Arnholt Insurance Agency

113 So. Clark St
Bassett, NE 68714
P.O. Box 280
(402) 684-2901

Individual Health Insurance

Health insurance minimizes the risk of financial loss due to illness and injuries. High quality individual health insurance plans can be purchased to meet short- and long-term needs. Depending on the policy, coverage includes:

Individial Health Insurance Information

Checkup on Health Insurance Choices

Today, there are more types of health insurance, and more choices, than ever before. The information presented here will help you choose a plan that is right for you. You may be buying health insurance for the first time, or you may already have health insurance but want to consider changing plans. Married or single, children or no children, this information will help you to find out how to choose a health insurance plan that best meets your needs and your pocketbook.

Thinking About Health Insurance Choices

Which of these statements best describes your thoughts on health insurance?
"I get health insurance through my job. I have the coverage I need... I think"

Many employers offer a choice of plans. The information provided will help you figure out the plan that's best for you.
"I know I need health insurance, but I'm not sure how to get the best protection at the lowest cost."

You're not alone. Many people have questions about how to select a health insurance plan. The information provided will help you find some answers.
"I can't afford health insurance right now. I have too many bills to pay and other things I need to buy."

Health insurance is one of your most important needs. Without it, one serious illness or accident could wipe you out financially. The information provided will help you decide which is the best plan you can afford.

Why Do You Need Health Insurance?

Today, health care costs are high, and getting higher. Who will pay your bills if you have a serious accident or a major illness? You buy health insurance for the same reason you buy other kinds of insurance, to protect yourself financially. With health insurance, you protect yourself and your family in case you need medical care that could be very expensive. You can't predict what your medical bills will be. In a good year, your costs may be low. But if you become ill, your bills could be very high. If you have insurance, many of your costs are covered by a third-party payer, not by you. A third-party payer can be an insurance company or, in some cases, it can be your employer.

Where Do People Get Health Insurance Coverage?

Group Insurance

Most Americans get health insurance through their jobs or are covered because a family member has insurance at work. This is called group insurance. Group insurance is generally the least expensive kind. In many cases, the employer pays part or all of the cost.

Some employers offer only one health insurance plan. Some offer a choice of plans: a fee-for-service plan, a health maintenance organization (HMO), or a preferred provider organization (PPO), for example. Explanations of fee-for-service plans, HMOs, and PPOs are provided in the section called Types of Insurance.

What happens if you or your family member leaves the job? You will lose your employer-supported group coverage. It may be possible to keep the same policy, but you will have to pay for it yourself. This will certainly cost you more than group coverage for the same, or less, protection.

A Federal law makes it possible for most people to continue their group health coverage for a period of time. Called COBRA (for the Consolidated Omnibus Budget Reconciliation Act of 1985), the law requires that if you work for a business of 20 or more employees and leave your job or are laid off, you can continue to get health coverage for at least 18 months. You will be charged a higher premium than when you were working.

You also will be able to get insurance under COBRA if your spouse was covered but now you are widowed or divorced. If you were covered under your parents' group plan while you were in school, you also can continue in the plan for up to 18 months under COBRA until you find a job that offers you your own health insurance.

Not all employers offer health insurance. You might find this to be the case with your job, especially if you work for a small business or work part-time. If your employer does not offer health insurance, you might be able to get group insurance through membership in a labor union, professional association, club, or other organization. Many organizations offer health insurance plans to members.

Individual Insurance

If your employer does not offer group insurance, or if the insurance offered is very limited, you can buy an individual policy. You can get fee-for-service, HMO, or PPO protection. But you should compare your options and shop carefully because coverage and costs vary from company to company. Individual plans may not offer benefits as broad as those in group plans.

If you get a noncancellable policy (also called a guaranteed renewable policy), then you will receive individual insurance under that policy as long as you keep paying the monthly premium. The insurance company can raise the cost, but cannot cancel your coverage. Many companies now offer a conditionally renewable policy. This means that the insurance company can cancel all policies like yours, not just yours. This protects you from being singled out. But it doesn't protect you from losing coverage.

Before you buy any health insurance policy, make sure you know what it will pay for...and what it won't. To find out about individual health insurance plans, you can call insurance companies, HMOs, and PPOs in your community, or speak to the agent who handles your car or house insurance.

Tips when shopping for individual insurance:

What Are Your Choices?

There are many different types of health insurance. Each has pros and cons. There is no one "best" plan. The plan that's right for a single person may not be best for a family with small children. And a plan that works for one family may not be right for another.

For example, if your family includes just two adults, it may be less expensive for each of you to have individual coverage than for just one of you to have a family plan. If you have children, or if you might have children soon, you need a family plan. Because your situation may change, review your health insurance regularly to make sure you have the protection you need.

