| WHAT IS AN HMO? |
| An HMO is a Health Maintenance Organization in which you are assigned
a "primary care physician (PCP). Any other doctors you see have to
be referred by your PCP. |
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| HOW DOES AN HMO WORK? |
| The primary benefit of an HMO is a low fixed co-payment for doctor's
visits, typically $10-$40, with lab and x-rays included in the cost
of the visit. Therefore, your out-of-pocket expenses when seeing a
doctor are substantially lower than under a typical PPO plan. The
main disadvantage of an HMO is that you have to stay within the insurance
company's "network of doctors." Also, HMO's typically tend to be more
expensive than high-deductible PPO plans. |
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| WHAT IS A PPO? |
| A PPO is a Preferred Provider Organization in which you choose
your own doctors. |
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| HOW DOES A PPO WORK? |
| The primary benefit of a PPO lies in the freedom and flexibility
of choosing your own doctors. In addition, if staying within the company's
network of doctors, you are entitled to a discounted rate. Also, the
higher deductible PPO plans tend to be priced significantly lower
than HMO plans. The main disadvantage of a PPO is that x-rays and
laboratory procedures will usually always be subject to the deductible
of your individual plan. Deductibles can be anywhere from $500 to
$5000. Therefore your out-of-pocket expenses will always be higher
when you see a doctor on a PPO than on an HMO. |
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| WHO SHOULD CHOOSE AN HMO? |
| Individuals who plan on seeing a doctor more than four times a year,
and those who feel more comfortable having a fixed co-payment for
office visits, generally opt for HMO plans. Such individuals must
be comfortable having a "primary care physician" who attends to their
general medical needs, as well as refer them to specialists within
the HMO network. |
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| WHO SHOULD CHOOSE A PPO? |
| In general, individuals who do not see a doctor on a consistent
basis, or want a catastrophic policy only, opt for PPO plans. PPO
plans allow them the freedom and flexibility to choose their own doctor,
but have higher out-of-pocket expenses for doctors' visits than HMO's.
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| IS A PPO OR AN HMO RIGHT FOR YOU? |
| To determine whether an HMO or PPO is right for you, you have to
ask yourself, how many times a year do you or your family members
typically see a doctor? For example, if by having a less expensive
plan your savings in monthly premiums outweigh your typical spending
on doctors visits throughout the year, you are probably better off
in a PPO plan. |
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| IS AN HMO OR PPO CHEAPER? |
| Determining whether an HMO or PPO is cheaper depends on the particular
plan you choose. For example, if you go with the least expensive PPO
plan, which is a catastrophic plan, or one with
a very high deductible, the HMO plans will usually cost more. However,
if you go with a lower deductible PPO like a $500 or $750 deductible,
the PPO will usually cost more than an HMO. |
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| WHEN CHOOSING A PPO |
| If you've determined a PPO plan is best to serve your needs, you
then might consider the economic benefits of a high
deductible plan and/or catastrophic plan. |
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| HOW LONG DOES IT TAKE TO PROCESS AN APPLICATION?
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| Underwriting can take anywhere from 1-4 weeks before a decision
is made. It can take longer if medical records need to be ordered.
You should allow adequate time to submit an application so that a
policy is approved by your requested effective date. |
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| EFFECTIVE DATES |
| Health insurance plans are made effective on the 1st and 15th of
each month. If your application is approved prior to the requested
effective date, you will not be charged until the policy is in force
on the following 1st or 15th. |
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| REASONS FOR BEING DECLINED OR SURCHARGED
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| Unlike group medical insurance, when applying for individual health
insurance, an applicant can be declined by the carrier, or charged
a higher premium than the rate initially offered. An individual can
be declined due to a number of health conditions and/or for taking
certain prescription medications. However, the good news is, once
an application is approved, the insurance company cannot cancel a
policy or raise rates based on any health conditions that may develop,
or any new medications that may be required. |
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| RATE INCREASES |
| Once health insurance is in force, no matter how many claims or
changes in health take place, rates cannot be raised, and policies
cannot be cancelled. However, rate increases do occur under the following
circumstances: 1.) When one falls under a new five-year age band category,
and 2.) When the insurance company implements a rate increase for
everyone. |
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| CATASTROPHIC PLANS |
| With the ever-increasing cost of health insurance, one of the smartest
things consumers can do to save money, is to stop paying for what
they don't use in the more expensive plans. This includes routine
doctor visits for those who don't need them. Instead, lower costing
plans can be used to protect against larger financial losses such
as those caused by accidents, surgery or major illness. Health insurance
protecting against only such losses are known as "catastrophic plans."
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| HIGHER DEDUCTIBLES |
The idea that health insurance should cover all expenses, routine
or otherwise, is outdated and not cost effective. The most intelligent
way to insure yourself is to be conscious of the benefits of the plan,
in addition to the actual return from your paid premiums. By opting
for a higher deductible, you not only carry a more affordable plan,
but stop wasting insurance premiums on coverage you may never use.
The money saved on premiums can be used to off-set the cost of doctor
visits and prescriptions, should you need to utilize those services.
Example: A family of four consisting of two 40-year-old adults, and
two children, can be on a PPO with a $1500 deductible, and paying
$619.00 per month.
However, that same family can be on the same PPO plan, but with a
$2500 deductible instead of $1500, and pay $425.00 per month. That's
a savings of $2328.00 per year! Are you spending $2328.00 per year
for medical expenses? If not, a higher deductible makes mathematical
sense. |
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| WHEN DO DEDUCTIBLES START? |
| Deductibles start on January 1st of each year, and accumulate through
December 31st. They start again new on January 1st of the following
year. |
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| ANNUAL OUT-OF-POCKET MAXIMUM |
| An "annual out-of-pocket maximum" is the total amount of money
you would spend in each year, including your deductible, on health
costs before the insurance company pays 100% of everything. For example,
if your policy states that you have an "annual out-of-pocket maximum"
of $4000, and your medical bills total $50,000 for the year, the insurance
company would pay $46,000, and your portion would total $4000 for
the year. |
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