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Health insurance — what are the options?

The first thing to understand about all the options for health insurance is that there’s no “best” answer. What works for one person may be completely wrong for another. When you are weighing all the choices, you are looking for the best plan you can afford remembering that no plan is going to pay all the medical costs you might incur. With that slightly depressing warning, here’s a brief introduction to the two basic types of cover.

Indemnity plans offer you the most choice. In theory, you can consult any doctor and, if it’s medically necessary, get a full range of different treatments. When the treatment is complete, or a billing period has come and gone, you claim the sum paid from your insurer. All this for a monthly premium. Except, unless you can afford the very top-of-the-range policy, you will find there are limits on the doctor you can choose or the treatments you can approve. Most people have to seek prior approval and there are caps on the amount of money you can reclaim from the insurer. The more basic the policy, the more important it is to read the small print. The lower the premium, the more limitations and exceptions you will encounter.

A slight variation on the indemnity approach is the Health Savings Account where you save on a tax-free basis and use that money to pay for your medical treatment. Moving further away, there are High-Deductible Health Plans where the insurance does not kick in until the bill is more than $1,000. Both of these represent varying degrees of self-insurance.

More common alternatives are the Managed Care options which you will see represented by the initials, HMO, POS and PPO. Here the insurance providers and doctors combine. The doctors form networks and agree reduced fees if the insurers refer a steady volume of patients. If you stay within a network and are content to accept the treatment recommended by your primary care physician, this is reasonably affordable. But if you prefer to go outside the network, you may either have to pay all the fees or only claim the difference between the network fees and the amount you paid.

As a general reminder, Medicaid provides medical care to people unable to afford private cover, and Medicare covers people over the age of 65.


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