Choosing a health insurance plan is like making any other major purchase: You choose the plan that meets both your needs and your budget. For most people, this means deciding which plan is worth the cost. For example, plans that allow you the most choices in doctors and hospitals also tend to cost more than plans that limit choices. Plans that help to manage the care you receive usually cost you less, but you give up some freedom of choice.

Cost isn't the only thing to consider when buying health insurance. You also need to consider what benefits are covered. You need to compare plans carefully for both cost and coverage.

Although there are many names for health insurance plans, the information here groups them as three main types:

Which Type Is Right for You?

For each group, choose the statement 1 or 2 that best describes how you feel:

  1. Having complete freedom to choose doctors and hospitals is the most important thing to me in a health plan, even if it costs more.
  2. Holding down my costs is the most important thing to me, even if it means limiting some of my choices.
  1. I travel a lot or have children that live away from me and we may need to see doctors in other parts of the country.
  2. I do not travel a lot and almost all care for my family will be needed in our local area.
  1. I don't mind a health insurance plan that includes filling out forms or keeping receipts and sending them in for payment.
  2. I prefer not to fill out forms or keep receipts. I want most of my care covered without a lot of paperwork.
  1. In addition to my premiums, I am willing to pay for the cost of routine and preventive care, such as office visits, checkups, and shots. I also like knowing that I can get an appointment for these services when I want one.
  2. I want a health plan that includes routine and preventive care. I don't mind if I have to wait for these services to be scheduled for an available appointment with my doctor.
  1. If I need to see a specialist, I probably will ask my doctor for a recommendation, but I want to decide whom to go to and when. I don't want to have to see my primary care doctor each time before I can see a specialist.
  2. I don't mind if my primary care doctor must refer me to specialists. If my doctor doesn't think I need special services, that is fine with me.

If your answers are mostly 1: You want to make your own health care choices, even if it costs you more and takes more paperwork. Fee-for-service may be the best plan for you.

If your answers are mostly 2: You are willing to give up some choices to hold down your medical costs. You also want help in managing your care. Consider a health maintenance organization.

If your answers are some 1's and some 2's: You might want to look for a plan such as a preferred provider organization that combines some of the features of fee-for-service and a health maintenance organization.

The differences among fee-for-service plans, HMOs, and PPOs are not as clear-cut as they once were. Fee-for-service plans have adopted some activities used by HMOs and PPOs to control the use of medical services. And HMOs and PPOs are offering more freedom to choose doctors, the way fee-for-service plans do. By studying your health insurance options carefully, you will be able to pick the one that provides you with the coverage you need, no matter what it is called.

Managed Care: A Way to Control Costs

Managed care influences how much health care you use. Almost all plans have some sort of managed care program to help control costs. For example, if you need to go to the hospital, one form of managed care requires that you receive approval from your insurance company before you are admitted to make sure that the hospitalization is needed. If you go to the hospital without this approval, you may not be covered for the hospital bill.

Types of Insurance

Fee-for-Service

This is the traditional kind of health care policy. Insurance companies pay fees for the services provided to the insured people covered by the policy. This type of health insurance offers the most choices of doctors and hospitals. You can choose any doctor you wish and change doctors any time. You can go to any hospital in any part of the country.

With fee-for-service, the insurer only pays for part of your doctor and hospital bills. This is what you pay:

To receive payment for fee-for-service claims, you may have to fill out forms and send them to your insurer. Sometimes your doctor's office will do this for you. You also need to keep receipts for drugs and other medical costs. You are responsible for keeping track of your medical expenses.

There are limits as to how much an insurance company will pay for your claim if both you and your spouse file for it under two different group insurance plans. A coordination of benefit clause usually limits benefits under two plans to no more than 100 percent of the claim.

Most fee-for-service plans have a "cap," the most you will have to pay for medical bills in any one year. You reach the cap when your out-of-pocket expenses (for your deductible and your coinsurance) total a certain amount. It may be as low as $1,000 or as high as $5,000. Then the insurance company pays the full amount in excess of the cap for the items your policy says it will cover. The cap does not include what you pay for your monthly premium.

Some services are limited or not covered at all. You need to check on preventive health care coverage such as immunizations and well-child care.

There are two kinds of fee-for-service coverage: basic and major medical. Basic protection pays toward the costs of a hospital room and care while you are in the hospital. It covers some hospital services and supplies, such as x-rays and prescribed medicine. Basic coverage also pays toward the cost of surgery, whether it is performed in or out of the hospital, and for some doctor visits. Major medical insurance takes over where your basic coverage leaves off. It covers the cost of long, high-cost illnesses or injuries.

Some policies combine basic and major medical coverage into one plan. This is sometimes called a "comprehensive plan." Check your policy to make sure you have both kinds of protection.

What Is a "Customary" Fee?

Most insurance plans will pay only what they call a reasonable and customary fee for a particular service. If your doctor charges $1,000 for a hernia repair while most doctors in your area charge only $600, you will be billed for the $400 difference. This is in addition to the deductible and coinsurance you would be expected to pay. To avoid this additional cost, ask your doctor to accept your insurance company's payment as full payment. Or shop around to find a doctor who will. Otherwise you will have to pay the rest yourself.

