Indemnity Plans

With this kind of plan you can see any doctor you want any time you want. You pay the doctor directly and then send your claim to your insurance company. The company pays you back for part of the total cost. (For example, if your doctor charged $100, you might get 80%, or $80, back.)

Indemnity plans (also called fee-for-service or reimbursement plans) generally don't pay for preventive care, like annual physical exams. Because they offer you the most choice, the monthly premium is usually higher than other types of health plans.

Managed Care Plans

When you get insurance through an employer, it is often through a managed care plan. With managed care, a health insurance company negotiates a contract with certain health care providers, hospitals, and labs to provide care for its members at a lower cost.

The four basic types of managed care plans are:

1. HMO (Health Maintenance Organization). When you join an HMO, you choose a primary care doctor. This doctor coordinates all your medical care, from annual physicals to hospitalizations. Although the co-pay for these services is usually fairly low, the tradeoff is that you can only use doctors and hospitals who are approved by your plan. Also you can't see any kind of specialist without a written referral.

2. PPO (Preferred Provider Organization). A PPO is like an HMO, only with more flexibility. Instead of choosing a primary care doctor, you can see any doctor you want. However, if you choose a doctor who participates in your plan, you will pay less.

3. POS (Point of Service). With a POS plan, you generally choose an in-network doctor for most of your care, but you may go outside the network if you need to see a specialist. If you do go out of network, you may have to pay more.

4. EPO (Exclusive Provider Organization). An EPO is like a PPO, only the network of participating doctors is smaller.

Consumer-Driven Health Plan (CDHP)

This type of plan is fairly new on the health care scene. It lets you set aside a certain amount of money in a special health insurance savings account. You are in charge of how you use this money to cover your health care costs. However, the deductible you have to reach is usually higher than in the other types of plans.

It may seem odd buying something that you might never need. Just consider it an investment in your peace of mind. Since peace of mind means less stress, you'll start enjoying health rewards right away!

Health Insurance: Cracking the Code

Health insurance has a language all its own. Here are some words you'll need to know:

• Claim: A detailed explanation of medical services that you or your doctor must submit to the insurance company in order to be reimbursed.

• Coinsurance: Similar to a co-payment except that instead of paying a fixed amount, you pay a percentage of the total cost. (Example: You have surgery that costs $5,000. You might have to pay 20%, or $1,000, while your health plan pays the other 80%, or $4,000.)

• Co-payment (or co-pay): The portion of the bill you are responsible for each time you receive a service. (Example: When you go to the doctor after you've reached your deductible, you may no longer have to pay the full $100; instead you may pay a $25 co-pay, while your insurance picks up the other $75.)

• Coverage limits: This means your health plan may stop paying once you reach a certain annual or lifetime maximum dollar amount.

• Deductible: The amount you must pay out of your own pocket before your insurance company will start paying for services. (Example: If you have a $500 deductible per year, and each doctor's visit costs you $100, your insurance may not kick in until you've been to the doctor five times.)

• In-network provider: Any doctor, hospital, or other provider of medical services that has agreed to be in your insurance company's network and to offer their services at discounted rates. Also called a participating provider. (Compare with out-of-network provider, below.)

• Non-covered services: Services that are not covered under your insurance policy, which means you will be responsible for all charges if you choose to get them. Examples of services that are frequently not covered include cosmetic surgery, chiropractic care, and alternative therapies like acupuncture.

• Out-of-network provider: Any doctor, hospital, or other provider of medical services that has not set up special rates with your insurance company. If you choose to use an out-of-network provider, your insurance may not pay as much toward that appointment — or your visit may not be covered at all. You have to pay the difference (or the entire fee) out of your own pocket. (Compare with in-network provider, above.)

• Out-of-pocket maximum: This is the dollar amount that your portion of health care costs cannot exceed each year. (Example: If your annual out-of-pocket maximum is $10,000 — and you have doctor's visits, procedures, and medication co-pays that have gone over that amount — your insurance will cover any further claims at 100%.)

• Policy: A contract between an insurance company and an individual that provides coverage for health costs in exchange for a set payment.

• Precertification: When you need to let your insurance company know in advance about any medical tests or procedures the doctor has ordered. If your insurance company requires precertification and you do not do this before receiving treatment, the procedure may not be covered.

• Pre-existing condition: Any injury or illness that existed before the date when your current policy started. Pre-existing conditions may not be fully covered.

• Premium: The amount you pay to the insurance company each month to buy health coverage.

• Primary care doctor/primary care physician: A doctor (usually a family practice or internal medicine doctor) who coordinates all your medical care, from annual physicals to referring you to specialists.

• Referral: When your insurance company requires your primary care doctor to authorize any visits to other doctors or specialists. If you don't get a referral, your visit may not be covered.

• Usual, customary, and reasonable: Terms that refer to the amount typically charged by health care providers for similar services in the area you live in. (Example: Your dermatologist charges $200 for an office visit, but most other dermatologists in your area charge $150. Your insurance company may reimburse based on a charge of $150.)