Health > Basics
The first thing that you need to be aware of is that you have no right to health insurance. There are no laws saying that your employer must provide health insurance for you. If you quit your job, there is no guarantee that you can continue with the same health insurance plan you previously enjoyed. Having said that, it is also worth noting that many employers do provide group health plans for their employees.
Whether your health insurance is provided by your employer, or if you find yourself in the position of having to purchase your own health insurance, here is what you need to know.
Indemnity (also called fee-for-service)
With an indemnity plan, you can use any medical provider. You, or they, will then send the bill to your insurance company, which pays part of the cost.
Usually you have a deductible, which is the amount of the expenses you must pay each year before the insurer begins to reimburse you -- such as $200 or $250. Once you've paid the deductible, indemnity plans pay a percentage of what is considered the usual and customary charge for covered services. The insurer generally pays 80 percent of the usual costs and you pay the other 20 percent, which is known as coinsurance. 70/30 reimbursement plans are also available.
Policies typically have an out-of-pocket maximum. This means that once your covered expenses reach a certain amount in a given calendar year, the usual fee for covered benefits will be paid in full by the insurer, and you no longer pay the coinsurance.
Managed care plans generally provide you with comprehensive health services and offer financial incentives for you to use the providers that belong to the plan. There are three major types of managed care plans: health maintenance organizations (HMOs), point-of-service (POS) plans, and preferred provider organizations (PPOs).
HMOs are the oldest form of managed care plan. Instead of paying separately for each service that you receive, your coverage is paid in advance. This is called prepaid care. For a set monthly fee, HMOs offer members a range of health benefits, including preventive care.
HMOs will give you a list of doctors from which to choose a primary care physician; the doctor that will coordinate your care. There is usually a copayment involved for office visits, hospitalizations, and other health services.
Many HMOs offer plan members the option to self direct care, as one would under an indemnity or PPO plan, rather than get referrals from primary care physicians. An HMO with this opt-out provision is known as a point-of-service (POS) plan. How the plan functions depends on whether individual plan members use their primary care physician or self direct their care at the "point of service."
A PPO is the form of managed care most like an indemnity plan. A PPO negotiates discounts with doctors, hospitals, and other providers of care who will accept lower fees from the insurer for their services. As a result, the premiums are lower because some of the provider payments will be discounted.
Buying individual health insurance
If you need to buy your own individual health coverage, it can be costly. In group plans, the risks of health care are spread across many people, keeping your premiums low. With individual plans, your personal health history becomes a factor, and may raise your premiums drastically, or even prevent your application from being accepted.
When you have a health plan, your premiums could increase at any time. Insurance companies often only have to submit increases in writing to begin immediately charging their customers more. Until the insurance regulators decide that the rates are excessive, your insurance company can keep charging you more.
If you are finding that you cannot afford individual health insurance, there are a number of government sponsored programs that can help you out: