Health insurance policy
First of all, in legal terms, what is a health insurance policy
It is a binding contract issued by an insurance company to either an individual or a group. This contract promises to pay for the health care reasonably required by the insured to treat an illness or injury. The insured is also known as policy holder or certificate holder.
In case the insurance policy is issued to an individual, the individual applies for the policy and is required to pay premiums either directly or through payroll deduction. Individual health insurance policies provide coverage not only to the individual policy holder but also covers spouse and dependent family members in exchange for a higher premium.
Whether it is an employer or a group or an association health insurance, the entity will be called group policyholder and the covered individuals will receive certificates of insurance. In such a group insurance arrangement, the policyholder is not only required to pay the premiums, but the insured has the responsibility of paying deductibles as well as co-pays i.e. a percentage of actual medical charges or maybe a fixed amount per visit. These deductibles and co-pays are predetermined in the policy at set amounts and rates.
Health insurance policy
With the help of insurance policy, the insurance company has agreed to cover costs of certain medical services and these are listed in your policy. These are called covered services. But there will also be certain medical services which are not covered by the insurance company and these are also mentioned in the policy. To receive any uncovered medical care, you will have to pay from your own pocket. Here, it becomes useful to have a clear-cut understanding of the terms such as medical necessity.
A medical necessity is something that your doctor has decided is absolutely necessary. This is entirely different and should never be confused with a medical benefit which refers to something that your insurance policy has agreed to cover. So in some cases it is entirely possible that the medical care you doctor thinks is necessary for you is not covered by your policy. Thus, the choice of which tests, drugs and services an insurance policy will cover rests with the insurance company and not with you or your doctor. Thus, it becomes not only desirable but pretty necessary that before buying any health insurance policy, be clear about what all services it covers and what it doesnt cover. Read different insurance policies from different insurance companies and if you still have some questions, feel free to call the insurance company and ask their representative to explain those points. Some policies may require that you get prior approval from the insurance company before getting certain specialized medical treatment. These things should also be discussed clearly. In the event the insurance company denies your claim, you have the right to challenge that decision. Every company has an appeal process, so be conversant with it before you decide to appeal. This appeal process is explained in your policy handbook so read that also. Before making an appeal, it is generally a good idea to consult your doctor and get his/her opinion. If your doctor thinks that your claim has been wrongfully rejected and you must challenge the decision, he/she may be able to help you through the process.
Fee-for-service, HMOs and PPOs.
Whether you have to buy an individual policy or you are a member of a group insurance plan, the following three choices are available to you:
1. Fee-for-service Think of this as the traditional kind of healthcare policy where the insurance company is supposed to pay the fees for medical services provided to insured people. This policy gives almost all the choices of doctors as well as hospitals. You are free to consult the doctor of your choice and also to change your doctor as and when you feel like. Similarly, you can go to any hospital anywhere in the country. In fee-for-service, you pay a monthly fee called a premium plus a certain amount of money each year known as the deductible. In addition to these payments, you also share a part of your medical bills with the insurance company. For example, you pay 20 percent while the insurer pays 80 percent of your bills. Your portion is called coinsurance.
2. Health Maintenance Organizations (HMOs) These are prepaid health plans. As a member of an HMO, you pay a monthly premium. In exchange, HMO provides a comprehensive list of medical benefits to you and your family including doctors visits, hospital stays, emergency care and other medical care. HMO arranges for this care either through its own group of doctors or through doctors and medical professionals under contract. This limits your choice of doctors and hospitals whose services you can avail of as an HMO member. Certain exceptions are, however, allowed in case of emergencies.
3. Preferred Provider Organizations (PPOs) These can be thought of as a combination of fee-for-service and HMO. There are a limited number of hospitals and doctors that you can choose from as a member of a PPO. These are known as preferred providers or network providers. Most PPOs cover precautionary care and require you to choose a primary care doctor to monitor your health care. However, if you use a doctor not part of the plan, you will still receive some coverage but you will be paying a much larger portion of the bill yourself and will also be filling out the claims form. In case you visit a preferred provider, you simply present your PPO membership card and there is no need to fill any forms.
Fee-for-service, HMO or PPO How to decide which one suits your needs
Well, each has its own pros and cons and there is no single best plan. A plan that may work well for a single person may fail to serve the needs of a family with small children. Again, a plan looking good for a certain family may not prove useful for another family. Thus, you will need to assess your needs.
Say, if you want complete freedom in choosing your doctor and hospital, or you travel a lot or your children live away from you and thus you generally find yourself in situations where you need to see doctors in other parts of the country, such situations suggest that a fee-for-service may be the best plan for you. On the other hand, if holding down cost and paperwork is the most important thing for you in a healthcare policy, even if it means having a limited choice of doctors and hospitals, and you generally dont travel much and almost all medical care for you and your family is needed in your local area, you can consider an HMO. Then again, you may find yourself in situations which represent a combination of two above mentioned scenarios; you may want to seriously consider a PPO.
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