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Health insurance can be separated into two very broad categories. Let’s compare indemnity and managed care health insurance plans.
Indemnity
An indemnity plan, also known as a “fee-for-service” plan, allows you the freedom to choose which providers and hospitals you want to go to. The insurance company would then be responsible for a portion of the charges.
How Indemnity Works
The indemnity plan allows you to see any doctor of your choosing without a referral. You may even still go to a specific doctor, but the insurance company will not make you choose a primary care doctor. You would be required to pay upfront for your services and file a request later for reimbursements.
An annual deductible will need to be paid before the insurance company will begin to pay your claims. Once you meet your deductible, the insurance company will begin to pay your claims at a percentage of the “usual, customary and reasonable rate” (UCR) for the services you received. The UCR is the amount that providers in your area usually charge for any particular service.
Managed Care
Managed care plans are a type of health insurance. They provide care at a lower cost by having contracts with various health care providers and medical facilities. The plan’s network is made up of certain providers. The rules of that network determine how much the plan will pay for.
There are three types of managed care plans.
Health Maintenance Organization (HMO)
The least expensive form of managed care plans is an HMO. After joining, you pay a fixed monthly premium. There are also small fees, or copays, that are required for doctor visits and prescriptions. Each plan provides a list of doctors and hospitals and you may only choose a primary care physician (PCP) from that list. These plans do not usually provide coverage outside of the network.
Preferred Provider Organization (PPO)
PPOs and HMOs are similar because they both have a fixed monthly fee and co-payments for doctor visits. Where they differ is the number of choices of providers, as PPOs have a wider range. If you wanted to receive care outside of your network, the PPO will cover the expenses but at a smaller percentage. Having more provider choices is a benefit, but it makes PPO the most expensive managed care plan.
Point of Service (POS)
When compared to HMOs and PPOs, POS medical plans have pretty low costs. POS plans work by allowing you to choose a PCP within a network, and then that physician would become the “point of service”. They would be able to refer you to other services outside of the network but with limited coverage. Another aspect of the POS plan requires that the individual fill out their paperwork and keep track of their receipts.
Got Medicare Questions?
We hope this information on comparing indemnity and managed care is helpful to you.
If you have questions about your Medicare coverage, call Empower Brokerage today. Let us help with your Medicare questions so you can get back to the activities you enjoy the most. (888) 446-9157 or click here to get an INSTANT QUOTE
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