Before you visit a country where the population speaks a foreign language, it helps to know a few key words and phrases. The same holds true when you’re trying to decipher the lingo of health insurance. Whether you’re buying individual or group health insurance, know there are several health plan varieties, including traditional indemnity fee-for-service plans (FFS), health maintenance organizations (HMOs), point of service plans (POS), and preferred provider organizations (PPO). Each plan has its own features to consider before making your choice.
FFS, also called traditional indemnity
FFS coverage offers flexibility in exchange for higher out-of-pocket expenses, more paperwork, and higher premiums.
FFS advantages
• You may choose your own doctors and hospitals.
• You may visit any specialist without getting permission from a primary care physician. FFS disadvantages
• There’s typically a deductible (anywhere from $500 to $1,500) before the insurance company starts paying claims, and then doctors are reimbursed about 80 percent of the bill while you pick up the remaining 20 percent.
• You might have to pay up front for medical services, and then submit the bill for reimbursement. • FFS plans pay only for “reasonable and customary” medical expenses. If your doctor charges more
than the average for your area, you will have to pay the difference.
HMO
HMOs are the least expensive, but also the least flexible of all the health insurance plans. They are geared more toward members of a group seeking health insurance.
HMO advantages
• They offer their customers low co-payments, minimal paperwork, and coverage for many preventive-care and health-improvement programs.
HMO disadvantages
• You must choose a primary care physician, also known as a PCP. • HMOs require you to see only network doctors, or they won’t pay. • You must get a referral from your PCP to see a specialist.
POS
POS plans are more flexible than HMOs, but they also require you to select a primary care physician (PCP).
4POS advantages
• Depending on your insurance company’s rules, you may choose to visit a doctor outside the network and still receive coverage — but the amount covered will be substantially less than if you went to a physician within your network.
• These plans tend to offer more preventive care and well-being services, such as workshops on smoking cessation and discounts to health clubs.
POS disadvantages
• You must choose a PCP.
• While you may choose to see a physician outside the network, if you don’t receive permission from your PCP, you’re likely to wind up submitting the bills yourself and receiving only a nominal reimbursement — if any.
PPO
PPOs give policyholders a financial incentive — reasonable co-payments (also called co- pays) — to stay within the group’s network of practitioners.
PPO advantages
• The standard co-payment is $15 for a routine office visit during regular hours.
• You may go to any specialist without permission, as long as the doctor participates in the network. PPO disadvantages
• If you see an out-of-network doctor, you might have to pay the entire bill yourself, and then submit it for reimbursement.
• You might have to pay a deductible if you choose to go outside the network, or pay the difference between what network doctors and out-of-network doctors charge.