Health Insurance Articles
What Do All The Health Insurance Plan Letters Mean?
2009-11-08
The typical employee may struggle to grasp the intricate complexities involved with selecting a health care plan. Understanding the nuances of health and life insurance takes years of training. Even still, new employees are often given no more than 24 hours to decide what sort of coverage to receive. Because workers are so dependent on their employer for these needs, they are frequently given erroneous or limited information. Once signed, insurance applications are legally binding contracts that are not going to be changed because of careless mistakes. Therefore, be proactive and responsible for understanding what the different plans mean.
The laws governing insurance are vast, never-ending and vary considerably from state to state. Some of the enigma over health insurance is because the jargon is routinely shortened. The National Association of Insurance Commissioners, or NAIC has compiled a nine paged PDF document simply with insurance acronyms and abbreviations. About 1 percent is of utmost importance for the public to grasp. Of the different group health insurance plans, three main kinds are most important to grasp. The most common and cost efficient managed care plan is the HMO, which stands for Health Maintenance Organization. There are very precise advantages and disadvantages to this plan. HMO policies provide the most comprehensive coverage and focus on preventative care. When enrolling the applicant selects a primary care physician who is responsible for coordinating all care. If you stay within the specific geographic network of providers and follow the requirements, most care is covered at 100 percent. However, if you see "out of network" doctors, other than for emergencies, you will incur their regular costs.
The next type of plan is the PPO, or Preferred Provider Organization. It offers great flexibility as you can use both in-network and out-of-network providers at different costs. Staying in network will cover between 80 and 100 percent of the costs, but you can see any provider and have some costs paid. You will pay more out-of-pocket expenses than with an HMO, but for large families who all see different providers, this is a great plan. The third plan, a POS or point-of-service, is a combination of the HMO and PPO. If you stay within the network, the plan acts like an HMO and coverage is usually at 100 percent. Seeing out of network providers is reimbursed in the same manner as a PPO. It is an optimal plan; however, usually has the highest premium rate.
These three are the primary health care plans offered by employers. Everything else is a hybrid of one of them. It can get extremely confusing. Insurance agents can help you make these vital decisions and are specifically trained to understand the nuances of each different group's needs. Pay attention to what type of plan you are analyzing when comparing online health insurance quotes.
