WealthEffect — Health

Health

What is Right for You?
by Jay Kantrowitz, CPCU, CLU, ChFC
Contributing Editor to WealthEffect.com

Type of health plan.

Procedures and tests that require pre-certification.

Reputation of the insurance company.

There are many different types of medical plans offered today. Below is a brief explanation of your choices:

Traditional Indemnity Plan: This type of plan reimburses the insured for reasonable medically necessary expenses that are outlined in the plan description. These plans do not generally require precertification except for hospital and surgical expenses.
Health Maintenance Organizations (HMO): This type of plan requires the insured to utilize a network of health care providers. Generally, the insured must choose a primary-care physician. In order to access other health care providers in the network, the insured must secure a referral from the primary care physician.
Point of Service Plans (POS): This type of plan offers both in-network and out-of-network benefits. The in-network benefits are similar to the HMO plan described above. The out-of-network benefits are subject to a deductible and coinsurance. Certain procedures and tests may be subject to precertification even if utilizing an out-of-network provider.
Preferred Provider Organizations (PPO): This type of plan has a network of doctors that the insured may use. The insured can utilize the network, or go out of the network. Benefit levels will vary depending on whether the provider is in or out of the network. Generally, the insured does not have to choose a primary care doctor and specialists (in the network) can be accessed without referrals.
Exclusive Provider Organizations (EPO): This type of plan is similar to the PPO plan described above, however the plan does not offer out-of-network benefits.
Hybrid plans: Many companies offer variations on the above plans (for example, some HMO's offer plans which don't require a primary-care physician).

Most insurance companies will require pre-certification for certain tests and procedures. Precertification is the process of contacting the insurance company's claims department and providing information regarding your medical condition; the insurance company will only pay for the procedure if pre-approved. (The company, however, might agree to pay less than the full cost or to deny the charge entirely). The following is only a partial listing of services that might require pre-certification:

Hospital
Surgical, both inpatient and out patient
MRI and CT scans
Infusion therapy
Physical, speech and occupational therapy
Chiropractic services
Durable medical equipment
Certain prescription medications
Home Health/Hospice care
Substance abuse

Comparing benefits and premiums is only part of the picture in medical insurance. The reputation of the insurance provider should be carefully considered in making any decision. This is the subject of the next article.

Suggestion: Go to The Fine Print

Return to Insurance