Checkup
on Health Insurance Choices
Today,
there are more types of health insurance, and more
choices, than ever before. The information presented here
will help you choose a plan that is right for you. You
may be buying health insurance for the first time, or you
may already have health insurance but want to consider
changing plans. Married or single, children or no
children, this information will help you to find out how
to choose a health insurance plan that best meets your
needs and your pocketbook. Definitions of the health
insurance terms used are included in the section called
Understanding
Health Insurance Terms.
Contents
Thinking
About Health Insurance Choices
Why
Do You Need Health Insurance?
Where
Do People Get Health Insurance
Coverage?
Group
Insurance
Individual
Insurance
What
Are Your Choices?
Which
Type Is Right for You?
Managed
Care: A Way to Control Costs
Types
of Insurance
Fee-for-Service
What
Is a "Customary" Fee?
Questions
to Ask About Fee-for-Service
Insurance
Health
Maintenance Organizations (HMOs)
Questions
to Ask About an HMO
Preferred
Provider Organizations (PPOs)
Questions
to Ask About a PPO
Checklist:
What's Most Important to You?
Worksheet:
What Is Your Best Buy?
Other
Types of Insurance
Medicare
Medicaid
Disability
Insurance
Hospital
Indemnity Insurance
Long-Term
Care Insurance
A
Final Word
Understanding
Health Insurance Terms
Thinking
About Health Insurance Choices
Which
of these statements best describes your thoughts on
health insurance?
"I
get health insurance through my job. I have the
coverage I need...I think"
Many
employers offer a choice of plans. The information
provided will help you figure out the plan that's best
for you.
"I
know I need health insurance, but I'm not sure how to
get the best protection at the lowest cost."
You're
not alone. Many people have questions about how to select
a health insurance plan. The information provided will
help you find some answers.
"I
can't afford health insurance right now. I have too
many bills to pay and other things I need to
buy."
Health
insurance is one of your most important needs. Without
it, one serious illness or accident could wipe you out
financially. The information provided will help you
decide which is the best plan you can afford.
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Why
Do You Need Health Insurance?
Today,
health care costs are high, and getting higher. Who will
pay your bills if you have a serious accident or a major
illness? You buy health insurance for the same reason you
buy other kinds of insurance, to protect yourself
financially. With health insurance, you protect yourself
and your family in case you need medical care that could
be very expensive. You can't predict what your medical
bills will be. In a good year, your costs may be low. But
if you become ill, your bills could be very high. If you
have insurance, many of your costs are covered by a
third-party payer, not by you. A third-party payer can be
an insurance company or, in some cases, it can be your
employer.
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Where
Do People Get Health Insurance Coverage?
Group
Insurance
Most
Americans get health insurance through their jobs or are
covered because a family member has insurance at work.
This is called group insurance. Group insurance is
generally the least expensive kind. In many cases, the
employer pays part or all of the cost.
Some
employers offer only one health insurance plan. Some
offer a choice of plans: a fee-for-service plan, a health
maintenance organization (HMO), or a preferred provider
organization (PPO), for example. Explanations of
fee-for-service plans, HMOs, and PPOs are provided in the
section called Types
of Insurance.
What
happens if you or your family member leaves the job? You
will lose your employer-supported group coverage. It may
be possible to keep the same policy, but you will have to
pay for it yourself. This will certainly cost you more
than group coverage for the same, or less,
protection.
A
Federal law makes it possible for most people to continue
their group health coverage for a period of time. Called
COBRA (for the Consolidated Omnibus Budget Reconciliation
Act of 1985), the law requires that if you work for a
business of 20 or more employees and leave your job or
are laid off, you can continue to get health coverage for
at least 18 months. You will be charged a higher premium
than when you were working.
You
also will be able to get insurance under COBRA if your
spouse was covered but now you are widowed or divorced.
If you were covered under your parents' group plan while
you were in school, you also can continue in the plan for
up to 18 months under COBRA until you find a job that
offers you your own health insurance.
Not
all employers offer health insurance. You might find this
to be the case with your job, especially if you work for
a small business or work part-time. If your employer does
not offer health insurance, you might be able to get
group insurance through membership in a labor union,
professional association, club, or other organization.
Many organizations offer health insurance plans to
members.
Individual
Insurance
If
your employer does not offer group insurance, or if the
insurance offered is very limited, you can buy an
individual policy. You can get fee-for-service, HMO, or
PPO protection. But you should compare your options and
shop carefully because coverage and costs vary from
company to company. Individual plans may not offer
benefits as broad as those in group plans.
