Indemnity Insurance Plans (Fee for Service)
	Managed Insurance Plans
	Other Forms of Health Insurance Plans

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Indemnity Insurance Plans

Up until about 30 years ago, most people had traditional indemnity coverage. These days, it's often known as "fee-for-service."
Indemnity plans are a bit like auto insurance: you pay a certain amount of your medical expenses up front -- in the form of a deductible -- and afterward the insurance company pays the majority of the bill.

Advances in modern medicine increased the cost of providing health care and made it possible for people to live longer.

Those advances caused many insurance companies to look for ways to reduce their costs of doing business, giving managed care the boost it enjoys today
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For years, indemnity or fee-for-service coverage was the norm. Under this type of health coverage, you have complete autonomy when it comes to choosing doctors, hospitals and other health care providers.

You can refer yourself to any specialist without getting permission, and the insurance company doesn't get to decide whether the visit was necessary.

You don't, however, have complete autonomy. Most fee-for-service medicine is managed to a certain extent. For instance, if you're not already incapacitated, you may need to get clearance for a visit to the emergency room.

On the down side, fee-for-service plans usually involve more out-of-pocket expenses. Often there is a deductible, usually of about $200, before the insurance company starts paying.
Once you've paid the deductible, the insurer will kick in about 80 percent of any doctor bills.
You may have to pay up front and then submit the bill for reimbursement, or your provider may bill your insurer directly.

Under fee-for-service plans, insurers will usually only pay for "reasonable and customary" medical expenses, taking into account what other practitioners in the area charge for similar services.
If your doctor happens to charge more than what the insurance company considers "reasonable and customary," you'll probably have to make up the difference yourself.

Traditionally, preventive care services like annual check-ups and pelvic exams haven't been covered under fee-for-service plans.
But as the evidence mounts that preventive care can prevent more costly illnesses down the road, some insurers are including them.

Fee-for-service plans often include a ceiling for out-of-pocket expenses, after which the insurance company will pay 100 percent of any costs. Needless to say, the ceiling is usually pretty high.
In a nutshell, fee-for-service coverage offers flexibility in exchange for higher out-of-pocket expenses, more paperwork and higher premiums.

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Managed Insurance Plans

Managed care has been around in one form or another since the 1930s, but it really took off in the last 10 years. As it grew, it evolved, leaving us with three basic types of managed care plans.
Today, the majority of people with private health insurance have some type of managed care.
Although there are important differences among the different types of managed care plans, there are some similarities.
All managed care plans involve an arrangement between the insurer and a selected network of health care providers, and they offer policyholders significant financial incentives to use the providers in that network.
There are usually explicit standards for selecting providers and a formal procedure to assure quality care.

Preferred Provider Organizations (PPOs)
One step over the managed care border is the Preferred Provider Organization. PPOs have made arrangements for lower fees with a network of health care providers.
PPOs give their policyholders a financial incentive to stay within that network.

For example, a visit to an in-network doctor might mean you'd have a $10 co-pay. If you wanted see an out-of-network doctor, you'd have to pay the entire bill up front and then submit the bill to your insurance company for an 80 percent reimbursement.

In addition, you might have to pay a deductible if you choose to go outside the network, or pay the difference between what the in-network and out-of-network doctors charge.

With a PPO, you can refer yourself to a specialist without getting approval and, as long as it's an in-network provider, enjoy the same co-pay.

Staying within the network means less money coming out of your pocket and less paperwork. Preventive care services may not be covered under a PPO.

Exclusive Provider Organizations (EPO)
Exclusive Provider Organizations are PPOs that look like HMOs.
EPOs raise the financial stakes for staying in the network.
If you choose a provider outside the network, you're responsible for the entire cost of the visit.

Point-of-Service (POS)
Point-of-service plans are similar to PPOs, but they introduce the gatekeeper, or Primary Care Physician. You'll need to choose your PCP from among the plan's network of doctors.

As with the PPO, you can choose to go out of network and still get some kind of coverage.
In order to get a referral to a specialist, though, you usually must go through your PCP. You can still choose to refer yourself, but it'll mean more hassles and more money coming out of your pocket.

