Health Insurance Basics

Adapted by the Network of Care Staff

Many of us try to take care of ourselves and stay healthy, but we often don't think about health insurance coverage until we need to use it.

Like preventive care, it's important to take action on health insurance before a serious health problem arises. Know your options and choose a health insurance plan that is right for you.

There are two major types of health plans - managed care and fee-for-service.

• Managed Care plans are agreements between certain doctors, hospitals, and health care providers. They are designed to offer a range of services to members at a reduced cost. They are known by many names, such as Health Maintenance Organization (HMO), Preferred Provider Organization (PPO), Individual Practice Association (IPA), or Point of Service (POS) plan.
• Fee-for-Service plans, also known as indemnity plans, allow you to choose health-care providers yourself. This gives you a wide range of options, including specialists such as cardiologists and surgeons.

Your main concern, however, shouldn't be whether the health insurance plan you choose is managed care or fee-for-service. The characteristics of the plan are far more important. When you compare the options offered by your employer or purchase your own coverage, you must consider the plan's features, overall quality and affordability.

Examine the plan's features
Whether you choose a fee-for-service plan or a managed care plan, make sure it covers the services you are likely to use.

For example, if you decide to change health plans, your prescriptions may no longer be covered. You also may need permission to see a specialist or use a doctor outside of your plan's network. Chronic conditions such as asthma, cancer, AIDS and alcoholism are treated differently by different plans.

Make sure you thoroughly review everything your policy will cover - and not cover - before making a decision.

Evaluate the plan's overall quality
Independent government and non-government organizations rate many health insurance plans. See our "HMO Report Card" section for extensive information about HMOs in your county.

In addition, some managed care groups choose to apply for accreditation, which rates them on standards like quality of care, doctors' credentials, members' rights and responsibilities, and preventive health services.

You can find out if additional performance measure information is available for your plan by asking your employer or by contacting the California Department of Managed Health Care.

Estimate the plan's affordability
Several factors will affect the affordability of your health care. For example, the amount of your monthly premium may vary depending on the level of service you choose. You also need to consider how high your deductibles will be (both per visit and annually) and whether your provider will pay for preventive care.