If
you get a noncancellable policy (also called a guaranteed
renewable policy), then you will receive individual
insurance under that policy as long as you keep paying
the monthly premium. The insurance company can raise the
cost, but cannot cancel your coverage. Many companies now
offer a conditionally renewable policy. This means that
the insurance company can cancel all policies like yours,
not just yours. This protects you from being singled out.
But it doesn't protect you from losing
coverage.
Before
you buy any health insurance policy, make sure you know
what it will pay for...and what it won't. To find out
about individual health insurance plans, you can call
insurance companies, HMOs, and PPOs in your community, or
speak to the agent who handles your car or house
insurance.
Tips
when shopping for individual insurance:
- Shop
carefully. Policies differ widely in coverage and
cost. Contact different insurance companies, or ask
your agent to show you policies from several insurers
so you can compare them.
- Make
sure the policy protects you from large medical
costs.
- Read
and understand the policy. Make sure it provides the
kind of coverage that's right for you. You don't want
unpleasant surprises when you're sick or in the
hospital.
- Check
to see that the policy states: the date that the
policy will begin paying (some have a waiting period
before coverage begins), and what is covered or
excluded from coverage.
- Make
sure there is a "free look" clause. Most companies
give you at least 10 days to look over your policy
after you receive it. If you decide it is not for you,
you can return it and have your premium
refunded.
- Beware
of single disease insurance policies. There are some
polices that offer protection for only one disease,
such as cancer. If you already have health insurance,
your regular plan probably already provides all the
coverage you need. Check to see what protection you
have before buying any more insurance.
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What
Are Your Choices?
There
are many different types of health insurance. Each has
pros and cons. There is no one "best" plan. The plan
that's right for a single person may not be best for a
family with small children. And a plan that works for one
family may not be right for another.
For
example, if your family includes just two adults, it may
be less expensive for each of you to have individual
coverage than for just one of you to have a family plan.
If you have children, or if you might have children soon,
you need a family plan. Because your situation may
change, review your health insurance regularly to make
sure you have the protection you need.
Choosing
a health insurance plan is like making any other major
purchase: You choose the plan that meets both your needs
and your budget. For most people, this means deciding
which plan is worth the cost. For example, plans that
allow you the most choices in doctors and hospitals also
tend to cost more than plans that limit choices. Plans
that help to manage the care you receive usually cost you
less, but you give up some freedom of choice.
Cost
isn't the only thing to consider when buying health
insurance. You also need to consider what benefits are
covered. You need to compare plans carefully for both
cost and coverage.
Although
there are many names for health insurance plans, the
information here groups them as three main
types:
- Fee-For-Service
(or Traditional Health Insurance).
- Health
Maintenance Organizations (or HMOs).
- Preferred
Provider Organizations (or PPOs).
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Which
Type Is Right for You?
For
each group, choose the statement 1 or 2 that best
describes how you feel:
- Having
complete freedom to choose doctors and hospitals is
the most important thing to me in a health plan, even
if it costs more.
- Holding
down my costs is the most important thing to me, even
if it means limiting some of my choices.
- I
travel a lot or have children that live away from me
and we may need to see doctors in other parts of the
country.
- I
do not travel a lot and almost all care for my family
will be needed in our local area.
- I
don't mind a health insurance plan that includes
filling out forms or keeping receipts and sending them
in for payment.
- I
prefer not to fill out forms or keep receipts. I want
most of my care covered without a lot of
paperwork.
- In
addition to my premiums, I am willing to pay for the
cost of routine and preventive care, such as office
visits, checkups, and shots. I also like knowing that
I can get an appointment for these services when I
want one.
- I
want a health plan that includes routine and
preventive care. I don't mind if I have to wait for
these services to be scheduled for an available
appointment with my doctor.
- If
I need to see a specialist, I probably will ask my
doctor for a recommendation, but I want to decide whom
to go to and when. I don't want to have to see my
primary care doctor each time before I can see a
specialist.
- I
don't mind if my primary care doctor must refer me to
specialists. If my doctor doesn't think I need special
services, that is fine with me.
If
your answers are mostly 1: You want to make your own
health care choices, even if it costs you more and takes
more paperwork. Fee-for-service may be the best plan for
you.
If
your answers are mostly 2: You are willing to give up
some choices to hold down your medical costs. You also
want help in managing your care. Consider a health
maintenance organization.
If
your answers are some 1's and some 2's: You might want to
look for a plan such as a preferred provider organization
that combines some of the features of fee-for-service and
a health maintenance organization.