If your PCP refers you to a doctor who is out of the network, the plan should pick up most of the cost.
But if you refer yourself out, then you'll probably have to deal with more paperwork and a smaller reimbursement.
You may also have to pay a deductible if you go outside the network.

POS plans may also cover more preventive care services, and may even offer health improvement programs like workshops on nutrition and smoking cessation, and discounts at health clubs.

Health Maintenance Organizations (HMOs
Most of the time, when you talk about HMOs, you're really talking about closed-panel HMOs -- the least expensive, but least flexible type of health plan.
They also tend to be geared more toward members of group plans than individuals
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In exchange for a low co-payment (or sometimes no co-pay at all), low premiums and minimal paperwork, an HMO requires that you only see its doctors, and that you get a referral from your primary care physician before you see a specialist.

If you can still pick up the phone, you'll probably need to get clearance before you can visit the emergency room.

An HMO may have central medical offices or clinics (such as those used by Kaiser Permanente), or it may consist of a network of individual practices.

In general, you must see HMO-approved physicians or pay the entire cost of the visit yourself. HMOs have the best reputation for covering preventive care services and health improvement programs.

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Other Forms of Health Insurance

In addition to broad coverage for medical, surgical, and hospital expenses, there are many other kinds of health insurance.

Hospital-surgical policies, sometimes called basic health insurance, provide benefits when you have a covered condition that requires hospitalization.

These benefits typically include room and board and other hospital services, surgery, physicians’ non surgical services that are performed in a hospital, expenses for diagnostic X-rays and laboratory tests, and room and board in an extended care facility.

Benefits for hospital room and board may be a per-day dollar amount or all or part of the hospital’s daily rate for a semi-private room.
Benefits for surgery typically are listed, showing the maximum benefit for each type of surgical procedure.

Hospital-surgical policies may provide "first-dollar" coverage. That means that there is no deductible, or amount that you have to pay, for a covered medical expense.
Other policies may contain a small deductible.

Keep in mind that hospital-surgical policies usually do not cover lengthy hospitalizations and costly medical care.
In the event that you need these types of services, you may incur large expenses that are difficult to meet unless you have other insurance.

Catastrophic coverage pays hospital and medical expenses above a certain deductible;
this can provide additional protection if you hold either a hospital-surgical policy or a major medical policy with a lower-than-adequate lifetime limit.
These policies typically contain a very high deductible ($15,000 or more) and a maximum lifetime limit high enough to cover the costs of catastrophic illness.

Specified or dread disease policies provide benefits only if you get the specific disease or group of diseases named in the policy.

For example, a policy might cover only medical care for cancer.
Because benefits are limited in amount, these policies are not a substitute for broad medical coverage.
Nor are specified disease policies available in every state.

Hospital indemnity insurance pays you a specified amount of cash benefits for each day that you are hospitalized, generally up to a designated number of days.

These cash benefits are paid directly to you, can be used for any purpose, and may be useful in meeting out-of-pocket expenses not covered by other insurance.

Hospital indemnity policies frequently are available directly from insurance companies by mail as well as through insurance agents.
You will find that these policies offer many choices, so be sure to ask questions and find the right plan to meet your needs.

Some policies contain limitations on preexisting medical conditions that you may have before your insurance takes effect.
Others contain an elimination period, which means that benefits will not be paid until after you have been hospitalized for a specified number of days.

When you apply for the policy, you may be allowed to choose among two or three elimination periods, with different premiums for each.
Although you can reduce your premiums by choosing a longer elimination period, you should bear in mind that most patients are hospitalized for relatively brief periods of time.

If you purchase a hospital indemnity policy, periodically review it to see if you need to increase your daily benefits to keep pace with rising health care costs.

Medicare supplement insurance, sometimes called Medigap or MedSup, is private insurance that helps cover some of the gaps in Medicare coverage.

Medicare is the federal program of hospital and medical insurance primarily for people age 65 and over who are not covered by an employer’s plan.

But Medicare doesn’t cover all medical expenses. That’s where MedSup comes in.

