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Other Types of Health Insurance

There are two types of private health insurance: fee-for-service plans and managed care plans. In general, you have more choices with fee-for-service plans. But you have fewer costs with managed care plans. Read these pages for more information on both types of plans.

Fee-for-service plans
With fee-for-service plans, your insurance company pays for most doctors and hospitals you want to visit. Fee-for-service plans have basic coverage and major medical coverage:

  • Basic coverage covers the costs of a hospital room and care while in the hospital. Basic coverage helps pay for the cost of surgery and some doctor visits. This may include cochlear implants.
  • Major medical insurance helps pay for other costs, like visits to specialists and therapy.
  • If you have both types of coverage, this is called a comprehensive plan. You may need both types of coverage for your child.

With fee-for-service plans, you will have to pay for part of your medical bills.

  • First, you pay a premium every month.
  • You also pay a deductible each year, usually $250 or $500.
  • You split the rest of the bill with your insurance company. The amount of money you have to pay is called your co-insurance. How much you have to pay depends on your plan.
  • The total of your deductible and co-insurance are called your out-of-pocket expenses.

Here's how it works. sun drawing
Say your child needs a hearing aid that costs $2,000. Your deductible may be $250, which means you have to pay that money first. If your coinsurance is 20 percent, you have to pay the $250 deductible plus 20 percent of what's left of the bill, or $350. So, your total out-of-pocket expenses for your child's hearing aid are $600. Your insurance company will pay the rest of the bill.

There is a limit to how much your total out-of-pocket expenses will have to be every year. But there is also a limit to how much the insurance company is willing to pay.

With fee-for-service plans, you usually have to fill out forms and keep receipts. It's important that you keep track of your costs, so you don't end up paying more than you have to!

Managed care
Managed care plans only pay for certain doctors and hospitals. If your child wants to go to a specialist, your pediatrician has to give you a referral. A referral is your doctor's OK for your child to get services from someone else. If your child does not have a referral, your medical bills may not be paid.

There are three kinds of managed care insurance plans:
Health maintenance organizations (HMOs), Preferred provider organizations (PPOs), and Point-of-Service plans (POSs).

  • HMOs. You pay a monthly fee. You will get a list of the doctors you can choose to be your child's pediatrician. You may also have to pay a co-pay when your child goes to the doctor. Co-pays are fees, usually $5 to $25.
  • PPOs. You pay a co-pay every time you see a doctor or get a prescription filled. Like HMOs, there is a limit to who you can choose to be your child's doctor.
  • POSs. Your pediatrician gives you a referral so your child can see another doctor.

Next: What health insurance covers

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