Friday, May 2, 2008

Types of Health Insurance

Before anyone should look for health insurance, we should be familiar with the various types of plans out there. Here are some basics...

1) HMO- Health Maintenence Organization- this type of plan is a form a managed care. It generally cost less, but only allows you to see certain doctors. If you need to see a specialist you need to get a referral from your "Primary Care Doctor". The biggest down side to this is your doctor can drop out of the network and then you need to find a new one.

2) PPO- Preferred Provider Organization- A network of doctors and hospitals that allow you to choose any doctor or hospital. There is the best price, which is in the network. If you choose to go outside the network, you take on a greater financial responsibility.
3) Schedule of Benefit plans- These are very common among the self-employed, the are normally a low cost plan. The downside is like everything else, you get what you pay for. A schedule plan often times covers a maximum of $50,000-$75,000 per claim. Now the majority of claims fall under that amount, but what if you need a transplant or brain surgery that could run into the hundreds of thousands of dollars.
4) Accident only plans- these plans only cover injury or accident. Very common among the younger people just out of college or people between jobs
5) Consumer driven health plans- These plans are becoming more common. These plans cover just about everythinge, but normally have a maxium that they will pay for each procedure. They give the consumer access to what these procedures cost. The consumer can then take an interest his or her own health care, knowing that if they choose a more expensive doctor they will incur more costs.

6) Health Savings Accounts-HSA's- These are normally high deductible health plans with a savings plan attached similar to your IRA. You have insurance and you fund your savings account the same way you would an IRA. Money goes in tax deferred, and goes out tax deferred for medical expenses.
Eric Wilson can be reached at 815-372-1363