Choosing the Right Health Plan

The importance of your decision on what health plan to go with cannot be underestimated. It needs to be adequate and appropriate for you and the rest of your family, and you need to get it right. There are plans available that provide only specific aspects of health care, such as hospitalization, and others which are much more comprehensive, and provide pretty much everything you may ever require. If you have a job, your employer may pay some or all of your health benefit costs. If you are in a low income bracket, there are plans available which help to alleviate the costs of health care, such as Medicaid and the Children’s Health Insurance Program. A very useful website at www.planforyourhealth.com/insure has links to health plan options in every state of the United States, and is well worth a visit.

The traditional fee-for-service plan allows you to receive reimbursement of a portion of the medical expenses. The fees that you have to pay do not vary depending on which doctor you attend, but your doctor may charge more than the provider reimburses.

There are three types of plans which are known as “managed care plans” which provide the customer with a specific network of health providers and hospitals. The first of these is called the Health Maintenance Organization (HMO). This option enables you to choose a primary care physician who functions as your care coordinator, and refers you to specialists as required. If you choose to go outside the network then you will be paying more of the cost unless the network was unable to provide the service that was needed.

The next type of plan is called the Preferred Provider Organization (PPO). This is similar to the HMO, but without the requirement of having to select a primary care physician. Some reimbursement of expenses from outside the network is available but you should expect to pay a greater portion of the cost.

The third type of managed care plans are called Point-of-Service (POS). They are characterized by the provision of network and non-network doctors. With these plans, a referral from your primary care provider will reduce the cost of subsequent treatment.

A more recent addition to the health insurance family is what is called Consumer Directed Health Plans (CDHPs). These are high-deductable plans which enable you to access an account for the payment of medical expenses. There are three types of CDHPs.

The first is known as the Health Savings Account (HSA). This plan enables you to contribute to your account from your income tax and sometimes from your pay itself if your employer participates in a plan known as the IRS 125 plan. This account is flexible and allows you to keep it going if you change employers. The funds can be used for non-medical expenses, but there would be costs involved in the form of tax penalties etc.

The next type of plan is known as the Health Reimbursement Arrangement (HRA). This plan is controlled and funded by your employer, and as such, you are not able to use the money for other purposes. If you leave this plan, you lose the funds that are left in it.

The third of the CDHPs is the Flexible Spending Account (FSA). This is funded by a deduction from your pay and is used to pay for health related services and certain other services such as day care. What expenses can be paid for by the FSA is up to the IRS. FSAs are not as flexible as other plans inasmuch as they are lost by the employee if not used by the end of the year, or if the employee changes employers.

This range of health care plans may seem a little bewildering at first glance, but you will find that it was worthwhile spending a little time and effort to find the most appropriate plan for you and your family.