Buying Insurance

Lesson 6: Health Insurance

HMO, PPO, And Other Options

Let us first define the acronyms. HMO stands for Health Maintenance Organization and describes a health plan which utilizes specified hospitals and physicians which you are expected to use for your health care. If you voluntarily use other doctors or hospitals, without the plan administrator's prior approval, payments on your behalf (insurance jargon:benefits) will be drastically reduced or your claim denied entirely. Health maintenance organizatioins tend to be the most affordable of health insurance plans, but are also the most restrictive. (Buyer beware:if you plan to enroll in an HMO examine the list of approved hospitals, clinics, and physicians carefully. Make sure that a doctor and a hospital or clinic that meets your needs and is acceptable to you is within reasonable proximity). PPO stands for Preferred Provider Organization. These are similar to an HMO but are less restrictive. If you utilize one of the hospitals or physicians on the "preferred" list, your benefits will be greater, i.e. more money paid on your bill, than if you go elsewhere. PPOs tend to be somewhat more expensive than an HMO. Both of these health insurance plans will be likely to require "preathorization". This means that you or your physician must call the plan administrator, describe what treatment is proposed and in what facility, and get preauthorized to move forward. Failure to secure preauthorization will drastically reduce your benefits and may cause your claim to be denied. Allowances are made for emergency situations, but typically you, your physician, or a family member must notify the plan administrator within 24 hours of an emergency treatment or admission to a hospital. The last type of personal health insurance is the least restrictive and is generally known as a "choice" plan. This simply means that you can use any pysician and any hospital of your choice and preauthorization is not generally required. This does not imply that the benefits are more comprehensive or generous, it simply means that you are less restricted in your choice of physicians and facilities. As you might imagine, this type of personal health insurance is the most expensive.Hungelmann offers come guidelines for making a choice among types of health insurance plans pp. 235-36.

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