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What is a PPO, a HMO, policy limits, and co-pay?
Finding the right health insurance plan for you and your family takes research. You need to spend the time learning how health insurance works before you commit to a specific policy.
Even company sponsored health insurance plans have multiple options that are sometimes geared more towards the cost of insurance rather than the actual benefits provided.
Is it better to choose an independent plan in lieu of your company plan? How much does health insurance cost per month? Are pre-existing conditions covered?
Is cost the most important factor to consider?
Everyone wants a health insurance plan that is low-cost and covers all of their possible medical expenses. Unfortunately, most people only focus their attention on the cost and fail to realize that the plan in question may not meet their needs.
If your health insurance doesn’t not cover you when you need it the most, it isn’t not a bargain regardless of price!
How can you determine if the health insurance plan is right for you? Excluding cost, there are several things you need to consider when choosing a health insurance plan.
Another thing to watch is what your plan says about “in-network” service vs. “out of network” service. If If you go to a doctor or hospital that does not participate in the plan’s network, your plan might not pay anything at all, or may pay only a reduced percentage.
Determine the Type of Coverage
First, you must determine exactly what the plan covers. For example, major medical is usually fairly inexpensive. Plans can cost as little as $25 a month.
However, major medical does not cover doctor visits, medication, or wellness issues. Therefore, if you visit the doctor on a regular basis, you will have to pay for those visits out of your own pocket. If you take medication on a regular basis, expect to pay full price.
While different carriers have different types of major medical, most only cover you if you are hospitalized or have a traumatic injury. Even then, they may pay only a portion of those costs.
Regular health insurance plans with deductibles and co-pays are far more beneficial for most people. These allow you to visit the doctor, get your medication (if a pharmacy plan is included), and have regular tests, such as x-rays or mammograms.
In addition, these policies cover at least a portion of the bill. Bur before you sign on the dotted line, you need to determine if the plan is right for you, and how much you will actually be paying out of pocket.
Understand the Policy Deductible
Higher deductibles mean lower premiums, however, if your deductible too high, you may run into problems if you have a medical emergency and are unable to meet your deductible.
If you have a high deductible, you should allot a specific amount of money in your monthly budget to be sure you can cover your portion of the costs.
A health insurance savings plan can help you save toward this goal. This is tax tax-free, however, certain conditions must be met for the money to remain tax free.
Talk with your employer or with a financial planner to determine whether a health insurance savings plan would benefit you.
How does the policy co-pay work?
If your deductible is manageable, the next thing you must look at is your co-pay. In addition to paying your deductible, a co-pay is a specific amount of money that you must pay at the time of medical service.
For example, your co-pay may be $20 for a doctor visit. That means that when you arrive at the doctor’s office, you will be required to pay $20 for the visit, even if your insurance picks up the rest of the bill.
Most doctors expect this co-pay to be made at the time of service, although some will bill you for the amount. A high co-pay means that you will be paying money every time you visit the doctor.
Prescriptions may also have a co-pay. Even if you use generic drugs, these co-pays can add up if you take medications on a regular basis.
Always look at the percentage offered by your plan to cover various medical expenses. Most plans use a sliding scale; some treatments are covered at one percentage and others at a lower percentage.
For example, your plan might pay 80 percent of reasonable costs for doctor visits and routine hospital care after your deductible is met.
However, the plan might pay only 50 percent of what it considers “extraordinary” expenses. Only your plan’s literature can tell you what the company considers routine and extraordinary.
Reasonable and Customary Charges
Additionally, most plans pay what they consider to be “reasonable and customary” charges for services. This can be a bone of contention between doctors, hospitals, and the insurance provider.
Less expensive insurance plans demand that “reasonable and customary” expenses be assessed at far less than the doctor or medical provider usually charges.
If the plan refuses to pay any more, you may be responsible for the difference. It is important to talk with your doctor about what your plan covers and what the doctor charges before you receive medical treatment.
Finding affordable health insurance is possible, but the cost of insurance is just one factor. Only the best combination of coverage, cost and provider will ever ensure all your family needs are met.
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