Introduction to Health Insurance

Health insurance covers the payment of medical costs incurred by you, such as doctor's fees, hospital bills, and other expenses that can include medical tests and prescriptions.

HEALTH CONSUMER BROCHURE

CHOOSING AN INDIVIDUAL HMO OR PPO PLAN THAT IS RIGHT FOR YOU

There are many things to consider when shopping for health insurance. With this in mind, this publication provides an overview of HMOs and PPOs, two common types of managed care plans, and describes advantages and disadvantages of each.

TYPES OF HEALTH PLANS

HMOs

Health Maintenance Organizations (HMOs) are managed care plans that provide health care services through networks of doctors, hospitals, and other health care providers. As a member you must select a primary care physician who oversees your medical care and provides referrals to specialists.

When you access the HMO network, you pay designated copays for doctor visits, prescription drugs, emergency visits, and inpatient hospital stays. Generally, you will not be responsible for a deductible (an amount you must pay each year before the health plan begins to cover your health care costs) or coinsurance (a percentage of the charges). An in-network provider cannot bill you for any balance after the copay is met.

PPOs

Preferred Provider Organizations (PPOs) are managed care plans that allow you to obtain health care services through in-network preferred providers or out-of-network providers. The PPO will typically reimburse a higher percentage of the cost of your health care services if you use in-network providers.

When you access the PPO network, you typically pay a copay for covered services. You may be responsible for a percentage of the overall cost (coinsurance) as well. When you use an out-of-network provider, you will typically pay a deductible and a higher percentage of the charges.

The PPO will base its reimbursement percentage on the usual and customary amount–the amount it typically contracts with providers to pay for the service. You will be responsible for your percentage of the usual and customary amount plus any remaining balance charged by the health care provider.

POS

A Health Maintenance Organization with Point-of-Service Option (POS) is a managed care plan that combines aspects of an HMO and a PPO. Generally, you are required to choose a PCP and obtain a referral from that doctor before making an appointment with other doctors in the network. The POS will typically reimburse a higher percentage of the cost of your health care services if you use in-network doctors.

When you access the HMO network, you will be responsible for copays. When you use an out-of-network provider, you will pay a deductible and a percentage of the charges. The reimbursement for your healthcare services will be based on the plan’s usual and customary amount. You will be responsible for your percentage plus any remaining balance charged by the health care provider.

Fee-for-Service

Traditional insurance plans, also known as Fee-for-Service insurance, partially pay for the medical services you receive. Unlike managed care plans, Fee-for-Service insurers typically do not negotiate contract amounts with providers. Instead, the insurer bases its reimbursement percentage on the usual and customary charges for the service. You will be responsible for your percentage plus any remaining balance charged by the health care provider.

HEALTH PLAN COSTS

There are several types of costs associated with health insurance. Understanding these costs can help you anticipate your yearly healthcare expenses. To avoid billing surprises, contact your health plan and provider for coverage and cost information prior to a service or procedure.

Premium

A premium is the monthly cost to participate in a health plan.

Deductible

A deductible is the yearly amount you must pay before your plan will contribute to a covered service. The deductible may not apply to certain services like routine doctor visits.

Copayment

A copayment is a fixed amount you must pay for a covered service. For example, your plan may require you to pay $25 to see your primary care physician.

Coinsurance

Coinsurance is the percentage of the cost of a service for which you are responsible. For example, your plan may require you to pay 20% of the cost of a service and it will cover the remaining 80%.

To avoid billing surprises, contact your health plan and provider for coverage and cost information prior to a service or procedure.

PLEASE NOTE: If you receive care from an out-of-network provider, you may be responsible for the difference between the usual and customary amount (or allowable amount) that your plan pays for the service and the amount the provider charges for the service.

For more information on healthcare billing, click HERE.

For more information on mediation for certain out-of-network claims, click HERE.

Health Insurance News

UP Tip of the Month

United Policyholders recently published some helpful advice for people shopping for disability insurance. In the group’s latest Tip of the Month, Tony Steuer discusses a few key policy provisions and provides some helpful questions to consider when shopping for disability insurance, including:

Are there benefit ceilings or caps that apply monthly and/or over a lifetime?
How is “disabled” defined under the policy?
Does the definition of “disabled” change or shift if you become disabled?

PPOs and Cost Sharing

A Preferred Provider Organization (PPO) is a type of managed care health plan that contracts with physicians, hospitals, and other health care providers to create a network of preferred providers to treat members at a negotiated price.

New Consumer Protections Related to Prescription Drug Formularies

House Bill 1405, enacted by the Texas state legislature in 2011, expands protections for consumers enrolled in employer and individual health plans with prescription drug formularies. A prescription drug formulary lists the prescription drugs, both generic and brand name, that are available through your health insurance plan.

OPIC's Guide to Texas HMO Quality 2011 Annual Report Now Available

AUSTIN—The Office of Public Insurance Counsel (OPIC) released the Guide to Texas HMO Quality 2011. OPIC produces and publishes this guide on an annual basis through an agreement with the Department of State Health Services’ Texas Health Care Information Collection (THCIC).

OPIC's Annual HMO Report Comparing Texas HMOs 2011 Now Available

AUSTIN—The Office of Public Insurance Counsel (OPIC) has released its fourteenth annual HMO report, Comparing Texas HMOs 2011. The report allows consumers to compare the quality of care delivered by Texas HMOs.

Legislature Prohibits Discretionary Clauses

AUSTIN—On January 1, 2012, a new law banning the use of discretionary clauses in certain insurance policies went into effect. House Bill 3017, 82nd Legislature Regular Session (2011), prohibits the inclusion of discretionary clauses in Health Maintenance Organization (HMO) evidence of coverage forms and life, health, and disability insurance policies.