Major Medical Plans
This type of policy is usually effective in covering serious illness or injury where costs are high. Hospital care, drugs, and doctors’ visits are usually covered. These benefits can be delivered in several different ways:
Indemnity Plans: These major medical plans typically have a deductible – the amount you pay before the insurance company begins paying benefits. After your covered expenses exceed the deductible amount, benefits usually are paid as a percentage of actual expenses, often 80%. These plans usually provide the most flexibility in choosing where to receive care.
Preferred Provider Organization (PPO) Plans: In these major medical plans, the insurance company enters into contracts with selected hospitals and doctors to furnish services at a discounted rate. As a member of a PPO, you may be able to seek care from a doctor or hospital that is not a preferred provider, but you will probably have to pay a higher deductible or co-payment.
Health Maintenance Organization (HMO) Plans: These major medical plans usually make you choose a primary care physician (PCP) from a list of network providers. Your PCP is responsible for managing all of your health care. If you need care from any network provider other than your PCP, you may have to get a referral from your PCP to see that provider. You must receive care from a network provider in order to have your claim paid through the HMO. Treatment received outside the network is usually not covered, or covered at a significantly reduced level.
Point of Service (POS) Plans: These major medical plans are a hybrid of the PPO and HMO models. They are more flexible than HMOs, but do require you to select a PCP. Like a PPO, you can go to an out-of-network provider and pay more of the cost. However, if the PCP refers you to an out-of-network doctor, the health plan will pay the cost.