Plan Types

Health Maintenance Organization (HMO)

This is the same thing that was covered in chapter 16.

• Referral is required to see a specialist (except for a dermatologist, which must be allowed minimum of five times within a 12 month period)
• Doctors are pre-paid a capitation arrangement, which means "per head"
• Stress preventive care
• No out-of-network coverage (except for emergencies while out of network, which have to be treated like any other claim)******

Preferred Provider Organization (PPO)

This is also the same thing that was covered in chapter 16.

• No referral required to see a specialist (so higher premium than an HMO)
• Doctors are paid on a fee-for-service basis
• The fees for the services are pre-negotiated with the doctors ahead of time
• Out-of-network coverage defaults to a major medical plan with deductibles and coinsurance

 

 

Indemnity plan

We first discussed these at the end of chapter 17. This is also called a hospital indemnity or fixed-rate policy and provides a daily, weekly, or monthly payment of a specified amount based on the number of days the insured is hospitalized. For example, if it provides $100 a day for every day you are confined in a hospital and you are hospitalized for five days, it will pay you $500 for your stay in the hospital, regardless of how much of the medical bill was already covered by other insurance.

Many insurance companies can offer high-benefit fixed-rate plans at reasonable premiums because underwriting and administration are greatly simplified and claim costs are not affected by increases in medical costs. Maximum benefit periods range from about six months to several years or up to a lifetime. Benefits are payable directly to the insureds and may be used for any purpose. Hospital fixed-rate policies usually are exempt from most state laws that apply to specific kinds of insurance contracts.

Direct Health Care

This is the same thing as the Direct Primary Care Agreements that we saw at the end of chapter 17. This eliminates third-party payers (insurance companies) from the relationship between the doctor (provider) and patient. The contract is directly between the doctor and the patient, where the patient pays a fixed monthly amount to the doctor for a set of services such as office visits, annual physical exam, routine lab tests, vaccinations, wound care, splinting or casting broken bones, and medically necessary health care procedures. It is important to remember that these agreements are not insurance, and entering into an agreement like this is not the business of insurance, and so are exempt from the Florida Insurance Code.

Dread Disease Policy ***

These were discussed at the end of chapters 17 and 19. The most common names of these policies are limited risk, dread disease, or critical illness. The commonly cover specified things like cancer, heart disease and aviation. Such policies will frequently pay a single, lump-sum amount to help defray medical costs associated with a specific medical diagnosis. Limited risk policies that cover specified accidents or single events are also available.