Health Insurance Benefits: The Basics

Types of Health Insurance Plans

There are many health benefit plans. The common theme among all managed care plans is restrictions on access to medical services and physicians. Managed care plans make more money when they keep you healthy, keep you out of hospitals, reduce the amount of care you receive, and stay within the budget set for each member's total medical care. The most common managed care plans include health mantainance organizations (HMOs) and preferred provider organizations (PPOs), point-of-service plans (POS), exclusive provider organizartions (EPO) and limited benefit plans. 

"HMOs" organize, pay for, and deliver care. An HMO is a health care plan. An HMO organizes, controls, pays for, and provides almost every aspect of health care that a member might need. With an HMO plan, you pick one primary care physician (PCP). All of your health care services go through that physician. Your PCP must refer you to see any other health care professional, except in an emergency. Visits to health care professionals outside of your network typically aren't covered by your insurance. Physician participation in HMOs is low compared to PPO or POS plans.

PPOs typically allow more choice. You don't need a primary care physician. PPOs usually let patients see medical specialists without getting permission from a primary care physician, but it can be plan specific. PPOs do have networks and choosing physicians/facilities within the network generally means smaller copays and less out-of-pocket. Physician participation in PPOs is genereally higher, except in instances where the insurance carrier is limiting participation. 

Point-of-service (POS) plans have more choice than PPOs. POS plans routinely cost more than HMOs or PPOs, but allow use of physicians not in the plan without the permission of your PCP or a company employee. If you get care from HMO or PPO doctors and hospitals, you'll generally have less out-of-pocket cost. If you decide to go outside the plan's network of doctors and hospitals for care, you will have claim forms to complete and a bigger out-of-pocket expense.

Limited Benefit Plans are medical plans with much lower and more restricted benefits than major medical insurance, but with lower premiums. They pay pre-determined limited benefits and restrict the number of visits and testing regardless of the total charges. Be sure you understand the network. Most physicians do not participate in limited benefit plans. 

EPO plans combine the flexibility of PPO plans with the cost-savings of HMO plans. You won't need to choose a primary care physician to see a specialist. But you'll have a limited network of doctors and hospitals tfrom which to choose. EPO plans don't cover care outside your network unless it's an emergency.

What this means for you.... All HMO and many PPO plans will pick a primary care doctor, often described as a "gatekeeper," who provides, arranges, or authorizes all your care. Primary care doctors are usually family doctors, internal medicine doctors, pediatricians, and obstetricians/gyneocologists. This control of your medical care means that you must get permission from your primary care physician before visiting any medical specialist, except in emergencies. 

ASK THESE QUESTIONS: Consider the following when reviewing a health plan choice:

What are your current and projected health care needs: Chronic conditions, pending elective surgeries, pregnancy, etc.

What options are available: Does this plan meet my specific needs? What isn't covered? Is it affordable?

Do I have to choose a primary care physician? Can I keep my current doctors? Insurance plan directories are commonly inaccurate and when employers negotiate coverage, misinformation is sometimes relayed. The best way to identify if your doctor is in a plan being considered is to check with his/her office directly.

What happens if I am out of state and need to seek care? Ask in advance what a plan requires.

What are my benefits? Each plan is required to provide members with a benefits plan that outlines coverage details. Many will provide a "summary document," but you must request a complete copy of the benefit plan. A complete recommendation would be to request a complete copy of the benefit plan each year. 

Should I evaluate prompt pay options with my physician? Many physician offices offer prompt pay discounts that result in less out-of-pocket for the patients that file insurance. This is because, for the physician office, cash services have less hassle factors, i.e., no claim to file, no authorizations, etc. If a high deductible is involved, evaluate prompt pay options with your physician.

Am I satisfied with my current plan? Did the plan have adequate physicians and/or facilities that were in network? Did the plan process claims timely? Did the plan cover the services I needed? How much out-of-pocket did I have? Should I consider a higher deductible and look for prompt pay discounts for some services?

What if I am not satisfied with my plan? File a complaint with the plan. File a written complaint documenting your concerns and, when appropriate, ask your physician to contribute medical perspectives. If the plan does not repsond, contact the Department of Insurance for your state and follow their processes to continue your complaint. In an employer sponsered plan, be sure to copy communications to the benefits coordinator.

Do I need to change health plans? If an individual plan, look for other options that might better meet your needs. If a group employer plan, provide feedback to your employer about your problems with the plan. Changes to coverage can generally be made during an "open enrollment" period.

Is Prompt Pay a Viable Option?
Most health insurnace is via an employer group sponsored plan. Employers may offer a couple of tier options. Healthier populations generally choose a higher deductible with a lower monthly premium. Current deductibles average $5,000; so each visit to the doctor, other than a defined preventative care visit, will have out-of-pocket costs (i.e., copays, deductible, coinsurance and/or prescriptions.)

For the physician office, health insurance administrative burdens and the need to employ personnel who's sole purpose is assure proper claims filing and payment increase the cost of providing health care services. Health plan reimbursement does not take into consideration actual cost of services when determining physician reimbursement. 

"Health insurance should be viewed the same way home and auto insurance is viewed; one does not make a claim from their homeowner's policy when they change a light bulb." Dr. Andry, Andry Medical Services, Bloomington, IL.

With a prompt pay model, patients file claims directly to their carrier to identify out-of-pocket dollars that can be applied to the deductible and patients can also make use of HSA accounts.

Prompt pay options are designed to benefit the patient and the physician. 

For example: Patient A has a health insurance plan in which the primary care physician of choice has elected not to participate. As the patient-physician relationship is an intimate one, Patient A chooses to continue to see primary care physician of choice. Patient A's deductible is approximately $250 monthly; there is an out-of-network deductible and copayment responsibility when filing claims. Patient A sees primary care physician of choice every 6 months due to conditions/medications that need to be monitored.

If Patient A files insurance, out-of-pocket cost for each visit would be $224-$263. If Patient A uses physicians prompt pay discount at the time of service, out-of-pocket cost is $105-$140 for each visit. Prompt payment results in an average saving of $300 for this scenario. If additional visits for illness were involved, the savings would be greater. 

With this scenario, Patient A gets to keep seeing primary care physician of choice, file claims so that the "deductible" is being paid down and saves money on each visit. The physician's expenses are lowered for the care of this patient as no insurance claim is filed, no follow-up on the claim is required and/or no worry that proper payment is received.

The physician passes that savings on to the patient and gets paid promptly at the time of service. 

Patients should evaluate opportunities to save on insurance premiums and out-of-pocket costs by examining cash options that result in potential cost savings. 

In Summary... As a consumer of healthcare services, you need to be aware, informed, and educated about your coverage benefits and how to address concerns when they arise. 

Prior to scheduling preauthorized elective services, check with your insurer about the network status of the facility-based physicians and others who may provide care and bill for services. Specifically, you want to know about the following services and if they require prior approval:

  • Radiology (All X-Rays/Scans)
  • Pathology (Lab Services and Examination of Tissue)
  • Anesthesiology
  • Emergency Services
  • Elective Provedures 

Be sure to ask the insurer, or employer that is working with the insurer, to have the insurer provide specifics regarding using or receiving services from an out-of-network physcian and the potential for balance billing. Offering a plan that has little participation by local physicians/facilities will generally cost your employer less in premiums, but cost you more in out-of-pocket expenses. Insurers know the geographical areas for which they are unable to assure an adequate network of physicians and/or facilities. As a consumer of healthcare services in your geographical are, you should have pertinent information regarding the availibility of physicians and/or facilities that will accept your health plan.

Request that your insurance broker/agent provides you the specifics on the limitations of the plans, especially potential out-of-pocket responsibilities for care provided both in- and out-of-network.

Understanding your health plan will allow you to use your benefits in the most effective and economical manner. Your health care is intimate and personal. Your health benefit plan should complement your choices in healthcare relationships, not dictate them.

The Cash Pay Model vs. Insurance - Andry Medical Services, Bloomington, IN

Managed Care Answer Guide -  Patient Advocate Foundations

Texas Medical Association

Texoma Independent Physician Staff

Medicare Benefits: The Basics

There are differences between Medicare and Medicare Advantage Plans that are important to understand. Since Medicare Advantage is not administered through the federal government, the rules and guidelines may vary.

Medicare - Traditional (Part A&B)

  • Traditional program administered through the federal government.
  • Includes Part A (hospital) and Part B (medical) coverage if you enroll in both.
  • Deductible and/or co-insurance apply (20% Medicare-approved cost for outpatient care).
  • Most pay a monthly premium for Part B; no Part A premium if you have at least 10 years of United States work history.
  • You can go to any doctor or hospital in the country that accepts Medicare.
  • No specialist referrals needed; no prior authorizations for most services.
  • You can buy a Medigap plan as supplemental coverage.
  • Medicare drug coverage requires purchase of Prescription Drug Program (PDP) from a private insurance company. 


