctor refers you outside the network you can claim back all the cost. If you refer yourself, coinsurance applies.
Preferred Providers Organizations (PPO)
This combines fee-for-service and an HMO. If you use one of the preferred providers from the network, most of your bills are covered subject to a co-payment. If you decide to go outside the network, you must pay a higher proportion of the bill on a coinsurance basis.
What is coinsurance?
This is the amount you have to pay after the deductible. The health insurance plan will set the percentage, usually with you paying at least 20% of the remaining amount.
What is co-payment?
This is a flat fee as a contribution to the cost of a consult with your doctor, or of basic lab tests, or medication.