Questions to Ask About Fee-for-Service Insurance

Health Maintenance Organizations (HMOs)

Health maintenance organizations are prepaid health plans. As an HMO member, you pay a monthly premium. In exchange, the HMO provides comprehensive care for you and your family, including doctors' visits, hospital stays, emergency care, surgery, lab tests, x-rays, and therapy.

The HMO arranges for this care either directly in its own group practice and/or through doctors and other health care professionals under contract. Usually, your choices of doctors and hospitals are limited to those that have agreements with the HMO to provide care. However, exceptions are made in emergencies or when medically necessary.

There may be a small copayment for each office visit, such as $5 for a doctor's visit or $25 for hospital emergency room treatment. Your total medical costs will likely be lower and more predictable in an HMO than with fee-for-service insurance.

Because HMOs receive a fixed fee for your covered medical care, it is in their interest to make sure you get basic health care for problems before they become serious. HMOs typically provide preventive care, such as office visits, immunizations, well-baby checkups, mammograms, and physicals. The range of services covered vary in HMOs, so it is important to compare available plans. Some services, such as outpatient mental health care, often are provided only on a limited basis.

Many people like HMOs because they do not require claim forms for office visits or hospital stays. Instead, members present a card, like a credit card, at the doctor's office or hospital. However, in an HMO you may have to wait longer for an appointment than you would with a fee-for-service plan.

In some HMOs, doctors are salaried and they all have offices in an HMO building at one or more locations in your community as part of a prepaid group practice. In others, independent groups of doctors contract with the HMO to take care of patients. These are called individual practice associations (IPAs) and they are made up of private physicians in private offices who agree to care for HMO members. You select a doctor from a list of participating physicians that make up the IPA network. If you are thinking of switching into an IPA-type of HMO, ask your doctor if he or she participates in the plan.

In almost all HMOs, you either are assigned or you choose one doctor to serve as your primary care doctor. This doctor monitors your health and provides most of your medical care, referring you to specialists and other health care professionals as needed. You usually cannot see a specialist without a referral from your primary care doctor who is expected to manage the care you receive. This is one way that HMOs can limit your choice.

Before choosing an HMO, it is a good idea to talk to people you know who are enrolled in it. Ask them how they like the services and care given.

Questions to Ask About an HMO

Preferred Provider Organizations (PPOs)

The preferred provider organization is a combination of traditional fee-for-service and an HMO. Like an HMO, there are a limited number of doctors and hospitals to choose from. When you use those providers (sometimes called "preferred" providers, other times called "network" providers), most of your medical bills are covered.

When you go to doctors in the PPO, you present a card and do not have to fill out forms. Usually there is a small copayment for each visit. For some services, you may have to pay a deductible and coinsurance.

As with an HMO, a PPO requires that you choose a primary care doctor to monitor your health care. Most PPOs cover preventive care. This usually includes visits to the doctor, well-baby care, immunizations, and mammograms.

In a PPO, you can use doctors who are not part of the plan and still receive some coverage. At these times, you will pay a larger portion of the bill yourself (and also fill out the claims forms). Some people like this option because even if their doctor is not a part of the network, it means they don't have to change doctors to join a PPO.

Questions to Ask About a PPO

Checklist: What's Most Important to You?

Insurance plans vary. Before choosing a plan, decide what is most important to you. This checklist can help. Put a check in front of those services that are important to you. Then see how many of these services are in Policy #1, Policy #2, and Policy #3. On the checklist, write in the coinsurance or copayment rate, if there is one, and any limits on service.

Remember that the most important service to be covered is hospitalization. If you are not covered for hospital care, then one sickness could cost you thousands of dollars, even hundreds of thousands of dollars.

    Service               Policy #1     Policy #2     Policy #3
	
-Hospital care
-Surgery (inpatient
 and outpatient)
-Office visits to
 your doctor
-Maternity care
-Well-baby care
-Immunizations
-Mammograms
-Medical tests,
 x-rays
-Mental health care
-Dental care,
 braces and cleaning
-Vision care,
 eyeglasses and exams
-Prescription drugs
-Home health care
-Nursing home care
-Services you need
 that are excluded 
Other issues that are
important to you:
-Choice of doctors
-Convenient location of 
 doctors and hospitals
-Ease of getting
 an appointment
-Minimal paperwork
-Waiting period before
 coverage begins

Which policy is best for you?

Worksheet: What Is Your Best Buy?

It is difficult to determine exactly what you will spend a year on health care. You do not know whether you will be sick 6 months from now and need an operation. Hopefully, you will not.

Using this worksheet, you can begin to make some rough estimates. Much will depend on what service you need or want, how many people are in your family, your age, and other factors. Do you need to have your eyes tested this year? Will you have a mammogram or other cancer screening test? Does your child need immunizations?

