Health Insurance

[Insurer practices may make a difference as to the health insurance plan you pick. If the same health insurance plan stays on the market for many years, the premium may not have as big an annual increase as plans that quickly become obsolete. If the pool of claims is one big pool that includes everyone who buys the health insurance plan year by year, then you would be paying market price each year. That will help keep the price increases for the health insurance plan relatively less.]

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.

[In many states and for many insurers, there is no such type as a special "family plan", just the individual health insurance plan with dependent coverage. The other category is employer group coverage. - ed.]

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.

[When comparing costs and coverage, bear in mind that any coinsurance in the health insurance plan may be much greater than the deductible.]

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

• Fee-For-Service (or Traditional Health Insurance).
• Health Maintenance Organizations (or HMOs).
• Preferred Provider Organizations (or PPOs).

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.

[Because of its cost control measures and generally less problematic claims process, some form of managed care is a more popular type of health insurance plan than pure indemnity. - ed.]

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