Health Insurance

Health Insurance is designed to provide benefits for medical care. Insurance contracts may provide for payment of medical expense by reimbursing a policyowner for services received or by paying those who provide the services directly, or a contract may pay a set predetermined amount to the insured regardless of the amount charged for medical expenses. Medical expense or hospitalization insurance can be written on an individual basis or on a group basis. Coverage is provided to the individual and eligible dependents.

In an effort to reduce medical costs several arrangements are offered:

PPO – A form of managed care whereby a group of independent hospitals and physicians in a certain area agree to provide a range of services at prearranged costs that are usually at a discounted rate. Insureds may seek care outside of the network at an additional cost. Plans are usually administered by the insurance company. Members may be charged cop

HMO – Also a form of managed care that provides benefits or services rather than reimbursement for medical expenses. The HMO is similar to a PPO system where the emphasis is on prevention thus the benefits offered are broader than those of a PPO. Members select a primary care physician who in turn provides or authorizes all care for the particular member. Members of an HMO may be charged nominal amounts or copayments for services in addition to the monthly payments.

POS – Point of Service plan where the individual is given a choice of receiving care by a group of in-network or participating group of doctors and hospitals in the plan or out-of-network providers. All care, including referrals to specialists and arrangements for hospitalization is coordinated by the insured’s primary care physician. Out-of-network coverage applies when the insured receives care by a provider not associated with the network and who is not referred by the primary care physician. The cost for an out-of-network physician will usually be more than those services provided an in-network provider.

Indemnity Policy – Reimbursement is paid by a specified, pre-established amount per day, as shown in the schedule of the policy, for a stated maximum number of days. For example: The policy may pay $100 dollars a day for up to 90 days for hospital room and board.

Health Savings Account – combines a high deductible health plan with a tax-deductible medical savings account. The savings account is used primarily to pay for medical expenses. To be eligible an individual or group must be covered under a high-deductible health plan (HDHP), who is not entitled for benefits under Medicare; and are not claimed as a dependant under another person’s tax return.