Health Care Service Plans

Health care service plans are needed by just about everyone to avoid financial devastation if someone in the family suffers a major injury or illness. Many people who are employed have the option of choosing employer-sponsored medical insurance plans. People seeking medical insurance on their own must search through the litany of plans available in order to make the right choice.

History

• The first coverage provided individuals protection against injuries or accidents sustained on steamboats and trains. Massachusetts Health Insurance sold the first group policy in 1847. In 1932, Blue Cross and Blue Shield began offering group plans. Employer-sponsored health plans boomed beginning in the 1940s. In 1965, Congress passed a bill that created Medicare and Medicaid. By 1995, the majority of people with health care service plans were enrolled in some type of managed care plan.

Types

• Generally, health care service plans fall under four categories: indemnity, managed cared Point of Sale (POS) and high-deductible health plan (HDHP). There are also government-sponsored health care plans, such as Medicare and Medicaid. Each choice has certain benefits and disadvantages. You should understand the difference between the plans and what your options are under each.

Function

• Indemnity plans are also called "fee-for-service" plans. The plan allows you to use any doctor in any location for just about any reason. You must pay a deductible and the plan pays anywhere from 60 to 80 percent of the costs.

  Managed care plans are health maintenance organizations (HMOs) or preferred provider organizations (PPOs). HMOs have contracts with various physicians and specific hospitals that comprise the "network" of approved service providers. There is no deductible; however, members pay a monthly premium. Some services may require a small co-payment. You have a choice of your primary doctor.

  If you need to see a specialist, you must get a referral from your primary physician. You must get prior approval to seek health care services outside the network if you want it to be co-coverage. Under PPOs, you can visit your primary doctor any time and receive full coverage. With a referral, you can visit a specialist and receive partial coverage. POS allows you three service options. If you visit an HMO physician, you receive full coverage. You can visit a physician in the PPO and make a co-payment or visit a physician outside the network. You would have to pay your deductible. The coverage will pay a portion of the cost.

  HDHP requires you to make periodic deposits in a Health Savings Account (HSA). Although you are required to pay a large deductible, you get to choose any physician or hospital you like.

  Medicare is funded by the federal government. Generally, it serves people who are age 65 and older and certain disabled people. Medicaid is a partnership between the federal government and the states. The states administer the program and provide up to 50 percent of the money. Medicaid serves low-income families, children and individuals.

Considerations

• When you compare health care service plans, there are a few things you should consider: the basic types of plans, such as HMO or PPO; deductibles; and other factors. Next, check to see which doctors and hospitals are available under each of the medical plans. If you are required to fund an HSA, you should include it in your evaluation. You should then complete a total assessment of your personal situation and decide which option works best for you.

Significance

• The carriers that provide health care plans are regulated by state laws. The laws may vary from state to state, but typical guidelines for health care plans include: They must provide coverage for emergency services without requiring prior approval; have a stated time frame in which to pay, contest or deny any claim; be forthright in revealing medical information regarding service and treatment options; honor your right to a second opinion; and disclose procedures for settling grievances.