Medicare Advantage Plans (Part C)

**These are not Traditional Medicare**

  • Plans sold by private insurance companies that provide Medicare benefits.
  • Cover same Part A and Part B benefits as Traditional Medicare.
  • Types are HMOs (Health Maintaince Organizations), PPOs (Preferred Provider Organizations) and PFFS (Private- Fee-for-Service) plans.
  • You are not in Traditional Medicare.
  • You pay a deductible and/or copay for services. 
  • You pay Medicare premiums, plan may charge an additional premium.
  • Typically required to use doctors and hospitals in the network.
  • You may have to chose a Primary Care Physician (PCP); get referrals to see specialists; and/or get prior authorization for certain services.
  • You can't buy Medigap insurance to pay your out-of-pocket costs.
  • Plans have yearly limits on your out-of-pocket costs (out-of-pocket maximum), after which you pay nothing for the rest of the year. 
  • If you want Medicare drug coverage, sign up for a plan that includes both health and drug coverage, called a Medicare Advantage Prescription Drug Plan (MA-PD). You usually can not have a seperate Part D plan, unless you're in a Medicare Medical Savings Account (MSA) or a PFFS plan.


Medicare Prescription Drug Coverage (Part D)

Traditional Medicare offers prescription drug coverage to everyone with Medicare. If you don't enroll in a drug plan when you first become eligible and you don't enroll in a Medicare Advantage Plan (Part C), late enrollment penalties might be assessed unless you meet certain other conditions. Medicare drug coverage is provided through approved insurance/ private companies. The plans vary in cost and coverage.

If you participate with a Medicare Advantage Plan (Part C) that offers drug coverage, you would receive all Medicare benefits (Parts A, B, &D) through that plan.

If your Medicare Advantage Plan (Part C) includes prescription dug coverage and you join a Medicare Presription Drug Plan (Part D), you will be disenrolled from your Medicare Advantage Plan and returned to Traditional Medicare. 

Open enrollment for Medicare Advantage Plans and Medicare Prescription Drug Coverage (Parts C & D) runs from October 15th to December 7th annually.

If you enrolled in a Medicare Advantage Plan and want to go back to Traditional Medicare, the disenrollment period is from January 1st to Febuary 14th annually.



Things to Consider When Evaluating Trational Medicare vs. Medicare Advantage Plans for Medical Services:

  1. Choice of Health Care Providers: More physicians and other health care professionals accept Traditional Medicare than Private Medicare Advantage insurance. Private Plans tend to be more restrictive in available providers and services.
  2. 20% Co-Insurance Costs: Tradtional Medicare Subscribers have a 20% co-insurance for most services. Medicare Advantage Plans structure costs differently and may offer a lower (or higher) co-insurance, or may charge copays instead.  A trade-off could be a higher monthly premium.
  3. Other Coverage:  Traditional Medicare does not cover vision, dental, hearing aides, assisted living or nursing home care; some Medicare advantage Plans will cover some of these services, but it could be at a higher cost to you.
  4. Out-of-Poacket Cap: Traditional Medicare has no out-of-pocket maximum. You keep paying a portion of the cost of services as you use them. Medicare Advantage Plans, by law, have an out-of-pocket maxium of no more than $6,700 per year. Once you hit that limit, the plan pays for all covered expenses.
  5. Prescription Drug Needs:  Traditional Medicare provides drug coverage, but it costs extra and you must apply by adding Part D coverage. A large percentage of Medicare Advantage Plans include drug coverage, however, in some cases, your monthly premium will exceed what you pay for Part D.


Things to Consider When Evaluating Tradtional Medicare vs. Medicare Advantage for Drug Coverage:

  1. Is the monthly premium a good value based in your needs?
  2. What is the annual deductible and how is it applied?
  3. Does the plan cover all my prescription needs?
  4. Are there copayment/ co-insurance responsibilities?
  5. Are you at risk for entering the Medicare Part D coverage gap (or "donut hole"), which is a temporary limit on what your Medicare plan will cover for prescription drugs?
  6. Does the Medicare plan include a pharmacy network?


"If Seniors are not familiar with the sometimes subtle differences between original Medicare and Medicare Advantage, it could end up biting them in the pocket book" - Sean Williams - TMFUltraLong