Sky-high premiums, unfair restrictions – it’s enough to make anyone sick.
The specifics of a PPO type policy can vary greatly. There is usually no deductible. Some plans require nominal fees to be paid by the patient each time a services is rendered, but others pay 100%. For example, many PPOs require a $5 payment at every doctor visit and $20 for a hospital visit. Others may cover 80%, leaving you responsible for 20%. A modified policy might cover 80% of your expenses if you see a preferred physician and 50% if you see a doctor who is not a member of the plan.
Increasingly, PPOs are placing restrictions on certain medical services in an attempt to control costs. Most require “pre-approval” for non-emergency treatment. They may monitor your care at various stages or require a written referral from a general practitioner before you can see a specialist.
Traditional indemnity plans allow you the most freedom with respect to choosing your own doctor and the range of covered services. They are, however, the most costly, both in terms of premiums and additional out-of-pocket expenses. Most of these plans are based on an 80/20% share of eligible expenses, which means the insurance company pays 80% of your medical expenses after you’ve paid your deductible. But even on a good plan, many charges are not covered.
Most indemnity plans have a maximum limit on co-insurance payments – that is a maximum you are required to pay out-of-pocket before the insurer covers 100% of all eligible expenses. This amount usually ranges from $1,000-$5,000.
While you shop around for the right plan, you may want to ask your insurance agent to get you on a temporary plan to tide you over. These policies generally cost less and require less information about your medical history. Your agent can also give you information on hospitalization-only plans, which provide limited coverage in the event of serious illness or injury.
Once you decide which type of plan best suits your needs, you’ll need to learn insurance company lingo in order to evaluate and compare specific policies. Each company uses its own particular terminology, but the concepts are fairly standard to any indemnity plan and most PPOs.
Deductible. The deductible is the amount of money you are required to pay out of your own pocket each calendar year before your insurance company begins to pay its share. Some companies will allow you to apply any deductible paid in the fourth quarter of a calendar year towards the following year’s deductible.
When you first apply for coverage you will be offered a choice of several annual deductibles, usually ranging from $100-2,000. The smaller the deductible, the greater your monthly premium will be. If you never get sick and are just interested in protection yourself in the event of an emergency, you will probably want to opt for a higher deductible so your monthly rate is lower. If, on the other hand, you tend to see your doctor on a regular basis, or would not be able to handle the large unexpected expense of a medical emergency, a lower deductible would make more sense. Be wary of any policy that applies a deductible to each separate illness or injury.
Eligible or Allowable Expenses. When your insurance carrier agrees to cover a certain percentage of your medical expenses, they actually mean that once your deductible has been met, they will cover that percentage of what they consider to be a reasonable and customary fee for a given service in your area. On a PPO-type plan this is not an issue since the providers have already agreed in advance to accept the insurer’s fee schedule. If you have a traditional indemnity plan, however, you may find that your physician will charge more than your insurer considers reasonable for a given service. The additional amount is 100% your responsibility. Let’s say you’re on an 80/20 plan and your doctor charges $100 for an office visit. It may be that your policy allows a maximum of only $80 for an office visit. In that case, your insurer would pay 80% of $80, or $64. The remaining $36 is your responsibility
It’s worth asking your doctor before you choose an insurer if he’ll accept your insurance company’s maximum payment in full. He may, but if he won’t he can at least tell you if his fees tend to line up with or exceed insurance company guidelines.
Lifetime cap. The lifetime cap, or maximum benefit amount, is the total amount of benefits an insurer will pay out for an individual over the lifetime of the policy. This amount is usually $1 million, though some policies provide unlimited benefits.
Pre-existing condition. This is a term you may well come to hate. A pre-existing condition is any illness, injury, or condition that existed prior to the beginning of your coverage. Any condition, no matter how trivial, for which you received treatment or medication prior to coverage, is suspect. An insurance company may check back 1-5 years or further. Most plans will not pay benefits for pre-existing conditions during the first year or two of a new policy.