All Medicare supplement policies must cover certain expenses, such as the daily coinsurance amount for hospitalization and 90 percent of the hospital charges that otherwise would have been paid by Medicare, after Medicare is exhausted.

Some policies may offer additional benefits, such as coverage for preventive medical care, prescription drugs, or at-home recovery.

There are 10 standard Medicare supplement policies, designated by the letters A through J.
With these standardized policies, it is much easier to compare the costs of policies issued by different insurers.
While all10 standard policies may not be available to you, Plan A must be made available to Medicare recipients everywhere.

Insurers are not permitted to sell policies that duplicate benefits you already receive under Medicare or other policies.

If you decide to replace an existing Medicare supplement policy—and you should do so only after careful evaluation—you must sign a statement that you intend to replace your current policy and that you will not keep both policies in force.

People who are 65 or older can buy Medicare supplement insurance without having to worry about being rejected for existing medical problems, so long as they apply within six months after enrolling in Medicare.

Long-term care policies cover the medical care, nursing care, and other assistance you might need if you ever have a chronic illness or disability that leaves you unable to care for yourself for an extended period of time.
These services generally are not covered by other health insurance.
You may receive long-term care in a nursing home or in your own home.

Long-term care can be very expensive.
On average, a year in a nursing home costs about $40,000. In some regions, it may cost much more.
Home care is less expensive, but it still adds up. (Home care can include part-time skilled nursing care, speech therapy, physical or occupational therapy, home health aides, and homemakers.)

Bringing an aide into your home just three times a week—to help with dressing, bathing, preparing meals, and similar chores—easily can cost$1,000 a month, or $12,000 a year.
Add in the cost of skilled help, such as physical therapy, and the costs can be much greater.

Most long-term care policies pay a fixed dollar amount, typically from$40 to more than $200 a day, for each day you receive covered care in a nursing home.

The daily benefit for at-home care is usually half the benefit for nursing home care.

Because the per-day benefit you buy today may be inadequate to cover higher costs in the future, most policies also offer an inflation adjustment feature.

Keep in mind that unless you have a long-term care policy, you are not covered for long-term care expenses under Medicare and most other types of insurance.

Recent changes in federal law may allow you to take certain income tax deductions for some long-term care expenses and insurance premiums.

Disability insurance provides you with an income if illness or injury prevents you from being able to work for an extended period of time.

It is an important but often overlooked form of insurance.

There are other possible sources of income if you are disabled.
Social Security provides protection, but only to those who are severely disabled and unable to work at all;
workers’ compensation provides benefits if the illness or injury is work-related;
civil service disability covers federal or state government workers;
and automobile insurance may pay benefits if the disability results from an automobile accident.
But these sources are limited.

Some employers offer short- and long-term disability coverage.
If you are self-employed, you can buy individual disability income insurance policies. Generally:
Monthly benefits are usually 60 percent of your income at the time of purchase, although cost-of-living adjustments may be available.

· If you pay the premiums for an individual disability policy, payments you receive under the policy are not subject to income tax.
If your employer has paid some or all of the premiums under a group disability policy, some or all of the benefits may be taxable.
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Whether you are an employer shopping for a group disability policy or someone thinking of purchasing disability income insurance, you will need to evaluate different policies. Here are some things to look for:

Some policies pay benefits only if someone is unable to perform the duties of their customary occupation, while others pay only if the person can engage in no gainful employment at all.
Make sure that you know the insurer’s definition of disability.

Some policies pay only for accidents, but it’s important to be insured for illness, too.
Be sure, as you evaluate policies, that both accident and illness are covered.

Benefits may begin anywhere from one month to six months or more after the onset of disability.
A later starting date can keep your premiums down. But remember, if your policy only starts to pay (for example) three months after the disability begins, you may lose a considerable amount of income.

Benefits may be payable for a period ranging anywhere from one year to a lifetime.

Since disability benefits replace income, most people do not need benefits beyond their working years.
But it’s generally wise to insure at least until age 65 since a lengthy disability threatens financial security much more than a short disability.

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