(note, this MAY vary from policy to policy, so it’s recommended you shop around a little)

What is the benefit of this? Well, for one, you can save a ton of money up front. For folks who are self employed, or have to pay their own insurance premiums for another reason, the difference in the monthly cost is significant.

For example, a traditional PPO plan with a $500 deductible would cost me around $300/month, where my HDHP costs me about $50. A dramatic savings, no?

On top of that, you get 100% co-insurance. What does this mean? You know that $300/month PPO plan? That only covers 80% of my medical costs after the deductible (up to a certain amount). This means I might still be on the hook for $500/day if I have to stay in the hospital or have surgery. With the HDHP, the most I will ever have to pay is the deductible – which I can offset by having a tax-deferred HSA!

Now, these plans don’t work for everyone of course – those with medical conditions that require regular care or have a good PPO/HMO plan provided by their employer at a lower cost to them might not need it. But as health care costs continue to rise, you can bet the HDHP will on everyone’s radar for a long time!

One big issue we see is that health care costs get run up because people are intimidated to discuss their treatment with their doctors from a financial persepective. For example – this guy – who had a procedure on a fractured hand that was covered by insurance, but anesthesia was not.

Talk about a punch in the gut when he got the bill! Could this have been avoided? Well, we can’t say for sure, because we don’t know all the circumstances.  We’re not here to judge doctors, insurance companies, or patients.  We DO know however, that he very likely would have been better off to discuss EVERY aspect of his treatment with his physician before the procedure.

As a consumer – you wouldn’t buy a car without test driving it, doing some research, and maybe swinging by a mechanic you trust to check it out. You might even try to lean on your salesman a little bit and get a better deal.  One key to true and long lasting health care reform is going to be transforming the mindset of Americans into full-on consumer mode when it comes to health care.

Folks – your doctor works FOR you. Not the other way around. DEMAND to know fees, procedures, the preceived need for those procedures, and who will be performing them. VERIFY that those procedures are going to be covered by your insurance BEFORE they are performed.

If you find a medical care provider that won’t work WITH you to manage your cost – and it’s not an emergency, go somewhere else. The only way to improve your experience as a patient and consumer is to demand you be treated like a valued customer.

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.

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.

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.

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.