Private insurance

Many employers and organizations offer private health insurance. Some employers offer only one type of plan that they will help pay for. Others may let you choose from more than one plan.

Buying health insurance on your own, instead of getting a plan through your work, is likely to cost more. And you pay for the plan yourself. You don't share the cost with your employer.

Some plans work with certain health care providers and facilities to provide care at lower costs. The providers are part of the plan's network. This is called managed care. There are many kinds of managed care plans:

• Health maintenance organizations (HMOs). These plans usually pay only for care within their network. HMOs may cost less than plans that offer a greater choice of providers.
• Preferred provider organizations (PPOs). These plans cover more of your costs if you get care within the network. But they still pay some costs for care outside of the network.
• Point of service. You can choose between an HMO or a PPO each time you get care. These plans give you more choices of doctors and hospitals.

Indemnity (fee-for-service) plans are not the same as managed care plans. The choice of doctors or hospitals you can use is not restricted. Your provider is paid a fee each time you get care covered by the plan.

Public (government) insurance

• Medicaid. Medicaid is a state-run, government insurance program. It helps some people with lower incomes pay for medical care. Medicaid pays your health care provider. You may have to pay a small fee for certain types of care.
• Medicare. Medicare is insurance provided by the government for people age 65 or older. People with certain disabilities or health problems also may get insurance through Medicare. For instance, a younger person with long-term (chronic) kidney failure treated with dialysis or a transplant may get Medicare. It covers some, but not all, medical costs for people who qualify. Medicare has four parts:
  • Part A (hospital insurance). This helps cover care in certain medical facilities, such as hospitals or nursing facilities.
  • Part B (medical insurance). This helps pay for doctors and certain outpatient care. It covers some services not covered by part A. And it includes some home health care and some physical therapy.
  • Part C (Medicare Advantage Plan). This allows you to get health care coverage for parts A and B (and usually part D) through a private health plan, like an HMO or a PPO.
  • Part D. This helps to cover some prescription drug costs. People with lower incomes may get extra help with prescription drug costs.

To learn more about:

• Medicaid, go to www.cms.gov.
• Medicare, go to www.medicare.gov or call 1-800-MEDICARE (1-800-633-4227).

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When you choose a health insurance plan, carefully read the plan's rules and policies. Find out the cost of the plan (the premium). What medical services are covered? How do the payments work? And how much choice will you have when you choose providers and hospitals? Ask for a summary of the plan's benefits.

Read the plan's brochure closely before you sign up. Ask questions about parts you don't understand. It may be helpful to know these terms:

• Deductible: The amount you have to pay each year before your plan starts to pay for your care
• Out-of-pocket expenses: Health care costs you have to pay with your own money
• Co-pay: A set fee you pay each time you get certain types of care
• Premium: The amount you pay to have your plan
• Exclusions, limitations, or noncovered: Services that aren't covered by your plan
• Out-of-network: Health care services received outside of a plan's network of providers. Services you get out-of-network often cost more than services you get in-network.
• Pre-existing condition: A health problem you already have when you apply for health insurance
• Health savings account: An account a person or employer sets up to save money for health care costs
• Flexible spending account: An account where you can use pre-tax dollars to pay for certain services not covered by your insurance plan, such as co-pays and dependent care
• Formulary: A list of medicines that your plan will cover or help you pay for
• Denial of claim: When a plan refuses to pay for a health care service

It's a good idea to talk to your doctor's office. They can tell you which health plans are accepted and how the payments work. It's also a good idea to talk to your health insurance company before you have a planned surgery or procedure so you can be sure it's covered under your plan. In an emergency, get the care you need right away. As soon as you safely can, call your insurance company to find out what services will be covered.

Coverage for medicines

In general, you'll pay less for generic medicines, Opens dialog than for brand-name medicines, Opens dialog. Some insurance companies require prior authorization from your doctor before they'll help you pay for a medicine. For instance, this may be the case if you'd prefer to take a brand-name medicine over a generic one in the same class of drugs. With some plans, you may have to pay more for medicines that aren't on the plan's list of preferred medicines (formulary). Some insurers cover medicines that are bought only at certain pharmacies.

A formulary may put drugs into three groups, or "tiers," based on how much your health plan will pay and how much you will have to pay.

Group 1: Generic drugs.

These are usually drugs that have been in use for a long time, have proven benefits, and cost less to make and sell. You pay the least for drugs in this group.

Group 2: Brand-name drugs that are on the formulary.

Your health plan may have agreements with some drug companies to offer their brand-name drugs at a lower cost. You still pay more for the "formulary" brand-name drug than for the generic, but it costs less than brand-name drugs that aren't on the formulary.

Group 3: Brand-name drugs that are not on the formulary.

These drugs cost more because your health plan doesn't have an agreement with the drug company to reduce the price. When the health plan pays more, so do you.

If you have a choice between plans, check what your co-pay for prescription drugs will be, the maximum amount the plan will pay in a year, and other details.

Questions to ask

When you are choosing a health insurance plan, think about questions you want to ask. For example:

• What benefits and services are covered?
• What plan does your doctor accept?
• Which doctors are available in the plan?
• Does the plan offer coverage for foreign travel?

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