Managed Care Please Click on the State you need Health Insurance in...

Managed care plans provide comprehensive health services to their members and offer financial incentives for patients to use providers under contract with the plan. That's how managed care plans keep their costs low: (In recent years, though, even this tactic has had a diminishing effect.) Instead of paying for each service that you receive separately, the plans pay providers in advance. That's why insurance professionals call these plans prepaid care.

HMOs have been in existence for many years. However, their popularity has increased dramatically since the passage of the Health Maintenance Organization Act by the federal government in the late 1970s.

If you join an HMO, you'll pay a monthly or quarterly premium. That premium will remain the same-whatever your medical history and whether or not you use the plan's services. The plan will also charge a co-payment for certain services. For example: $10 for an office visit or $5 for a prescription. This is one of the ways in which the plans adjust for people who use the services more heavily than others.

HMOs deliver care directly to patients. Whether patients go to a medical facility to see a doctor or to a specific doctor's office, their business relationship is with the HMO. To many people, the health care providers appear to be interchangeable subcontractors.

This appearance isn't exactly accurate. If you belong to an HMO, you usually have to receive your medical care through the plan by selecting a primary care physician who coordinates your care. A primary care physician may be a family practice doctor, an internist, a pediatrician, etc. He or she is responsible for referring you to specialists.

While most of these specialists will be participating providers in the HMO, there are circumstances in which patients enrolled in an HMO may be referred to providers outside the HMO network and still receive coverage. (However, this issue is a major controversy in HMOs. We'll consider the matter in greater detail in Chapter 5.)

Preferred provider organizations and point-of-service plans are the other major types of managed care. These plans combine the features of fee-for service plans and HMOs. These plans provide choice regarding physician, hospital, etc. An HMO restricts choice to a network provider.

With a PPO or a POS, unlike most HMOs, you will get some reimbursement if you receive a covered service from a provider who is not in the plan. Of course, choosing a provider outside the plan's network will cost you more than choosing a provider in the network These plans will act like fee-for-service plans and charge you co-insurance when you go outside the network.

PPOs and POSs generally offer more flexibility than HMOs, but their premiums tend to be somewhat higher.

What is the difference between a PPO and a POS plan? A POS plan has primary care physicians who coordinate patient care, and in most cases, PPO plans do not.

Commercial Insurers and Service Organizations

Many of the major life and health insurance companies market various forms of hospitalization coverage, including both group and individual policies. Your insurance company may issue one or more types of hospitalization insurance.

The structure of the commercial insurer offering hospitalization policies generally includes a marketing department, underwriting department, and a claims and administration section. These are organizations which provide prepaid medical and health benefits. The best example of this type of provider is Blue CrosslBlue Shield. This system began in 1939 as part of the California Physicians' Service. This early plan was designed to pay doctors' fees. The American Medical Association was closely involved with the early development of medical association service plans.

Most Blue Cross-Blue. Shield plans are organized in accordance with state laws which recognize them as nonprofit service organizations and exempt them from state premium taxation. Depending on the state, Blue Cross-Blue Shield may or may not technically operate as an insurer. Regardless, they are regulated by the state insurance departments.

Unlike a commercial insurer, which issues a policy and has a contractual relationship with the insured, service organizations have a contractual relationship with the providers of health care, namely doctors and hospitals. Subscribers to this health care service then use the services of the contracted doctors and hospitals commonly referred to as participating providers. All claims are settled directly with the providers by Blue Cross-Blue Shield.

Other Coverages

Various kinds of insurance-most tied to some form of life insurance or related coverages-can provide health coverage for people or groups who can't get the protection they want from standard policies.

We'll consider some of these coverages in greater detail later in this book. Here, we'll take a quick look at the important ones.

Used on a stand-alone basis-,-Qr combined with each other-alternative coverages can work for people whose health or medical history makes traditional health insurance difficult

Accidental Death and Dismemberment (AD&D)

Although a health insurance product, AD&D benefits are frequently provided as riders-attachments to a policy that modify its conditions by expanding or restricting benefits-to individual and group life insurance contracts. AD&D benefits may be included as riders on life insurance policies, as part of disability income insurance, as part of health insurance, or as a separate policy.

