Striking a Balance Between Quality of Care and Your Wallet Most of us with health insurance are covered under a group plan offered by our employer or our spouse's employer. Others purchase our own individual policies or have COBRA coverage. Some of us have no coverage at all. Whether you're married, single, have children, or are a student, you need some level of health insurance to protect yourself against financial disaster in the event of a serious illness or accident.

Whether you choose a group plan or an individual plan, there are important choices to be made that will affect not only the quality of your medical care, but also your wallet. Let's sort through some of these choices so that you can make an informed decision that fits both your specific medical needs and your budget.

HMOs, PPOs, POS Plans, Indemnity plans. What ARE all these confusing terms and how do they affect you? There are many different types of plans, but the most common can be grouped into three categories:

Indemnity or Fee-for-service Plans

Traditional plans that allow you to go to any doctor you choose are called indemnity or fee-for-service (or point of service) plans. These plans provide the most flexibility, but are getting harder and harder to find and come with a high price tag.

Advantages of Indemnity Plans

You can get your medical care anywhere you want without getting referrals or prior approvals.

Disadvantages of Indemnity Plans

To control costs, insurance companies shift more costs to you, making indemnity plans more costly to you than HMOs and PPOs.

Your healthcare provider may expect you to pay up front and submit a claim to your insurance company for reimbursement.

Health Maintenance Organizations(HMOs)

An HMO (Health Maintenance Organization) is an association of healthcare professionals and medical facilities that sell a fixed package of health care services for a fixed price. Each patient has a primary care physician, who is often referred to as a gatekeeper because services provided by a specialist are not covered unless the gatekeeper determines that the specialist is necessary. In HMOs, it's possible that you might not receive the medical care you need.

Advantages of HMOs

Claim forms aren't usually necessary.
Your out-of-pocket costs are often lower and more predictable.

Disadvantages of HMOs

Services provided by healthcare professionals outside the network aren't covered.
Services provided by specialists require a referral from your primary physician.
Some services are limited (for example, outpatient mental health services).

Preferred Provider Organizations (PPOs)

A PPO (Preferred Provider Organization) contains the managed care aspect of an HMO but with the added flexibility of being able to go outside the network of healthcare professionals and facilities to any health care provider of your choice when you feel it's necessary. When you go outside the network, your benefits are less and you pay more out of your own pocket than you would if you had stayed within the network. If flexibility and choice are important to you, a PPO may be a good choice if it's available to you.

Advantages of PPOs

You have more flexibility than you would in an HMO.

Disadvantages of PPOs

It's more difficult to predict your out-of-pocket costs.

If you're choosing between these plans, it's important to ask the right questions in order to determine which choice is best for you. A list of suggested questions is provided by the Joint Commission on the Accreditation of Healthcare Organizations.

Where Can I Get Health Insurance?

Most people get their health insurance through a group plan sponsored (and often at least partially paid for) by their employer or a spouse's employer. But many small employers don't offer health insurance. If your company is one of them, you might be able to get group insurance through membership in a labor union, professional association, club, or other organization that offers health insurance to members.

If you're unable to find group coverage, you can buy an individual policy, but you may find it very expensive. Compare all of your options carefully, compare benefits and costs, and decide which benefits are most important to you. It may be helpful to use an insurance agent, who should be familiar with policies offered in your area and the benefits and costs of each.

If you're uninsurable due to health problems, you may be able to buy insurance through your state's risk pool. A list of states with risk pools can be found at www.healthinsurance.org.

For more information on health insurance issues and information on choosing insurance plans, see the Health Insurance Net Links Directory.

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