Look at your medical and insurance records from last year as a guide to what services you might use this year. Add up the actual costs to you, including premiums. Estimate what you might spend on your health care in terms of deductibles, coinsurance and/or copayments, and services that are not covered.

Compare Policy #1, Policy #2, and Policy #3 to determine which is the best buy for you.

What is your monthly premium? Policy #1 Policy #2 Policy #3
Individual:
Family:
Multiply by 12 for annual cost:
 
What is your deductible?
(if there is one)
Individual:
Family:
What is your coinsurance rate or copayment, if there is one?
(Note if there is a higher rate for special services, such as outpatient mental health care.)		  
Are there any annual limits for days or services covered and the amount spent on you?  
What is the maximum you will have to pay out-of-pocket each year?  
What is the lifetime limit, if any,that you will be reimbursed?  
Total estimated yearly cost to you:  

Now look at the checklist of services that are important to you. Is your best buy the same policy that gives you the most services you need?

Other Types of Insurance

Medicare

Medicare is the Federal health insurance program for Americans age 65 and older and for certain disabled Americans. If you are eligible for Social Security or Railroad Retirement benefits and are age 65, you and your spouse automatically qualify for Medicare.

Medicare has two parts: hospital insurance, known as Part A, and supplementary medical insurance, known as Part B, which provides payments for doctors and related services and supplies ordered by the doctor. If you are eligible for Medicare, Part A is free, but you must pay a premium for Part B.

Medicare will pay for many of your health care expenses, but not all of them. In particular, Medicare does not cover most nursing home care, long-term care services in the home, or prescription drugs. There are also special rules on when Medicare pays your bills that apply if you have employer group health insurance coverage through your own job or the employment of a spouse.

Medicare usually operates on a fee-for-service basis. HMOs and similar forms of prepaid health care plans are now available to Medicare enrollees in some locations.

The best source of information on the Medicare program is the Medicare Handbook. This booklet explains how the Medicare program works and what your benefits are. To order a free copy, write to: Health Care Financing Administration, Publications, N1-26-27, 7500 Security Blvd., Baltimore, MD 21244-1850. You also can contact your local Social Security office for information.

Some people who are covered by Medicare buy private insurance, called "Medigap" policies, to pay the medical bills that Medicare doesn't cover. Some Medigap policies cover Medicare's deductibles; most pay the coinsurance amount. Some also pay for health services not covered by Medicare. There are 10 standard plans from which you can choose. (Some States may have fewer than 10.) If you buy a Medigap policy, make sure you do not purchase more than one.

You need to shop carefully before deciding on the best policy to fit your needs. You may get another booklet, Guide to Health Insurance for People with Medicare, to help you in making the right choice. To order a free copy, write to: Health Care Financing Administration, Publications, N1-26-27, 7500 Security Blvd., Baltimore, MD 21244-1850.

Another good source of information on the same topic is The Consumer's Guide to Medicare Supplement Insurance. To order a free copy, write to: Health Insurance Association of America, 555 13th St., N.W., Suite 600 East, Washington, D.C. 20004.

Medicaid

Medicaid provides health care coverage for some low-income people who cannot afford it. This includes people who are eligible because they are aged, blind, or disabled or certain people in families with dependent children. Medicaid is a Federal program that is operated by the States, and each State decides who is eligible and the scope of health services offered.

General information on the Medicaid program is given in the Medicaid Fact Sheet. For a free copy, write to: Health Care Financing Administration, Publications, N1-26-27, 7500 Security Blvd., Baltimore, MD 21244-1850. For specifics on Medicaid eligibility and the health services offered, contact your State Medicaid Program Office.

Disability Insurance

Disability insurance replaces income you lose if you have a long-term illness or injury and cannot work. This is an important type of coverage for working-age people to consider. Disability insurance does not cover the cost of rehabilitation if you are injured. Check your major medical insurance to see if it is covered there.

Some employers offer group disability insurance and this may be one of the benefits where you work. Or you might be eligible for some government-sponsored programs that provide disability benefits. Many different kinds of individual policies are also available.

The Consumer's Guide to Disability Insurance explains disability insurance and sources of disability income to help you decide if you need this coverage. It will also help you compare your choices of policies. For a free copy, write to: Health Insurance Association of America, 555 13th St., N.W., Suite 600 East, Washington, D.C. 20004.

Hospital Indemnity Insurance

This insurance offers limited coverage. It pays a fixed amount for each day, up to a maximum number of days. You may use it for medical or other expenses. Usually, the amount you receive will be less than the cost of a hospital stay.

Some hospital indemnity policies will pay the specified daily amount even if you have other health insurance. Others may coordinate benefits, so that the money you receive does not equal more than 100 percent of the hospital bill.

