“Health is not simply the absence of sickness.” – Hannah Green
This statement is all too true. Health is taking a walk instead of staying in front of the television; health is spending time with friends instead of time alone; health is feeling good about yourself at the end of the day; health is not worrying about insurance… it’s just knowing you’re covered.
We hope the following will help you understand the differences between indemnity plans and managed care plans (PPO, POS & HMOs).
Indemnity…
With an indemnity plan you can use any medical provider (such as a doctor and hospital). You, or they, send the bill to the insurance company, which pays part of the cost.
Once you meet the deductible, most indemnity plans pay a percentage of what they consider the usual and customary charge for covered services. The insurer generally pays 80 percent of the usual and customary costs and you pay the other 20 percent, which is known as coinsurance. If the provider charges more than the usual and customary rates, you will have to pay both the coinsurance and the excess charges.
Preferred Provider Organization (PPO)…
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. If you go to a doctor within the PPO network, you will pay a copayment. Your coinsurance will be based on the negotiated discounted charges for PPO members. For example, the insurer may reimburse you for 90 percent of the cost if you go to a provider within the network. If you choose to go a provider out of the network, the insurer might only reimburse you for 60 percent of the cost.
Point-of-Service (POS)…
Many HMOs offer plan members the option to self direct care, rather than get referrals from primary care physicians. When medical care is needed, the individual plan member essentially has up to two or three choices, depending on the particular health plan. The plan member can choose to go through his or her primary care physician, in which case services will be covered under HMO guidelines (i.e., usually a copayment will be required). Alternatively, the plan member can access care through a PPO provider and the services will be covered under in-network PPO rules (i.e., usually a copayment and coinsurance will be required). Lastly, if the plan member chooses to obtain services from a provider outside of the HMO and PPO networks, the services will be reimbursed according to out-of-network rules (i.e., usually a copayment and higher coinsurance charge will be required).
Health Maintenance Organization (HMO)…
In an HMO, instead of paying for each service that you receive separately, 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, but typically care must be authorized by your primary care physician.
HMOs will give you a list of doctors from which to choose a primary care physician. This doctor coordinates your care, which means that generally you must contact him or her to be referred to any specialist. Typically, with most HMOs there is a copayment for office visits, hospitalizations, and other health services.
