HMO vs POS vs PPO vs HDHP

September 21, 2009

A huge source of confusion for the health insurance consumer is the difference between all the types of plans – hopefully this will help you understand them a little better:

HMO – Health Maintenance Organization
An HMO requires you to designate a primary care provider (PCP), who serves as a “gatekeeper,” providing general health care and referrals to in-network providers as needed. It is more restrictive than a PPO in that if you go to a doctor who is not in the network or even see an in-network specialist without a referral, your expenses will not be covered.

PPO (Preferred Provider Organization)/POS (Point of Service)
A PPO or POS plan means you can decide at the point of service–that is, when you need health care–whether to see an in-network provider and receive a higher level of benefits or an out-of-network provider and receive a lower level of benefits. You may see specialists without a referral, and switch between in-network and out-of-network providers. You do not need to designate a PCP.

HDHP (High Deductible Health Plan)
An HDHP is a fast growing option – because it is typically much cheaper than the other health plans.  Just like its name suggests, an HDHP has a much higher deductible (between $1,500 and $5,000).  While this may seem like a lot, it should be noted that often, there is no coninsurance, meaning that once your deductible is paid, your remaining expenses are covered 100%.  In fact, this is a requirement for an HDHP to qualify for an HSA.

What is Copayment?

September 21, 2009

A Copayment is a form of medical cost sharing in a health insurance plan that requires an insured person to pay a fixed dollar amount when a medical service is received. The insurer is responsble for the rest of the reimbursment.

Sometimes, there are different copayments for different services (doctor visits, ER visits, etc…).

This is money you are responsible for paying, typically at the time the medical service is provided.

What is Coinsurance?

September 21, 2009

Coinsurance – A form of medical cost sharing in a health insurance plan that requires an insured person to pay a stated percentage of medical expenses after the deductible amount, if any, was paid.

- Once any deductible amount and coinsurance are paid, the insurer is responsible for the rest of the reimbursement for covered benefits up to allowed charges: the individual could also be responsible for any charges in excess of what the insurer determines to be “usual, customary and reasonable”.

- Coinsurance rates may differ if services are received from an approved provider (i.e., a provider with whom the insurer has a contract or an agreement specifying payment levels and other contract requirements) or if received by providers not on the approved list.

-In addition to overall coinsurance rates, rates may also differ for different types of services.

Basically – Coinsurance is what you’re going to pay after the deductible.  This means, if you have an 80/20 coinsurance plan, you can be liable for up to 20% of your remaining medical bills, up to the maximum out of pocket cost.

Is Required Health Insurance A Tax Increase?

September 21, 2009

President Obama doesn’t seem to think so (of course, it IS his idea).  The question remains – does requiring everyone to carry health insurance – similar to laws regarding auto insurance, constitute what can be considered as a tax increase?

From the CNN Article:

He noted that consumers currently pay higher health insurance premiums due to the costs run up by hospitals and other facilities providing care to uninsured people.

My concern with this approach, however, is that the costs aren’t only driven up by folks without insurance, but they are also driven up by people who take advantage of their health insurance plans. For example, people who go to the emergency room for non-emergency services (bad colds, ankle sprains, etc..).

We are quick to chastise the insurance companies as we debate the causes of our health care crisis – but we also need to make sure we look at ourselves when discussing ways to make the health care system work better.