Long-Term Care Insurance

Long-term care insurance is designed to cover the costs of nursing home care, which can be several thousand dollars each month. Long-term care is usually not covered by health insurance except in a very limited way. Medicare covers very few long-term care expenses. There are many plans and they vary in costs and services covered, each with its own limits.

More detailed information is given in A Shopper's Guide to Long-Term Care Insurance. Contact your State Insurance Department or write: National Association of Insurance Commissioners, 120 W. 12th Street, Suite 1100, Kansas City, MO 64105.

Another good source of information is The Consumer's Guide to Long-Term Care Insurance. For a free copy, write to: Health Insurance Association of America, 555 13th St., N.W., Suite 600 East, Washington, D.C. 20004.

A Final Word

There's no doubt that choosing among health insurance plans takes time and effort. Now that you have read this information, you know what questions to ask so you will be able to carefully compare various plans and find the one that best fits your needs.

Understanding Health Insurance Terms

Coinsurance: The amount you are required to pay for medical care in a fee-for-service plan after you have met your deductible. The coinsurance rate is usually expressed as a percentage. For example, if the insurance company pays 80 percent of the claim, you pay 20 percent.

Coordination of Benefits: A system to eliminate duplication of benefits when you are covered under more than one group plan. Benefits under the two plans usually are limited to no more than 100 percent of the claim.

Copayment: Another way of sharing medical costs. You pay a flat fee every time you receive a medical service (for example, $5 for every visit to the doctor). The insurance company pays the rest.

Covered Expenses: Most insurance plans, whether they are fee-for-service, HMOs, or PPOs, do not pay for all services. Some may not pay for prescription drugs. Others may not pay for mental health care. Covered services are those medical procedures the insurer agrees to pay for. They are listed in the policy.

Deductible: The amount of money you must pay each year to cover your medical care expenses before your insurance policy starts paying.

Exclusions: Specific conditions or circumstances for which the policy will not provide benefits.

HMO (Health Maintenance Organization): Prepaid health plans. You pay a monthly premium and the HMO covers your doctors' visits, hospital stays, emergency care, surgery, checkups, lab tests, x-rays, and therapy. You must use the doctors and hospitals designated by the HMO.

Managed Care: Ways to manage costs, use, and quality of the health care system. All HMOs and PPOs, and many fee-for-service plans, have managed care.

Maximum Out-of-Pocket: The most money you will be required pay a year for deductibles and coinsurance. It is a stated dollar amount set by the insurance company, in addition to regular premiums.

Noncancellable Policy: A policy that guarantees you can receive insurance, as long as you pay the premium. It is also called a guaranteed renewable policy.

PPO (Preferred Provider Organization): A combination of traditional fee-for-service and an HMO. When you use the doctors and hospitals that are part of the PPO, you can have a larger part of your medical bills covered. You can use other doctors, but at a higher cost.

Preexisting Condition: A health problem that existed before the date your insurance became effective.

Premium: The amount you or your employer pays in exchange for insurance coverage.

Primary Care Doctor: Usually your first contact for health care. This is often a family physician or internist, but some women use their gynecologist. A primary care doctor monitors your health and diagnoses and treats minor health problems, and refers you to specialists if another level of care is needed.

Provider: Any person (doctor, nurse, dentist) or institution (hospital or clinic) that provides medical care.

Third-Party Payer: Any payer for health care services other than you. This can be an insurance company, an HMO, a PPO, or the Federal Government.

Additional Resources:

For more current information on health insurance and health plan choice, select Choosing and Using a Health Plan or Your Guide to Choosing Quality Health Care.

Internet Citation:
Checkup on Health Insurance Choices. AHCPR Publication No. 93-0018, December 1992. Agency for Health Care Policy and Research, Rockville, MD. http://www.ahrq.gov/consumer/insuranc.htm

Choosing and Using a Health Plan

Changes and Choices

Health care in America is changing rapidly. Twenty-five years ago, most people in the United States had indemnity insurance coverage. A person with indemnity insurance could go to any doctor, hospital, or other provider (which would bill for each service given), and the insurance and the patient would each pay part of the bill.

But today, more than half of all Americans who have health insurance are enrolled in some kind of managed care plan, an organized way of both providing services and paying for them. Different types of managed care plans work differently and include preferred provider organizations (PPOs), health maintenance organizations (HMOs), and point-of-service (POS) plans.

You've probably heard these terms before. But what do they mean, and what are the differences between them? And what do these differences mean to you?

Overview
This booklet can help you make sense of your choices for getting health care insurance:

Even if you don't get to choose the health plan yourself (for example, your employer may select the plan for your company), you still need to understand what kind of protection your health plan provides and what you will need to do to get the health care that you and your family need.

The more you learn, the more easily you'll be able to decide what fits your personal needs and budget.

Choosing a Plan

1. What Are My Health Plan Choices?

Choosing between health plans is not as easy as it once was. Although there is no one "best" plan, there are some plans that will be better than others for you and your family's health needs. Plans differ, both in how much you have to pay and how easy it is to get the services you need. Although no plan will pay for all the costs associated with your medical care, some plans will cover more than others.

