Insurance Plan Types

There are many types and designs of health insurance plans and each works in a different manner. This is a guide that will help you understand the different types of health insurance plans that exists.

PPO stands for Preferred Provider Option. This started as a basic health insurance plan that had a deductible, and then a co-insurance with a stop loss. For example you may have a $500.00 deductible that means for any type of hospital or outpatient services you would pay the first $500.00. After you satisfied your deductible the plan would pay 80% (co-insurance) of the next $5,000.00 (stop loss). In this example you would pay no more than $1,500 of any hospital bill. Add the PPO option to this plan and then it may turn into 80% when you use the PPO network of hospitals and surgery centers and 60% for those who are not in the network. Under a PPO option you would be given a list of doctors that if you use them you would pay co-pay per visit. Your deductible would not have to be satisfied under this arrangement; all you would pay is the co-pay for your visit. Most plans cover routine care such as physicals, but you will always need to read your booklet. With a PPO you do not have to get referrals to other doctors and most of the time you can use non-network doctors to write prescriptions and fill them with your drug card. The two disadvantages are that a PPO is normally higher in price and if you are enrolling in a group plan and do not already have coverage there is a waiting period for preexisting conditions. When you are using network providers you only pay your percentages of their approved charges. This is not true if you go out of the network.

HMO stands for Health Maintenance Organization. These types of plans have been in existence since the mid-70’s and have evolved quite a bit since their inception. Traditionally they did not have a deductible, always had a drug prescription card, paid for all routine care, and had no pre-existing condition clauses. They have changed in that a lot of them have deductibles or daily co-pays for inpatient hospital care. To date I have never seen or heard of one that had a pre-existing condition waiting period. The disadvantage is that they require referrals. In the state of Ga. there are some services that an HMO cannot require referrals for. They are mental and nervous, ophthalmologist, optometry, dermatologists, and obstetrics and gynecology. One should take advantage of the fact that you can get a full physical each year for the cost of co-pay. This was their original intent that if a person received routine exams on a regular basis they would avoid being in the hospital because problems could be found and cured early. I am convinced this theory works. All plans have co-pay for hospital emergency room care and most of them do not stipulate you have to use a network hospital. With the exception of emergency’s you have to use network providers.

POS stands for Point of Service Plans. This means that at the point of service you can choose to use the network portion of your plan to receive network benefits or you can go out of network. If you use the network portion it is the same as an HMO network, if you choose to go out of network you will pay a deductible and a co-insurance portion of all the charges.

HYBRID HMO plans come in several versions. The first is called an Open Access HMO. This is an HMO that does not require a referral and also is a point of service plan. Beware that when you are in the network if a doctor gives you a referral that does not guarantee that they are in the network and you may end up paying for all of the charges. That is because your out of network portion would have a deductible and it would need to be satisfied before your plan would pay any of the charges. To receive network benefits from an HMO you will have to use a network provider to admit you to a network facility. There are HMO plans that allow you to self refer to a specialist but you would have to pay a higher cost and if in the hospital your out of pocket would be higher. The second hybrid HMO is sometimes called a Multi-Choice Plan. This type of HMO will have a three-tear network. If you use the first level and get referrals to doctors through the network you would have a high level of benefits and most plans would be 100% although some are less rich. The second tear allows you to self refer and your benefits would be less than the first tear. The third tear is when you go completely out of the network. The plan will have a specific deductible and co-insurance with a maximum out of pocket. The downside to going completely out of network is the usual and customary charges. Anything above usual and customary has to be paid by the insured.

INDEMNITY plans are old traditional health insurance plans. They have a deductible and co-insurance, do not use a network and are very expensive.