Types of Insurance
This information was provided by The Hospital Association of Pennsylvania. There are two broad types of health insurance. Traditional (or indemnity) insurance, pays for your healthcare as you use healthcare services.
Managed care insurance assumes a greater responsibility for the healthcare services you receive. Rather than just paying for your care, managed care plans negotiate fees with providers to help make your insurance more affordable.
They also closely monitor quality and utilization of services. Other types of insurance are funded by the government or employers.
Traditional (or Indemnity) Insurance
Traditional (or indemnity) insurance plans offer the consumer the widest choice of doctors and hospitals. Generally, you pay for doctor visits and submit a claim form to your insurance company to receive reimbursement. Many preventive and primary services at the doctor's office are not covered by the plan.
You must meet a deductible, which means you spend a specified amount out-of-pocket before you can receive payment for services. You usually are responsible for a co-payment, your share of the bill, for certain services after you have met your deductible. Services are paid on a fee-for-service basis, which means that preset fees are paid for services defined by your insurance plan.
Some participating providers accept as payment in full what the insurer pays for the services you receive. This is known as assignment. Others providers require you to pay the portion of the bill not covered. You are not reimbursed for this by the insurance company.
Managed Care Plans
Two common types of managed care insurance plans are health maintenance organizations (HMOs) and preferred provider organizations (PPOs) plans. Because these plans typically cost less than traditional plans, many employers and government programs are giving individuals financial incentives to join a managed care program.
In Pennsylvania, Medical Assistance recipients especially are being encouraged to join an HMO.
Health maintenance organizations (HMOs) provide a comprehensive set of basic health care services, emphasizing preventive care such as doctor visits, immunizations and well-baby care. You obtain care from a specific group of doctors and hospitals.
Most HMOs require you to select a primary care physician who becomes your first point of contact with the healthcare system. These primary care physicians are often called "gatekeepers." If you need specialty services, you usually have to be referred by your primary care physician.
Often, you will pay a small co-payment for services and office visits. You will have no coverage outside of your network.
A preferred provider organization (PPO) contracts with a selected group of providers to make their services available to PPO enrollees, usually at a discounted price. PPOs do not require you to use preferred providers, but typically you will pay more to see a non-preferred provider.
When you turn 65 or if you become disabled, you become eligible for Medicare. Medicare has three parts:
- Part A covers your hospitalization
- Part B covers your physicians and also is the portion that is withheld from your Social Security check.
- Part D covers your prescriptions when you enroll in a prescription plan.
There are many decisions that go along with having Medicare: Do you stay with traditional Medicare? Do you pick up a supplement or MediGap policy, or do you enroll in a Managed Care plan? For more information, read our Medicare section.