Types of Plans | Final Considerations

PD_Global Business and Currency_52276"Managed care" refers to health insurance plans or systems that coordinate the quality and cost of care for enrolled members. Usually, if you enroll in a managed care plan, you will need to choose health care providers from a network. Going outside of the network will either not be covered or will only be partially covered. Network providers will submit claims directly to the insurance companies, so you will not have to submit claim forms. Patients buy into a network, paying a basic fee, or premium, each month, and then paying more as they need services. Many managed care plans require you to pay a "co-pay" for visits to doctors offices, clinics, and hospitals at the time of your visit. These fees are generally lower than those for traditional indemnity insurance plans.

Traditional indemnity plans (or reimbursement plans) reimburse you for medical expenses performed by any provider. These plans usually require more out-of-pocket expenses, such as deductibles and co-payments. They allow you to see the health provider of your choice; however, the amount of reimbursement you can receive may be limited.

Types of Plans

Managed care plans vary in how much freedom you have when choosing providers. In general, you will pay more for greater choice in providers. The three basic types of managed care plans are:

HMO members pay a fixed monthly fee and get a variety of medical services. With few exceptions, these plans cover only doctors, hospitals, labs, and others within the parent organization, but the range of care is virtually complete, and the prices are generally the lowest. Additionally, most drugs are covered. Most HMOs require that you select a "primary care doctor," whose permission, called a "referral," you need in order to see a specialist or enter a hospital (except in an emergency). HMOs stress the importance of preventative care to keep members healthy.

These plans generally have a higher monthly premium than HMOs and cover only a percentage of your care (eg, 80%). In addition to a co-pay, they charge a "deductible" which is the minimum amount you must spend on your own health services before the PPO kicks in. While PPOs have "in-network" doctors and hospitals, you can seek care from specialists or other doctors within this network without necessarily obtaining a referral from a primary care provider. And you can go outside of network, although it will cost you much more for each visit.

This is a sort of cross between the PPO and HMO. Generally, these plans charge you less for using in-network providers and require you to have a primary care doctor, though you may seek a specialist out of the network on your own at a higher cost to you.

Final Considerations

One rule of thumb is that plans that cost more per month generally provide you with more choices, but also may cost more when a service is provided.

Some plans provide drugs discounts. Others do not, requiring you or your employer to select another company for your prescriptions if you want to avoid paying full charges. Preventive dental and vision coverage may be provided by HMOs, but may not be covered by other types of plans.