Major Medical Coverage plans generally fall into one of two categories; indemnity plans and managed care plans.¬† Indemnity plans, sometimes called ‚Äėfee-for-service‚Äô plans, generally offer greater flexibility in choice of doctor, hospital and care facility.
Indemnity plans typically require the insured to satisfy a deductible before beginning to pay benefits.
Indemnity plans will often also include a co-insurance component, which means after your deductible is satisfied, your insurer will pay a percentage of your medical expenses (e.g. 80%) and you will be required to pay the remaining percentage (e.g. 20%).
Managed care plans on the other hand generally have agreements with a network of doctors, hospitals and healthcare providers who provide services to members at negotiated rates. Care received from providers whom are not part of this network is often not covered or covered at significantly reduced rates.
- Indemnity Major Medical Plans ‚Äď generally offer maximum flexibility in where one can seek care. Indemnity plans typically include an annual deductible, which applies prior to the insurance company paying benefits, and co-insurance applicable to expenses up to a certain amount. Indemnity plans will normally determine the amount of benefit payable for a given procedure based on what they consider the ‚ÄėUsual and Customary‚ÄĚ charge for covered services. This can mean that you can be responsible for a difference in the fee charged by your provider and the amount covered by your insurer under their ‚ÄėUsual and Customary‚ÄĚ scale.
Managed Care Plans
- Health Maintenance Organization (HMO) plans ‚Äď usually require that one choose a primary care physician from a network of providers. Specialty care must often require a referral from your primary care physician. Care received outside of the plan‚Äôs network will often not be covered or will be covered with significantly lower benefits.
- Preferred Provider Organization (PPO) plans ‚Äď are managed care plans which generally include a network of providers with lower negotiated rates, but allow some flexibility for one to seek care outside of the preferred provider network, but with higher deductibles and co-payments.
- Point of Service (POS) plans ‚Äď combine some features of HMO as well as PPO plans. Generally one must select a primary care physician. Out of network care is generally covered at a significantly reduced rate or not at all, unless referred to that doctor by one‚Äôs primary care physician.