The
differences among fee-for-service plans, HMOs, and PPOs
are not as clear-cut as they once were. Fee-for-service
plans have adopted some activities used by HMOs and PPOs
to control the use of medical services. And HMOs and PPOs
are offering more freedom to choose doctors, the way
fee-for-service plans do. By studying your health
insurance options carefully, you will be able to pick the
one that provides you with the coverage you need, no
matter what it is called.
Managed
Care: A Way to Control Costs
Managed
care influences how much health care you use. Almost all
plans have some sort of managed care program to help
control costs. For example, if you need to go to the
hospital, one form of managed care requires that you
receive approval from your insurance company before you
are admitted to make sure that the hospitalization is
needed. If you go to the hospital without this approval,
you may not be covered for the hospital bill.
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Types
of Insurance
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.
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?
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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Checklist:
What's Most Important to You?
Insurance
plans vary. Before choosing a plan, decide what is most
important to you. This checklist can help. Put a check in
front of those services that are important to you. Then
see how many of these services are in Policy #1, Policy
#2, and Policy #3. On the checklist, write in the
coinsurance or copayment rate, if there is one, and any
limits on service.
Remember
that the most important service to be covered is
hospitalization. If you are not covered for hospital
care, then one sickness could cost you thousands of
dollars, even hundreds of thousands of
dollars.
|
Service
|
Policy #1
|
Policy #2
|
Policy #3
|
|
|
|
|
|
|
Hospital care
|
|
|
|
|
Surgery (inpatient and outpatient)
|
|
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|
|
Office visits to your doctor
|
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|
|
Maternity care
|
|
|
|
|
Well-baby care
|
|
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Immunizations
|
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|
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Mammograms
|
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Medical tests, x-rays
|
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|
Mental health care
|
|
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|
|
Dental care, braces and cleaning
|
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|
Vision care, eyeglasses and exams
|
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Prescription drugs
|
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Home health care
|
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Nursing home care
|
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Services you need that are excluded
|
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Other issues that are important to you:
|
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Choice of doctors
|
|
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Convenient location of doctors and
hospitals
|
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Ease of getting an appointment
|
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Minimal paperwork
|
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Waiting period before coverage begins
|
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|
Which policy is best for you?
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Worksheet:
What Is Your Best Buy?
It
is difficult to determine exactly what you will spend a
year on health care. You do not know whether you will be
sick 6 months from now and need an operation. Hopefully,
you will not.
Using
this worksheet, you can begin to make some rough
estimates. Much will depend on what service you need or
want, how many people are in your family, your age, and
other factors. Do you need to have your eyes tested this
year? Will you have a mammogram or other cancer screening
test? Does your child need immunizations?
Look
at your medical and insurance records from last year as a
guide to what services you might use this year. Add up
the actual costs to you, including premiums. Estimate
what you might spend on your health care in terms of
deductibles, coinsurance and/or copayments, and services
that are not covered.
Compare
Policy #1, Policy #2, and Policy #3 to determine which is
the best buy for you.
|
What is your monthly premium? |
Policy #1 |
Policy #2 |
Policy #3 |
|
Individual: |
|
|
|
|
Family: |
|
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|
Multiply by 12 for annual cost: |
|
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|
What is your deductible? (if there is
one) |
|
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Individual: |
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Family: |
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|
What is your coinsurance rate or copayment,
if there is one? |
|
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|
(Note if there is a higher rate for special
services, such as outpatient mental health
care.) |
|
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Are there any annual limits for days or
services covered and the amount spent on
you? |
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What is the maximum you will have to pay
out-of-pocket each year? |
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What is the lifetime limit, if any,that you
will be reimbursed? |
|
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Total estimated yearly cost to you: |
|
|
|
Now
look at the checklist of services that are important to
you. Is your best buy the same policy that gives
you the most services you need?
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Other
Types of Insurance
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.
The
best source of information on the Medicare program is the
Medicare Handbook. This booklet explains how the
Medicare program works and what your benefits are. To
order a free copy, write to: Health Care Financing
Administration, Publications, N1-26-27, 7500 Security
Blvd., Baltimore, MD 21244-1850. You also can contact
your local Social Security office for
information.
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.
You
need to shop carefully before deciding on the best policy
to fit your needs. You may get another booklet, Guide
to Health Insurance for People with Medicare, to help
you in making the right choice. To order a free copy,
write to: Health Care Financing Administration,
Publications, N1-26-27, 7500 Security Blvd., Baltimore,
MD 21244-1850.
