Types of Plans
There are three basic types of plans when dealing with health insurance. If your employer gives you a choice of plans or if you must select individual coverage, you will have to decide what the most important factors are for you. The plans offer different levels of cost and freedom, so evaluate your financial situation and comfort with different doctors and medical facilities.
Fee-for-Service (FFS)
This is the most common type of plan and the one with the most freedom. In essence, the insurance company simply pays for any medical costs you accrue, and you can go to any doctor or hospital and charge any amount of money. However, there are some payments you must make. Fee-for-Service plans require a monthly premium, like any other type of insurance. Also like some types of insurance, there is a deductible that must be paid. This is simply the amount of money you must pay every year for medical services before coverage begins. Typically, it is $250 for an individual and $500 for a family, although this may vary. Once your yearly deductible is paid, you must pay coinsurance. This is simply sharing the bill with your insurance company, generally split 20/80 with your provider paying the bulk of the cost.
Because you can visit any doctor, hospital or medical facility, paperwork must be filled out and sent to your insurance company to verify your treatment and the cost. The doctor’s office will usually do this for you. However, some medical expenses such as prescription drugs must be accounted for, and you will have to keep records and be able to report back to your insurance company. Most FFS plans will employ a cap on the amount you will ever spend on a medical bill. This gives you the security of knowing that there is a limit to the cost of any treatment. The cap can be as low as $1,000 or as high as $5,000. This does not include the money you pay for your monthly premium.
There are two types of FFS plans: basic and major medical. Basic will generally pay for hospital stays, supplies, x-rays, medicine and various other services. Major medical essentially covers what basic does not. It is generally used for prolonged, severe illnesses. Sometimes a combination of the two types is called a comprehensive plan. However, realize that from plan to plan there can be differences in what is covered and what is not. Some things are commonly left off the list of covered procedures, like child immunizations. Also be aware of customary fees. If your doctor charges more for a procedure or service than most doctors in your area are charging, your insurance company may require that you pay the difference between the two out of your pocket. Make sure that a doctor’s prices aren’t too high or that she charge only what your insurance company will pay. If she will not, you might want to consider finding a new doctor.
Health Maintenance Organizations (HMO)
HMO’s are significantly simpler and less costly than other types of health insurance, but they do impose some limitations on your choice of health care providers. You pay monthly premiums, and coverage is given to you and your family. Your insurance company will select doctors and other medical facilities at which you can receive care. You will be given a membership card and simply show it when you visit the doctor or go to the hospital. Nor forms are necessary. Usually there will be a number of doctors and hospitals to choose from, but some HMO’s will select a physician for you.
You will have to pay a small co-pay as a member of an HMO, usually around $5 for a doctor’s visit and $25 for an emergency room visit. HMO’s generally have contracts with a number of doctors and facilities or will employ general practitioners and other health care professionals. HMO’s are geared towards preventative medicine and might not cover extreme illnesses, so it is important to utilize the services you are provided with early and often. If you need to see a specialist, it must be authorized by your physician and HMO first. All HMO’s are different. It is a good idea to talk to a member of an HMO you are considering joining before you do so.
Preferred Provider Organizations (PPO)
PPO’s are a combination of HMO’s and FFS. There is a limited number of facilities that you can go to for medical care. There is no paperwork to fill out, and you need only to present a card when you visit a doctor or hospital that is part of the Preferred Provider network. However, you can usually choose your own doctor and will still have some coverage if you visit a physician who is not a member of the network. Some services will require a deductible and coinsurance.
The Office of Personnel Management Insurance Program can give you more information about federal employee health insurance plans.