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Check-Up 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 article 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 thelowest 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:

  1. Having complete freedom to choose doctors and hospitals is the most important thing to me in a health plan, even if it costs more.
  2. Holding down my costs is the most important thing to me, even if it means limiting some of my choices.
  1. 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.
  2. I do not travel a lot and almost all care for my family will be needed in our local area.
  1. I don't mind a health insurance plan that includes filling out forms or keeping receipts and sending them in for payment.
  2. I prefer not to fill out forms or keep receipts. I want most of my care covered without a lot of paperwork.
  1. 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.
  2. 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.
  1. f 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.
  2. 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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