What is an HMO?
An HMO is a Health Maintenance Organization, which is a network of health care
providers including doctors, hospitals, pharmacies and other medical facilities and
professionals. The network works together to manage the quality and cost of each member's
health care.
Advantages of an HMO?
HMOs are designed to manage the costs of medical care, which means members enjoy
lower out-of-pocket expenses compared to traditional Indemnity medical insurance. Visits
to the doctor's office, hospital charges and many other medical care expenses are covered
at 100% after a small co-payment such as $5 or $10 per visit. Generally, prescription
drugs, routine physicals, lab tests, vision exams, well-baby care and maternity visits are
covered. HMO plans do not require you to pay an annual deductible before services are
covered and usually have no lifetime maximums. HMO providers conveniently take care of
most paperwork, so members do not have to complete claim forms.
Are there any drawbacks to an HMO?
Some people who are accustomed to selecting their own health care providers and
facilities find working with a Primary Care Physician system to be inconvenient or
restrictive at first. HMOs are constantly changing, however, due to competitive pressures.
HMO members who recognize the cost-savings, quality care and conveniences they receive
with managed care are generally satisfied with the trade-off. No benefits are paid if a
member decides to go to a health care provider that is not in the network.
What is a Point-of-Service Plan
(POS)?
A Point-of-Service Plan (POS) delivers health care services using both an HMO
network and more traditional Indemnity coverage where individuals can utilize health care
services outside the HMO network.
How does a POS work?
At the time medical care is required, members decide to use either an In-Network
or Out-of-Network provider. Network managed care benefits are provided as an HMO (small
co-pays, low out-of-pocket expenses and no deductibles, benefit maximums or claim forms).
Out-of-Network benefits are lower, out-of-pocket expenses are higher and there may be a
deductible, benefit maximums and claim forms to complete.
What are the advantages of a POS?
There is flexibility in choosing health care providers because benefits are paid
for both In-Network or Out-of-Network providers. This gives members the opportunity to
enjoy the advantages of managed care for most health care needs ... and receive benefits
for care from providers that are not in the HMO network.
Are there any drawbacks to a POS?
Out-of-Network can be substantially lower than In-Network benefits and
deductibles may apply, so out-of-network expenses will be higher.
What is a PPO?
A PPO (Preferred Provider Organization) is a network of doctors, hospitals and
other health care providers that have been contracted by an insurance company or health
plan to provide care at a discount. PPO plans have two benefit schedules - one for
In-Network and another for Out-of-Network services.
How does a PPO Plan Work?
What are the advantages of a PPO
Plan?
Because of negotiated discounts, out-of-pocket expenses can be kept reasonable by
using PPO providers. There are no deductibles for some PPO benefits. There is flexibility
in choosing health care providers because benefits are paid for both In-Network and
Out-of-Network services. There is freedom of choice among In-Network providers, including
specialists. Where In-Network providers are used, out-of-pocket expenses are lower and no
claim forms are required.
Are there any drawbacks to a PPO
Plan?
The value of a PPO plan depends on the availability of providers, by the area in
the network. Claim form are required for Out-of-Network benefits.
What is Indemnity Insurance?
Indemnity insurance is the traditional method whereby a health care provider is
paid directly for services and the insured person is reimbursed by the insurance company.
These policies are almost non-existent in California.
How does an Indemnity Plan work?
The Insured person can select any health care provider they wish. The receive
benefits based on their company benefit schedule, after submitting a claim form.
What are the advantages of an
Indemnity Plan?
Indemnity insurance gives people the most freedom of choice when it comes to
choosing health care providers.
Are there any drawbacks to Indemnity
Insurance?
Indemnity insurance generally has the highest out-of-pocket expenses and highest
premium rates of all types of medical coverage because there is no central cost
management. Annual deductibles apply and claim forms are required for all services.
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