Health Insurance: You Need To Understand The Basics

Health Insurance: Understanding the BasicsHMO and PPO.
Americans today receive a barrage of healthIn an HMO, or Health Maintenance Organization, you
insurance information from every direction. Punditspay a monthly premium in exchange for
speak of the national health care crisis; Medicare nowcomprehensive medical care. There is usually a small
offers additional options; and employee benefitsco-payment for doctor's visits (usually ranging from
officers often speak in a jumble of letters from HMO$5 to $25), and a somewhat higher co-pay or
to PPO. For the consumer, choosing a healthdeductible for hospitalization. Your out of pocket
insurance plan can be quite confusing.expenses are significantly easier to predict and
Health insurance is not "one size fits all." Depending onmanage with an HMO rather than a fee for service
your current state of health, budget, and individualplan. However, an HMO introduces the concept of a
needs, the best insurance for you may be far"gatekeeper." In an HMO, you must choose a primary
different than the best insurance for your friend orcare physician. That doctor, working in tandem with a
family member. A basic understanding of the variousrisk management insurance officer, will determine
types of insurance that are available, and what eachyour access to specialists. Finally, an HMO requires
does and does not cover, can be helpful inyou to use doctors that are part of the HMO's
determining which plan will work best for eachnetwork. If you travel a lot, be sure to find out what
person.the provisions are should you require an out of
Traditional health insurance, also called "fee fornetwork doctor.
service" or 80/20, is the type of insurance that mostA PPO, or Preferred Provider Organization, can be
of us grew up with. You are entitled to visit anyconsidered a blend of HMO and fee for service plans.
doctor, and the insurance company pays 80% of theYou will choose a primary care physician, and
bill. This type of insurance offers the greatestgenerally use doctors that are part of the
flexibility, but carries the highest out of pocketorganization. However, a PPO lets you see doctors
expenses. A deductible must be met before thewho are not part of the network for a somewhat
insurance company will pay. The lower your monthlyhigher fee. This increased flexibility is excellent for
premium, the higher the deductible will be. Thethose who travel frequently, or for those whose
insurance company usually reserves the right to capcurrent doctor is not a member of the organization.
payments if, in their opinion, the doctor's fees areMany other options exist for covering your medical
higher than what is "reasonable and customary" inexpenses. A Health Savings Account allows you to
your area. This is an excellent type of coverage toset aside pre-tax dollars each month. Catastrophic
have if you become extremely ill and require ainsurance carries a low premium with a high
network of specialists, or if your medical bills aredeductible, and is designed to cover you if you
astronomical. Once your expenses for the year reachdevelop a serious illness or injury. However, for the
a certain level, the insurance company will take overaverage consumer, the choice is generally between
and pay 100%.fee for service and managed care. All types of plans
Many healthy people do not need fee for servicecarry their own advantages and disadvantages, and it
medical insurance. They find that their out of pocketis important to understand what these are in order
expenses are much lower with a "managed care"to make the right decisions for your family.
plan. There are two basic types of managed care -