Taking a break from last week’s lesson of Healthcare Exchange 101, I’ve decided to take a good hard look at the foundation of Healthcare in America, HMOs versus PPOs. Exciting isn’t it?! Once you understand the two, you’ll no longer say IDK (I Don’t Know) about HMO (which stands for… you’re about to find out!).
If you’re enrolled in an HMO (Health Maintenance Organization), you’re part of a network provider, meaning you’ve selected a PCP (Primary Care Physician) whose responsibility is to manage and coordinate your entire healthcare. Basically your doctor is the Alfred to your Batman, doing all the behind the scenes paperwork while you’re fighting crime, or you know, working a 9 to 5; whichever.
HMOs operate in service areas, meaning they only provide health care within specific geographic areas. An HMO’s service area may include all or part of a particular county. If you’d like to have an HMO, you must live or work in its service area.
With HMOs, you pay the following:
- The fee an HMO charges each month to maintain your coverage.
- The total premium is what you pay PLUS what your employer pays.
- The flat fee that you pay each time you see a doctor or get services.
- Doctor visits, prescription drugs, emergency room visits, and hospital stays have different co-pays.
- Some HMOs charge you a co-insurance instead of a co-pay. The co-insurance is a percent of the cost of a service.
- Some HMOs have an annual deductible. This is the amount you must pay each year to providers before your HMO pays anything.
- The annual deductible does not apply to preventive services. From the beginning of the year, you only pay the co-pay for preventive checkups, family planning services, maternity/prenatal care, and some other services.
- You may pay a separate yearly deductible for prescription drugs.
- This is the total you have to pay each year for most of your services.
However, you still pay co-pays for some services, including prescription drugs and most medical equipment, even after you meet your yearly maximum.
We’ve broken down HMOs and learned a few new concepts along the way, such as coinsurance and annual deductibles. Below are some examples to help understand the two:
Consider co-insurance a payment on the procedure after making the annual deductible. Most percentage participation rates for co-insurance include 70/30, 80/20 and 90/10 plans. On a 70/30 plan, the insurance company pays for 70% of costs incurred, while the individual is responsible for the remaining 30%.
The annual deductible is a fixed dollar amount you pay for covered services each calendar year or plan year before the healthcare provider covers the rest. In layman terms, or in the theme of this week’s blog, Batman terms please enjoy the following:
Mr. Wayne already paid the annual deductible of $500 with 20% coinsurance. In February he and his sons, Timothy and Damien, got an annual checkup from Dr. Thompkins. In March, Damien got poisoned and visited the hospital again, costing $50. Since Mr. Wayne already paid the annual deductible and the HMO paid Dr. Thompkins $40 (80%), Mr. Wayne only had to cover to $10 (20%). That’s a lot more money saved to protect his kids in the future!
Be sure to ask your employer or plan for a summary of your costs if you choose an HMO. Use this worksheet on California’s Office of Patient Advocate’s website to list them.
For all your insurance needs, contact Haronian Insurance at 818.784.7047 or click here for a free instant quote!