Let’s say you have a $1,000 deductible and $3,000 OOPM. Your carrier pays 80% of eligible
in-network health care costs. Once you reach your OOPM (paid your $1,000 deductible AND your $3,000 out-of-pocket.

"Health Maintenance Organization"

How does a HMO help me?

If a person needs routine medical care, he/she would go to the HMO clinic for care, paying a small co-payment at each visit. Likewise, if the person is sick, he/she would do the same. The clinics have many types of doctors who will treat the patient for whatever illness is present. Until recently, few referrals for care outside of the system were given.


Advantages of a HMO

The advantage of this form of medical care includes slightly lower annual premiums, because the cost of care is spread out among the members. In addition, there is little paperwork dealing with insurance forms for the patients. And there is an influence of prevention at an HMO, whereby programs are provided to its members which promote healthier life choices and better health.


Disadvantages of HMO Plans

The disadvantages include fewer choices for medical care outside of the HMO, since referrals to specialists are sometimes limited. If a specialist is needed for an unusual medical condition, the person may want to see someone outside of the system and there will also be a greater cost. The requirement to pick a primary care physician at the HMO may seem inflexible to many also.

For people requiring mostly routine care, people who have no unusual medical needs requiring out-of-network specialists, and people who like their medical care in an organized way, an HMO is excellent.
 

"Preferred Provider Organization"

How does a PPO Plan work?

Advantages of a PPO include the flexibility of seeking care with an out-of-network provider if so desired, even though it is more out-of-pocket expense for the patient. PPO networks also have prescription services which provide prescription drugs at a reduced cost. The overall premium for a PPO is less than for individual health coverage and will often include more covered medical services. There is a large network of medical providers representing large geographic areas.

Advantages of a PPO Plan

Advantages of a PPO include the flexibility of seeking care with an out-of-network provider if so desired, even though it is more out-of-pocket expense for the patient. PPO networks also have prescription services which provide prescription drugs at a reduced cost. The overall premium for a PPO is less than for individual health coverage and will often include more covered medical services. There is a large network of medical providers representing large geographic areas.
 

How does a POS Plan work?

In a POS plan, you select a primary care physician from a list of participating providers, like in an HMO. All your medical care is directed by this physician, so he is your point of service. This doctor will normally refer you to other in-network physicians if you have a need for a specialist. There is a broad base of medical providers in the network which typically covers a wide geographic area.

How does a POS plan affect me and my family?

You will also have a choice to see out-of-network providers when you need a specialist, like in a PPO plan. Here, however, you will be required to do paperwork yourself and submit claims for reimbursement from the insurance company. The percentage the insurance company pays for out-of-network charges is lower. Most plans require you to go through your primary care physician before you see the out-of-network specialist. If you refer yourself to an out-of-network doctor, the POS plan often pays even less.

Advantages and Disadvantages of POS Plans

In a POS, you have greater freedom to see out-of-network providers than with an HMO. However, this freedom comes with a price, so that every time you see an out-of-network provider, it costs extra. Your decision about choosing this type of plan may rest on whether this freedom is worth the extra premium price.

There is an emphasis on prevention and health education, similar to that with an HMO, where members are encouraged to participate in programs which lead them to healthier choices and lifestyles.
 

"Health Savings Account"

Disadvantages of Health Savings Accounts

There are a few disadvantages: Until the age of 65, any money that is not spent on medical needs out of the account is added to the person's gross income for tax purposes and will generate an additional 10% tax. Also, you must always have a high deductible health insurance policy in place, with the deductible a minimum of $1000 for single coverage and $2000 for family coverage. There is also a stipulation that in the insurance policy, out-of-pocket expenses cannot be more than $5000 for individuals and $10,000 for families. One more negative issue: there could be potential problems for employers when initially working with the new HSA and the existing health plan.


Can I get a HSA Plan?

In order to utilize a Health Savings Account, you must be under 65 years of age and you cannot be claimed as a dependent under anyone else's tax return. You must have a high deductible health insurance policy at the time of deposits into the HSA account. You also cannot have other health insurance at the same time, except the following types: specific injury and accident, disability, long term, dental and vision.


What can a HSA do for me?

There is no doubt that the new Health Savings Accounts will provide lower premiums for health insurance, be a great investment vehicle, and provide tax benefits for those who are able to use them. Just the ability to use pre-tax dollars to pay for medical fees is a huge improvement. Because the high premium of regular health insurance is a stumbling block to many people's ability to afford health insurance, the use of HSAs might be the edge they need to manage insurance now.