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Inside this Article
Health
Insurance-Indemnity Insurance
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Traditional plans
that allow you to go to any doctor you choose are
called indemnity or fee-for-service (or point of
service) plans. These plans provide the most
flexibility, but are getting harder and harder to
find and come with a high price tag.
You can get your
medical care anywhere you want without getting
referrals or prior approvals.
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Health
Insurance - Deductible
Before you get
reimbursed for anything, you must have already paid
the full deductible amount for the year. Deductibles
are usually around $250 for an individual, but they
can be as high as $10,000. The higher the deductible,
the lower the premium. If you're a very healthy person
and don't have any potentially dangerous hobbies, you
can get away with a really low monthly premium.
However, you'll have to live with the realization that
you might have to pony up a big chunk of cash in the
event you get seriously sick or injured.
Health Insurance -
Other Out-of-pocket Costs
Most FFS plans pay 80
percent of the total doctor bill (physician charges)
once you meet the deductible. That leaves 20 percent
for you to pay, called the co-insurance. Some
plans do pay 100 percent of hospital charges that are
separate from physician charges, but not all.
Because costs for
procedures vary among geographic areas, what your
doctor charges for a procedure may not be what your Health
insurance company is willing to pay. The insurance
calls the amount they are willing to pay the reasonable
and customary charge. Not all services and
procedures are covered. What the Health insurance
company doesn't pay is your responsibility.
So in addition to
paying 20 percent of the total bill, you'll also be
paying the differences between the actual and allowable
charges. Here is an example: Your child has his
tonsils taken out and the bill is $350. Since you've
met the deductible already you should only have to pay
20 percent, or $70. But your Health insurance
company says the maximum allowable charge for a
tonsillectomy is $300, which means you really owe
$110. (20 percent of $300, plus the extra $50 your
doctor charged above what the Health insurance
company will pay.)
The good news is that
most policies include stop loss protection.
This is the annual maximum amount that you will have
to pay. So if you end up with a lot of medical bills,
at some point the Health insurance company
begins to pay 100 percent. (100 percent of the
reasonable and customary amount, that is.)
The flip side of this
is that the Health insurance policy itself will
have a lifetime (your lifetime) cap. That means that
when your bills reach a certain amount (usually $1
million or above) the Health insurance company
won't pay anymore. For some policies there may be a
cap for the year or for a specific illness claim. At
this point you may have to get insurance through a
different company.
Recently some FFS
plans have begun operating more like managed care
plans. For example, they may require that you pay a
deductible and 20 percent of the charges, but there
may also be co-pays for doctor visits and other
services. Premiums are often fairly low.
Health Insurance - Typically
Covered
No plan covers
everything, so you have to read the policy to ensure
that it meets your needs. In many cases FFS plans
don't cover annual check ups and other
"well" doctor visits you might have.
Families in particular can rack up a lot of expenses
just in annual physicals and check-ups. FFS plans may
also limit the number of days you can stay in the
hospital and still receive coverage.
Health Insurance -
Pros and Cons
FFS plans are
typically more versatile than other types of plans.
Being able to go to any physician is a big part of
that versatility. Additional benefits include not
having to get referrals before going to a specialist
and not worrying about being "out of
network" in the event of an emergency illness or
injury when traveling. The drawback is that they are
more expensive.
Health Insurance -
Fee-for-service (FFS)
insurance, or
indemnity, is the traditional insurance plan,
much like your grandparents had. You can get basic
coverage, which includes doctor visits,
hospitalization, surgery and other medical expenses.
For serious illness or injuries, you can get
"major medical," which pays the big bills
when basic coverage has run out. Comprehensive
coverage combines basic and major medical. It's
typically what is offered in employer-sponsored group
health plans. FFS plans allow you to go to the doctor,
clinic, or hospital of your choice.
You pay the bill and
then submit forms for reimbursement by your Health
insurance company. There are a few requirements,
however, before you get to the reimbursement stage.
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