There are some terms associated with Medical Insurance that we need to establish:
PPO: Preferred Provider Organization network
HMO: Health maintenance Organization network
Maximum Out of Pocket
HIPAA: Health Insurance Portability and Accountability Act of 1996
HSA: Health Savings Account
A PPO is a health care organization composed of physicians, hospitals, or other providers which provides health care services at a reduced fee. A PPO is similar to an HMO, but care is paid for as it is received instead of in advance in the form of a scheduled fee. PPOs may also offer more flexibility by allowing for visits to out-of-network professionals at a greater expense to the policy holder. Visits within the network require only the payment of a small fee. There is often a deductible for out-of-network expenses and a higher co-payment. A policy holder will have a primary physician within the network who will handle referrals to specialists that will be covered by the PPO. After any visit, the policy holder must submit a claim, and will be reimbursed for the visit minus his/her co-payment.
An HMO is a form of health insurance combining a range of coverages in a group basis. A group of doctors and other medical professionals offer care through the HMO for a flat monthly rate with no deductibles. However, only visits to professionals within the HMO network are covered by the policy. All visits, prescriptions and other care must be cleared by the HMO in order to be covered. A primary physician within the HMO handles referrals.
Co-payment is a payment made by an individual who has health insurance, usually at the time a service is received, to offset some of the cost of care. Co-payments are a common feature of HMO (Health Maintenance Organization) and PPO (Preferred Provider Organization) health plans in the US. Co-payment size may vary depending on the service, generally with low copayments required for visits to a regular medical provider and higher payments for services received in the emergency room, the latter intended to discourage insured persons from using the emergency room unless it is absolutely necessary. Also called co-insurance.
Co-insurance is an insurance policy provision under which the insurer and the insured share costs incurred after the deductible is met, according to a specific formula.
Deductibles are what you have to pay before the insurance pays. Co-pays do not apply toward your deductible.
Maximum Out of Pocket is the maximum you will pay out of pocket annually.
HIPAA makes health insurance portable by providing rights in three circumstances:
- When you leave a job where you had group health plan coverage, and move to another job with group health plan coverage. (This also applies if you are covered as a dependent of the person who changes jobs.)
- You lose group health plan coverage, you meet the definition of a HIPAA eligible individual and you wish to purchase individual health insurance coverage.
- You have individual health insurance coverage or any other type of creditable coverage, and you enroll in a new group health plan.
Misunderstandings about HIPAA:
- Portability does not let you keep your current plan or benefits when you change or lose your job or get a new job.
- It does not require your new employer or union to provide health coverage.
- It does not guarantee that if you move from one plan or policy to another, the benefits you receive will be the same as those that were available to you under your old plan or policy.
- It does not regulate the cost of health insurance coverage.