Finding the Perfect Plan for a Family: A Comparison of Policy Types
As the health care administrator for a large company, I am frequently asked by employees how to compare and select a health insurance policy for their family. The answer is never simple and the wrong decision could prove costly.
Private health insurance policies come in two basic types: Managed Care; commonly known as HMOs; and Indemnity Plans, also known as Fee for Service, the traditional form with deductibles and co-insurance.
With managed care health insurance, all doctors, pharmacies and hospitals must be a part of the HMO’s network. Preventative care is usually covered and out of pocket costs are generally lower, but you must follow the HMO’s requirements.
Indemnity plans allow you to se almost any doctor, but the insurance only covers a percentage, for example 80% and you pay the remaining 20%. You must pay a specific amount, called the deductible, before the insurance is applicable. The deductible varies by plan, but can be as high as $5,000.00.
To select the best health insurance policy for your family, approximate your annual healthcare costs. How often does your family member visit a doctor or specialist? What prescriptions are taken regularly and how much do they cost. Medications for common childhood ailments such as asthma can be very expensive without a low prescription co-pay.
Carefully compare the monthly premium for each available plan. Add in any out-of-pocket costs such as co-pays for prescriptions and doctor visits. An indemnity plan with a low premium is likely end up costing more for a family than a higher premium HMO because the HMO coverage is more comprehensive and there is no initial deductible.
Once you analyze the health plans available, with careful consideration of your expected medical costs, you will be assured you have found the best health insurance plan for your family.