Almost all plans today have ways to reduce unnecessary use of health care—and keep down the costs of health care, too. This may affect how easily you get the care you want, but should not affect how easily you get the care you need.

Plans change from year to year, so you should carefully consider each plan, using the questions outlined in this booklet. If you get health insurance where you work, you should start with your employee benefits office. Its staff should be able to tell you what is covered under the plans available. You can also call plans directly to ask questions.

Health insurance plans are usually described as either indemnity (fee-for-service) or managed care. These types of plans differ in important ways that are described below. With any health plan, however, there is a basic premium, which is how much you or your employer pay, usually monthly, to buy health insurance coverage. In addition, there are often other payments you must make, which will vary by plan. In considering any plan, you should try to figure out its total cost to you and your family, especially if someone in the family has a chronic or serious health condition.

Indemnity and managed care plans differ in their basic approach. Put broadly, the major differences concern choice of providers, out-of-pocket costs for covered services, and how bills are paid. Usually, indemnity plans offer more choice of doctors (including specialists, such as cardiologists and surgeons), hospitals, and other health care providers than managed care plans. Indemnity plans pay their share of the costs of a service only after they receive a bill.

Managed care plans have agreements with certain doctors, hospitals, and health care providers to give a range of services to plan members at reduced cost. In general, you will have less paperwork and lower out-of-pocket costs if you select a managed care type plan and a broader choice of health care providers if you select an indemnity-type plan.

Over time, the distinctions between these kinds of plans have begun to blur as health plans compete for your business. Some indemnity plans offer managed care-type options, and some managed care plans offer members the opportunity to use providers who are "outside" the plan. This makes it even more important for you to understand how your health plan works.

Besides indemnity plans, there are basically three types of managed care plans: PPOs, HMOs, and POS plans.

Indemnity Plan

With an indemnity plan (sometimes called fee-for-service), you can use any medical provider (such as a doctor and hospital). You or they send the bill to the insurance company, which pays part of it. Usually, you have a deductible—such as $200—to pay each year before the insurer starts paying.

Once you meet the deductible, most indemnity plans pay a percentage of what they consider the "Usual and Customary" charge for covered services. The insurer generally pays 80 percent of the Usual and Customary costs and you pay the other 20 percent, which is known as coinsurance. If the provider charges more than the Usual and Customary rates, you will have to pay both the coinsurance and the difference.

The plan will pay for charges for medical tests and prescriptions as well as from doctors and hospitals. It may not pay for some preventive care, like checkups.

Managed Care

Preferred Provider Organization (PPO). A PPO is a form of managed care closest to an indemnity plan. A PPO has arrangements with doctors, hospitals, and other providers of care who have agreed to accept lower fees from the insurer for their services. As a result, your cost sharing should be lower than if you go outside the network. In addition to the PPO doctors making referrals, plan members can refer themselves to other doctors, including ones outside the plan.

If you go to a doctor within the PPO network, you will pay a copayment (a set amount you pay for certain services—say $10 for a doctor or $5 for a prescription). Your coinsurance will be based on lower charges for PPO members.

If you choose to go outside the network, you will have to meet the deductible and pay coinsurance based on higher charges. In addition, you may have to pay the difference between what the provider charges and what the plan will pay.

Health Maintenance Organization (HMO). HMOs are the oldest form of managed care plan. HMOs offer members a range of health benefits, including preventive care, for a set monthly fee. There are many kinds of HMOs. If doctors are employees of the health plan and you visit them at central medical offices or clinics, it is a staff or group model HMO. Other HMOs contract with physician groups or individual doctors who have private offices. These are called individual practice associations (IPAs) or networks.

HMOs will give you a list of doctors from which to choose a primary care doctor. This doctor coordinates your care, which means that generally you must contact him or her to be referred to a specialist.

With some HMOs, you will pay nothing when you visit doctors. With other HMOs there may be a copayment, like $5 or $10, for various services.

If you belong to an HMO, the plan only covers the cost of charges for doctors in that HMO. If you go outside the HMO, you will pay the bill. This is not the case with point-of-service plans.

Point-of-Service (POS) Plan. Many HMOs offer an indemnity-type option known as a POS plan. The primary care doctors in a POS plan usually make referrals to other providers in the plan. But in a POS plan, members can refer themselves outside the plan and still get some coverage.

If the doctor makes a referral out of the network, the plan pays all or most of the bill. If you refer yourself to a provider outside the network and the service is covered by the plan, you will have to pay coinsurance.

Primary Care Doctors

Your primary care doctor will serve as your regular doctor, managing your care and working with you to make most of the medical decisions about your care as a patient. In many plans, care by specialists is only paid for if your are referred by your primary care doctor.