AD&D coverage pays the policy's principal sum in accordance with policy provisions. A principal sum is similar to a policy's face amount. This same amount is paid if you suffer the actual severance of two arms, two legs, or the loss of vision in two eyes due to an accident. If the policy is paying an accidental dismemberment benefit, this amount is identified as the capital sum.

Medical Expense Benefits

Medical expense insurance, commonly referred to as hospitalization insurance, provides benefits for expenses incurred for hospital medical treatment/surgery as well as certain outpatient expenses like doctor's visits, lab tests and diagnostic services. The policy can be issued as an individual policy covering all family members or as a group insurance policy provided through an employer-sponsored program.

Dental expense benefits are generally sold as part of group hospitalization coverage. Dental benefits are provided for preventive maintenance (cleanings and x-rays), repair (drillings, root canals, etc.) and replacement of teeth.

Most insurers do not provide individual dental coverage

Long-term care (LTC) insurance pays for the care of persons with chronic diseases or disabilities, and may include a wide range of health and social services provided under the supervision of medical professionals. LTC often covers nursing home care, home-based care and respite care.

Limited Health Exposures and Long-term Contracts

There are a variety of special health insurance policies providing limited coverage. To ensure that you have sufficient notice that your coverage is limited, your policy; by law; should state plainly that it is a limited policy.

Travel accident insurance provides coverage for death or injury resulting from accidents occurring while the insured is a fare-paying passenger on a common carrier.

Specified disease or dread disease insurance provides a variety of benefits for only certain diseases, usually cancer or heart disease. This coverage is especially important for people with a history of a particular illness-because this is how they can insure against other problems. For example, a person who has survived cancer may have trouble finding standard health coverage but may be able to get coverage for heart trouble.

Hospital income insurance pays a specified sum on a daily, weekly or monthly basis while the insured is commed to a hospital. The amount of the benefit is not related to expenses incurred or to wages lost while the insured is hospitalized. accident only insurance provides coverage for injury from accident-but excludes sickness. Benefits may be paid for all or any of the following: death, disability; dismemberment or hospital expenses.

Prescription Coverage

Prescription medication coverage is normally provided as an optional benefit under a group medical expense policy. The insured and eligible dependents are provided with a stated cost for any prescription medication required. This specific cost is usually, two, three, or five dollars per prescription. Thus, regardless of the cost of the medication, the insured only pays the stated amount, and the balance of the prescription cost is paid by the insurance company.

Medicare and Government Plans

Medicare is health insurance for the aged or disabled. Aged means 65 years old or older. (Though Congress has recently considered raising the qualifying age to 67.) Disabled means that the person is totally disabled as determined by Social Security or an individual has a major kidney problem which requires dialysis treatment. Reaching age 65 or having disability status quaHfies an individual for this federal health care program.

Medicare is financed through the payment of the Medicare tax which is part of the total Social Security taxes paid by workers and their employers. The other main federal health care program is Medicaid. Like Medicare, this coverage has many limitations.

In addition to state and federal programs in which the government becomes a health care provider, there are other organizations and entities which serve as health care providers.

We will consider these programs (including Medicare and Medicaid) in greater length later in this book.

Qualification for benefits under Medicaid is based on financial need. And! even then! the coverage is limitedt It's not great coverage.

How Do You Get Your Health Insurance?

Now that you have a working knowledge of the types of plans out there, you probably want to know how to purchase this coverage.

Group coverage is typically offered through your employer, but unions, professional associations, and other organizations also offer this type of insurance.

When you receive group insurance at work, the premium usually is paid through your employer. In some cases, the employer pays some or all of this premium as an additional benefit. In others, the premium will be deducted from your pay.

Group coverage has distinct advantages. Most of the costs may be borne by your employer. Premiums are lower due to lower administration costs for large groups. Eligibility for group coverage is usually open when you start a job-you won't have to undergo a physical exam to prove you're insurable.