Another
good source of information on the same topic is The
Consumer's Guide to Medicare Supplement Insurance. To
order a free copy, write to: Health Insurance Association
of America, 555 13th St., N.W., Suite 600 East,
Washington, D.C. 20004.
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.
General
information on the Medicaid program is given in the
Medicaid Fact Sheet. For a free copy, write to:
Health Care Financing Administration, Publications,
N1-26-27, 7500 Security Blvd., Baltimore, MD 21244-1850.
For specifics on Medicaid eligibility and the health
services offered, contact your State Medicaid Program
Office.
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.
The
Consumer's Guide to Disability Insurance explains
disability insurance and sources of disability income to
help you decide if you need this coverage. It will also
help you compare your choices of policies. For a free
copy, write to: Health Insurance Association of America,
555 13th St., N.W., Suite 600 East, Washington, D.C.
20004.
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.
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.
More
detailed information is given in A Shopper's Guide to
Long-Term Care Insurance. Contact your State
Insurance Department or write: National Association of
Insurance Commissioners, 120 W. 12th Street, Suite 1100,
Kansas City, MO 64105.
Another
good source of information is The Consumer's Guide to
Long-Term Care Insurance. For a free copy, write to:
Health Insurance Association of America, 555 13th St.,
N.W., Suite 600 East, Washington, D.C. 20004.
Return
to Contents
A
Final Word
There's
no doubt that choosing among health insurance plans takes
time and effort. Now that you have read this information,
you know what questions to ask so you will be able to
carefully compare various plans and find the one that
best fits your needs.
Return
to Contents
Understanding
Health Insurance Terms
Coinsurance:
The amount you are required to pay for medical care in a
fee-for-service plan after you have met your deductible.
The coinsurance rate is usually expressed as a
percentage. For example, if the insurance company pays 80
percent of the claim, you pay 20 percent.
Coordination
of Benefits: A system to eliminate duplication of
benefits when you are covered under more than one group
plan. Benefits under the two plans usually are limited to
no more than 100 percent of the claim.
Copayment:
Another way of sharing medical costs. You pay a flat fee
every time you receive a medical service (for example, $5
for every visit to the doctor). The insurance company
pays the rest.
Covered
Expenses: Most insurance plans, whether they are
fee-for-service, HMOs, or PPOs, do not pay for all
services. Some may not pay for prescription drugs. Others
may not pay for mental health care. Covered services are
those medical procedures the insurer agrees to pay for.
They are listed in the policy.
Deductible:
The amount of money you must pay each year to cover your
medical care expenses before your insurance policy starts
paying.
Exclusions:
Specific conditions or circumstances for which the policy
will not provide benefits.
HMO
(Health Maintenance Organization): Prepaid health plans.
You pay a monthly premium and the HMO covers your
doctors' visits, hospital stays, emergency care, surgery,
checkups, lab tests, x-rays, and therapy. You must use
the doctors and hospitals designated by the
HMO.
Managed
Care: Ways to manage costs, use, and quality of the
health care system. All HMOs and PPOs, and many
fee-for-service plans, have managed care.
Maximum
Out-of-Pocket: The most money you will be required pay a
year for deductibles and coinsurance. It is a stated
dollar amount set by the insurance company, in addition
to regular premiums.
Noncancellable
Policy: A policy that guarantees you can receive
insurance, as long as you pay the premium. It is also
called a guaranteed renewable policy.
PPO
(Preferred Provider Organization): A combination of
traditional fee-for-service and an HMO. When you use the
doctors and hospitals that are part of the PPO, you can
have a larger part of your medical bills covered. You can
use other doctors, but at a higher cost.
Preexisting
Condition: A health problem that existed before the date
your insurance became effective.
Premium:
The amount you or your employer pays in exchange for
insurance coverage.
Primary
Care Doctor: Usually your first contact for health care.
This is often a family physician or internist, but some
women use their gynecologist. A primary care doctor
monitors your health and diagnoses and treats minor
health problems, and refers you to specialists if another
level of care is needed.
Provider:
Any person (doctor, nurse, dentist) or institution
(hospital or clinic) that provides medical
care.
Third-Party
Payer: Any payer for health care services other than you.
This can be an insurance company, an HMO, a PPO, or the
Federal Government.
Additional
Resources:
For
more current information on health insurance and health
plan choice, select Choosing
and Using a Health Plan
or Your
Guide to Choosing Quality Health
Care.
Return
to Contents
Internet
Citation:
Checkup
on Health Insurance Choices. AHCPR Publication No.
93-0018, December 1992. Agency for Health Care Policy and
Research, Rockville, MD. http://www.ahrq.gov/consumer/insuranc.htm
