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In this post, we’ll demystify health insurance, give you tips for navigating the medical landscape, and help you ask the right questions of your care providers.
As moms we are more likely to be responsible for the healthcare decisions in our household – a lot more. According to the Kaiser Family Foundation, women make 80% of all family healthcare decisions. It’s pretty likely you are responsible for choosing your family’s health insurance plan. In between knowing each child’s blood type, allergies, bread crust preferences, and immunization history, moms are also tasked with deciphering the language of the healthcare industry and making decisions that can have a significant impact on the physical, mental, and financial well-being of our families. No pressure.
Alphabet Soup: Types of Health Insurance
Health insurance plans are confusing, even for medical professionals. The market is constantly changing. The types of plans and the coverage they provide often varies by insurer. However, having a general understanding of the types of plans available and how they generally provide coverage can make open enrollment a less intimidating.
Health Maintenance Organizations (HMOs)
HMOs are probably the most well-known/most notorious types of health insurance plans. In the 1990s, HMOs became a common form of healthcare coverage, but rapidly earned a nasty reputation for having narrow networks – or only covering a limited number of doctors and hospitals.
Today most HMOs continue to restrict the doctors you can see, particularly when it comes to specialists. Typically, they require you to see a primary care physician (your general doctor) in order to get a referral to see a specialist. That doctor will only be able to recommend specialists within your network. So why would anyone want this type of insurance?
HMOs are built on a cost-sharing model, spreading the cost of services across all members of the plan. This means you pay a lot less for services, typically a small copay for each office visit in addition to a monthly premium, and otherwise have very little paperwork to handle. The plans generally cover 100% of procedures and other medical services rendered.
Overall, HMOs are an excellent choice if:
- You aren’t particularly picky about the doctor you see.
- You want a plan that has simple, predictable fees.
- Seeing your primary care physician before each specialist visit is not a problem for you.
- The care network provided is within a reasonable proximity of your home.
- Your family has pretty general needs – a visit to the pediatrician for a vaccination here, a trip to the ER there to remove a Lego from the nostril there.
Preferred Provider Organizations (PPOs)
PPOs are the plan of choice for people who like choice. You are able to see doctors in and out of your network. You aren’t required to get a referral before visiting a specialist. You have a wider number of hospitals to choose from.
Of course the downside is cost. In general, premiums for PPO plans are a bit higher than those of HMO plans. Out-of-pocket costs are significantly higher, especially if you go out of network. Payments are usually structured by coverage percentages i.e. in-network, the plan covers 80% of the cost of your visit, out of network the plan covers 50% of the cost of your visit. Of course, the cost of your visit may be the full charge for services, a negotiated cost worked out between the doctor and your plan, or a regional average depending on your health plan.
PPOs are a great choice for people who:
- Demand flexibility or need to see particular specialists due to pre-existing conditions.
- Do not have the time or do not wish to see a primary care physician before making an appointment with a specialist.
- Live in an area where there are few choices within an HMO network.
- Are comfortable with relatively unpredictable costs.
- Your kids have allergies, infections, or other healthcare needs that often require visits to very specific specialists.
Point-of-Service Plans (POS)
POS plans are the love child of HMO and PPO plans. Just like an HMO plan, you need to have an in-network, primary care physician to coordinate your care. However, like a PPO plan, you can go outside your care network and still have a portion of your services covered by insurance. In-network visits generally incur a copay like a HMO plan while out-of-network visits result in a percentage-based fee UNLESS your primary care physician made a referral out of network – then your POS plan will cover most of the cost. POS plans generally have higher premiums than both HMOs and PPOs
POS plans are a great value if:
- Your primary care physician is in-network, but your specialist network is not.
- You need a little flexibility in the specialists you can see.
- It’s a mystery as to what your family will need this year. Sometimes, it’s just the annual doctor’s visit, sometimes little Billy develops a mysterious rash that requires a trip to an out-of-town specialist.
Health Savings Accounts (HSAs)
HSAs are relatively new plans on the market. They are savings accounts that are combined with a high-deductible (a deductible is the amount of money that you must pay before your insurance plan will pay a claim. health plan. High deductible health plans generally have very low monthly premiums in comparison to other plans. The money contributed to the HSA by both the employee and employer can then be used to pay for any authorized health expense up until the point where the deductible is met. Once the deductible is met, you are then only responsible for a small fraction of costs – generally something like 10% of costs from a PPO provider.
You do not pay taxes on HSA contributions and neither does your employer. The money not spent at the end of the year can generally be rolled over for future medical expenses. Money can be pulled from your HSA for any reason, but you’re subjected to a 20% penalty and income tax on those funds.
A HSA might be right for you if:
- You only have access to high-deductible plans.
- You anticipate very few healthcare costs throughout the year and therefore don’t require much coverage.
- Your kids are well behaved and rarely require trips to the ER for jumping off garage roofs and/or crashing bicycles.
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