Know your choices. Some employers offer employees a choice of fee-for-service and managed care plans. In addition, some group plans offer dental insurance as well as medical. Individual insurance is a main option if you are self employed or work for a small company that doesn't offer health insurance. Mechanically; an individual policy works in the same way that a group policy does-the main difference is that the premiums are usually higher because the administrative costs are, too.

Self-funded plans

Your employer may have set up a financial arrangement that helps cover employees' health care expenses. Sometimes employers do this and have the health plan administered by an insurance company, but sometimes there is no outside administrator.

A self-funded plan is a program which allows a financially secure employer to assume the risk for health care costs instead of transferring the risk to an insurance company. The employer's funds are used to pay benefits directly to the employees. Instead of paying insurance policy premiums to an insurer, the employer places a sum of money into a secured account to provide health care benefits, usually with certain limitations. In essence, the employer has become a "mini insurer" providing various types or levels of health care.

A self-insured plan is a less expensive way for an employer to provide health care benefits, provided the claims experience is favorable and the employer can realize a good rate of return on the money deposited in the trust account.

Employers ofteh choose a self-funded plan to cover their employees' dental expenses because it is less expensive than purchasing a dental plan.

There are two variations of this coverage. Specific stoploss coverage begins to apply after an individual's medical expenses exceed a predetermined amount-such as $5,000.

Aggregate stop-loss coverage applies when the employer's liability for group insurance claims exceeds a specified amount. The insurance company pays all claims once the specified amount is reached.

A self-funded plan may be an indemnity program which reimburses covered employees for medical care they have received. Or, the employer may provide benefits through the service plan offered under an HMO, or through a company's PPO network.

An insurance company can also be used by a self funded employer under an "administrative services only" (ASO) contract. Under an ASO agreement the insurance company provides claim forms, administers claims and makes payments to providers, but the employer still provides the funds to make payments.

What Is Not Covered

While HMO benefits are generally more comprehensive than those of traditional fee-for-service plans, no health plan will cover every medical expense. Most plans won't cover eyeglasses or hearing aids because these are considered budgetable expenses. Very few cover elective cosmetic surgery, except to correct damage caused by a covered accidental injury. Some fee-for-service plans won't cover checkups. And some plans cover complications arising from pregnancy but not normal pregnancy or childbirth.

You should also remember that insurers will not pay duplicate benefits. You and your spouse may each be covered under a health insurance plan at work but, under what is called a coordination of benefits provision, the total you can receive under both plans for a covered medical expense cannot exceed 100 percent of the allowable cost. Also note that if neither of your plans covers 100 percent of your expenses you will only be covered for the percentage of coverage (for example, 80 percent) that your primary plan covers. This provision benefits everyone in the long run because it helps to keep costs down.

Fee-for-service plans generally won't cover experimental procedures.

Preexisting Conditions

If you or a family member covered under your policy has a preexisting condition you won't have to worry about whether or not your coverage will transfer when you change jobs thanks to a recent change in federal law. As of July 1997, insurance companies can impose only one 12-month waiting period for any preexisting condition treated or diagnosed in the previous six months. As long as you have maintained coverage without a break for more than 62 days, your prior health insurance coverage will be credited toward the preexisting condition exclusion period. Pregnancy won't apply here, but the 12-month waiting period is waived for any newborns or adopted children who are covered within 30 days. If you've had group coverage for two years, switch jobs and move to another plan, the new health plan can't impose another preexisting condition exclusion period.

Pedera11aw also makes it easier fur you to get individual insurance under certain situations. If you aren't covered under a group plan and can't get insurance on your own, check with your state insurance department to see if it has a risk pool like risk pools fur automobile insurance, these can provide health insurance if you can't get it elsewhere. But they can get expensive.

Summary The information economy is tearing down traditional notions of companies and employer/employee relations. This is having a major impact on how people get health insurance. At the same time, large parts of the insurance industry especially those dealing with life and car insurance-are dealing directly with consumers. Whether by mail, telephone or Internet, the big companies are cutting out the middlemen.

However, these. middlemen-insurance agents-provide important information and advice to consumers. As their numbers decline, a growing number of people will be left without the tools to make good decisions.