An HMO or a POS plan will provide you with a list of doctors from which you will choose your primary care doctor (usually a family physician, internists, obstetrician-gynecologist, or pedicatrician). This could mean you might have to choose a new primary care doctor if your current one does not belong to the plan.

PPOs allow members to use primary care doctors outside the PPO network (at a higher cost). Indemnity plans allow any doctor to be used.

2. Where Do I Get These Health Plans?

Group Policies
You may be able to get group health coverage—either indemnity or managed care—through your job or the job of a family member.

Many employers allow you to join or change health plans once a year during open enrollment. But once you choose a plan, you must keep it for a year. Discuss choices and limits with your employee benefits office.

Individual Policies
If you are self-employed or if your company does not offer group policies, you may need to buy individual health insurance. Individual policies cost more than group policies.

Some organizations—such as unions, professional associations, or social or civic groups—offer health plans for members. You may want to talk to an insurance broker, who can tell you more about the indemnity and managed care plans that are available for individuals. Some States also provide insurance for very small groups or the self-employed.

Medicare
Americans age 65 or older and people with certain disabilities can be covered under Medicare, a Federal health insurance program.

In many parts of the country, people covered under Medicare now have a choice between managed care and indemnity plans. They also can switch their plans for any reason. However, they must officially tell the plan or the local Social Security Office, and the change may not take effect for up to 30 days. Call your local Social Security office or the State office on aging to find out what is available in your area.

Medicaid
Medicaid covers some low-income people (especially children and pregnant women), and disabled people. Medicaid is a joint Federal-State health insurance program that is run by the States.

In some cases, States require people covered under Medicaid to join managed care plans. Insurance plans and State regulations differ, so check with your State Medicaid office to learn more.

Pre-Existing Conditions
A pre-existing condition is a medical condition diagnosed or treated before joining a new plan. In the past, health care given for a pre-existing condition often has not been covered for someone who joins a new plan until after a waiting period. However, a new law—called the Health Insurance Portability and Accountability Act—changes the rules.

Under the law, most of which goes into effect on July 1, 1997, a pre-existing condition will be covered without a waiting period when you join a new group plan if you have been insured the previous 12 months. This means that if you remain insured for 12 months or more, you will be able to go from one job to another, and your pre-existing condition will be covered—without additional waiting periods—even if you have a chronic illness.

If you have a pre-existing condition and have not been insured the previous 12 months before joining a new plan, the longest you will have to wait before you are covered for that condition is 12 months.

To find out how this new law affects you, check with either your employer benefits office or your health plan.

3. What Plan Benefits Are Offered?

Most plans provide basic medical coverage, but the details are what counts. The best plan for someone else may not be the best plan for you. For each plan you are considering, find out how it handles:

Also ask about:

Some plans offer members health education and preventive care, but services differ. Ask questions such as:

4. What Is Most Important to Me in a Plan?

In choosing a plan, you have to decide what is most important to you. All plans have tradeoffs. Ask yourself these questions:

You might also want to think about whether the services a plan offers meet your needs. Call the plan for details about coverage if you have questions. Consider:

5. How Do I Compare Health Plans?

After you review what benefits are available and decide what is important to you, you can compare plans. Many things should be considered. These include services offered, choice of providers, location, and costs. The quality of care is also a factor to think about (go to section 6.).

Services
Look at the services offered by each plan. What services are limited or not covered? Is there a good match between what is provided and what you think you will need? For example, if you have a chronic disease, is there a special program for that illness? Will the plan provide the medicines and equipment you may need?

Find out what types of care or services the plan won't pay for. These usually are called exclusions.

Few indemnity and managed care plans cover treatments that are experimental. Ask how the plan decides what is or is not experimental. Find out what you can do if you disagree with a plan's decision on medical care or coverage.

Choice
What doctors, hospitals, and other medical providers are part of the plan? Are there enough of the kinds of doctors you want to see? Do you need to choose a primary care doctor? If you want to see a specialist, can you refer yourself or must your primary care doctor refer you? Do you need approval from the plan before going into the hospital or getting specialty care?

Location
Where will you go for care? Are these places near where you work or live? How does the plan handle care when you are away from home?

Costs
No health insurance plan will cover every expense. To get a true idea of what your costs will be under each plan, you need to look at how much you will pay for your premium and other costs.

You can't know in advance what your health care needs for the coming year will be. But you can guess what services you and your family might need. Figure out what the total costs to your family would be for these services under each plan.

6. How Do I Find Out About Quality?

Quality is hard to measure, but more and more information is becoming available. There are certain things you can look for and questions you can ask. Whatever kind of plan you are considering, you can check out individual doctors and hospitals. For doctors, see "Tips on Choosing a Doctor."

Many managed care plans are regulated by Federal and State agencies. Indemnity plans are regulated by State insurance commissions. Your State Department of Health or insurance commission can tell you about any plan you are interested in.

