Back to the Future: A New Kind of Health Plan

The last few columns we've focused on various aspects of the health insurance industry, from scams to avoid to how to get approved on the best possible terms. With this week's column, we're going to go retro to get to now. Or, in other words, we'll go back to the future. When I first started this column, I thought it a good idea to show what basic plans were available: HMO, PPO, and Traditional plans. One plan we didn't touch upon was the newest and fanciest plans available, but also the oldest. How is that you say? Read on.

As stated in previous columns, health insurance plans aren't as complicated as they look at first. There really are only three types of plans. Differences among the plans are usually in what you pay and who you can see. A brief recap of the health plans available are as follows:

1) HMOs

• Pros—great for day-to-day expenses and wellness checkups. Patient cost is low due to flat fees called copays.
• Cons—referral system for specialists inconvenient. Most procedures have red tape in getting approved. Limited to doctors in network.

2) PPOs

• Pros—flexibility in physician choice. Self-referral to specialists.
• Cons—higher copays for service. Deductibles and coinsurance for major services like hospitalization. Limited wellness care. Higher costs for non-network providers.

3) Traditional

• Pros—Ultimate flexibility in provider choice. Simplest of the plans.
• Cons—Deductible and Coinsurance for everything. Highest premium cost.

As you can see, all of the above plans have good points and not-so-good points. Not everybody fits into the various plans however. Wouldn't it be great if we could get rid of, or at least minimize, the bad points of the plans? Well, we can. It's called a Point-of-Service plan and it is one of the newest health plans available. While new, it is made up of all the older plan designs above. You are charged according to which provider you use, HMO, PPO, or Traditional. The difference is that you are in constant control. You choose which plan you use on a daily or even hourly basis. You can go to an HMO doctor in the morning, self-refer yourself to a specialist on the PPO, and then go Out-of-Network to the Traditional side in the evening. As you guessed, the weak point here is in how does the insurance company keep track of who you saw and what to bill you? Well, it's not perfect, but one way is that the insurance company will first run every bill through the HMO side. If it doesn't match up, then it goes to the PPO side. Finally, if it's not a PPO charge, then it defaults to the Traditional side.

Some of the more common misconceptions on POS plans is that you have to "choose" one of the three plans as "your" plan. As we've just seen, that is not the case. While different co-pays and deductibles apply across the three sides of a POS plan, one thing that doesn't change is what you pay for prescriptions. Prescription costs are the same across the plans. Additionally, any emergency care is typically looked at as an HMO (lowest cost to you) expense. Of course, this is just a brief overview. For a full description of the above plans, see my previous columns.

Until next time, stay healthy!