Types of Health Care Plans

1. Types of Health Care Plans

2. In this section we ultimately want to talk about health insurance plans. But first let’s look at who pays for personal health care. In 2000 we had the following as to how health care was paid for: Out-of-Pocket 19.6% Government 43.6 Private health insur. 33.1 Other private funds 3.7 We are not here to ask why each entity pays what it does, we only note the details. Why would you want health insurance? I think the obvious reason is in case you would have a big problem. You would want it covered. But you can choose to go without.

3. The two main types of health care plans are called Traditional Indemnity and Managed Care plans. Traditional Indemnity Plans The health insurer and the health care services are separate entities. You typically have unlimited choice of doctors and hospitals. The insured typically has a deductible – this means the insured has to pay some costs out of pocket up to a certain amount each year. In 1988 71% of all private plans were this kind, while the % shrunk to 35 by the year 2000 (our authors tell us)

4. Managed Care plans Subscribers/users contract with and make monthly payments directly to the organization that provides the health care services. Choice of doctors and hospitals is limited. Authors say these plans control the amount of care provided & emphasize prevention of illness. There are no deductibles, but co-payments for office visits. Managed care plans include HMO’s IPA’s PPO’s and others.

5. Health Care Insurance Providers Health Insurance companies – Aetna, Cigna and Prudential are some Managed Care Organizations – HMO’s & PPO’s Blue Cross/Blue Shield Government agencies Medicare Workers comp

6. Types of Coverage Hospitalization Surgical Physicians - once called regular medical Major medical – lifetime limits on coverage though Dental Terms of Payment Deductibles Participation or coinsurance Internal Limits Coordination of benefits – example say you get injured at work. If worker’s compensation will pay the bills then if you have a coordination of benefits clause with other health insurers you can not also collect from them.

7. Major Medical example Billy Jones has Hospitalization: 5 days at $500 a day $2,500 Surgical Expense 1,800 Other covered medical expenses 1,800 total $6,100 If Billy has a $1000 deductible he pays that $1000. Say he has an 80 coinsurance clause. Then the most the insurer would pay is .8(2500 +1800 +1800 – 1000) = $4080. But, Billy also has an internal limit of $350 per day in a hospital room and a surgical limit of $2000.

8. Again, I write the most the insurance will pay is .8(2500 +1800 +1800 – 1000) = $4080 With the coinsurance the most the insurance would pay is 400 per day in the hospital, or 2000, but he also only has a 350 limit per day. The insurer won’t pay 50 times 5 = 250 on the hospital. Reducing the amount the insurer will pay to 3830 (which is 4080 – 250) The coinsurance means of the 1800 in surgical expense the insurer pays .8 times 1800 = 1440 and he pays 360. The other covered medical expenses would have the same provision as above – they pay 1440 he pays 360. So of the $6100 bill the insurer pays 3830 and the insured pays the rest.

9. Terms of Coverage People and places – make sure all the people you want covered are – kids up to 18?, 21? Do you want world wide coverage? Cancellation – be careful, some policies can cancel you at any time – check the fine print. Preexisting conditions – coverage may not apply to conditions you have before you get the insurance. Pregnancy and abortion – check the policy – make sure you have the coverage you want. Some pay even sick-leave in final months of pregnancy. Mental Illness – The authors say at some point in time mental illness will strike 1 in 3 families, yet we often do not talk about it and insurance plans differ in what they will cover. Check the coverage.

10. Rehabilitation coverage – is there after injury care and maybe even retraining coverage? Continuation of coverage – the COBRA – this is a provision passed by congress that when an employee leaves a company they can continue to buy the coverage they had with the company for a certain period of time. Cost containment features Pre-admission certification Continued stay review Second surgical opinions Waiver of coinsurance – if you go with cheaper alternatives they pay the full amount.