You can also find out if the managed care plan you are interested in has been "accredited," meaning that it meets certain standards of independent organizations. Some States require accreditation if plans serve special groups, such as people in Medicaid. Some employers will only contract with plans that are accredited.

Several national organizations review and accredit plans and institutions (see "Sources of Additional Information"). You can contact these organizations to see if a plan you are considering, or an institution in the plan, is accredited.

Another approach is to ask the plan how it ensures good medical care. Does the plan review the qualifications of doctors before they are added to the plan? Plans are supposed to review the care that is given by their doctors and hospitals. How does the plan review its own services, and has it made changes to correct problems? How does the plan resolve member complaints?

Some managed care plans survey members about their health care experiences. Ask the plan for a report of the survey results.

Some plans and independent organizations are also beginning to produce "report cards." These reports often include satisfaction survey results and other information on quality, such as if a plan provides preventive care (for example, shots for children and Pap smears for women) or if the plan follows up on test results. Report cards may also include information on how many members stay in or leave the plan, how many of the plan's doctors are board certified, or how long you may have to wait for an appointment.

Report cards can only give you an idea of how a plan works and may not give a full picture of a plan's quality. Ask plans if their activities have been reported in report cards developed by outside groups (business or consumer organizations).

Also keep any eye out for magazine articles that rate health plans.

Finally, you can talk to current members of the plan. Ask how they feel about their experiences, such as waiting times for appointments, the helpfulness of medical staff, the services offered, and the care received. If there are programs for your particular condition, how are the patients in it doing?

Tips on Choosing a Doctor

Your doctor will be your partner in care, so it is important to choose carefully from the doctors available to you. In some managed care plans, you will generally be limited to choosing from only certain doctors; in other plans, some doctors may be "preferred," which means they are part of a network and you will pay less if you use them. Ask your plan for a list or directory of providers. The plan may also offer other help in choosing.

You can ask doctors you know, medical societies, friends, family, and coworkers to recommend doctors. You may also contact hospitals and referral services about doctors in your area.

Once you have the names of doctors who interest you, make sure they are accepting new patients. Here's how to check doctors out:

You may also want to find out:

Once you have narrowed your search to a few doctors, you may want to set up "get acquainted" appointments with them. Ask what charge there might be for these visits, if any. Such appointments give you a chance to interview the doctors—for example, to find out if they have much experience with any health conditions you may have.

Quick Checks for Quality: Choosing Quality Health Care

Quick Checks for Quality summarizes the major ways you can check for quality in health care. The information in it comes from Your Guide to Choosing Quality Health Care, which is based on research about the information people want and need when making decisions about health plans, doctors, treatments, hospitals, and long-term care.

Introduction

Research shows that Americans want and value quality health care. The problem is that the quality of health care services varies in our country—a lot. For example, some health plans and doctors simply do a better job than others of helping you stay healthy and getting you better if you are ill.

Fortunately, health care quality can be measured, and it can be improved. You can find out how in a new guide developed by the Agency for Health Care Policy and Research (AHCPR) of the Department of Health and Human Services (HHS). Your Guide to Choosing Quality Health Care describes quality measures including consumer ratings, clinical performance measures, and accreditation—what they are, where to find them, and how to use them. Select to access the Guide.

The Guide provides other information, such as the following "Quick-Checks for Quality," that summarize the major ways you can check for quality health care.

Quick Checks for Quality

Look for a plan that:

_____Has been rated highly by its members on the things that are important to you.
_____Does a good job of helping people stay well and get better.
_____Is accredited, if that is important to you.
_____Has the doctors and hospitals you want or need.
_____Provides the benefits you need.
_____Provides services where and when you need them.
_____Meets your budget.

Look for a doctor who:

_____Is rated to give quality care.
_____Has the training and background that meet your needs.
_____Takes steps to prevent illness (for example, talks to you about quitting smoking).
_____Has privileges at the hospital of your choice.
_____Is part of your health plan, unless you can afford to pay extra.
_____Encourages you to ask questions.
_____Listens to you.
_____Explains things clearly.
_____Treats you with respect.

When choosing a treatment, make sure you understand:

_____What your diagnosis is.
_____Whether treatment is really needed at this time.
_____What your treatment options are.
_____Whether the treatment options are based on the latest scientific evidence.
_____The benefits and risks of each treatment.
_____The cost of each treatment.

Look for a hospital that:

_____Is accredited by the Joint Commission on Accreditation of Healthcare Organizations.
_____Is rated highly by State or consumer or other groups.
_____Is one where your doctor has privileges, if that is important to you.
_____Is covered by your health plan.
_____Has experience with your condition.
_____Has had success with your condition.
_____Checks and works to improve its own quality of care.

Look for long-term care that:

_____Has been found by State agencies, accreditors, or others to provide quality care.
_____Has the services you need.
_____Has staff that meet your needs.
_____Meets your budget.

This initiative is one effort of HHS to address the findings of the President's A