Health Insurance 101

What is the purpose of health insurance?
Health insurance protects you from the high cost of medical care by providing coverage for specific health care services. Although you generally pay a monthly premium and either co-payments or coinsurance, the cost for insurance is far less than Medicare would be if paid fully out-of-pocket.

Insurance costs but having none costs more. There are sensible ways to save money on insurance, but skipping coverage isn't one of them. if you are healthy today, an accident or medical emergency can drain your finances. Put your mind at ease with AvMed Individual Health. It's the coverage you need at prices you can afford.

What are the major types of health insurance policies?
There are three umbrella types of health insurance:

1. consumer-directed
2. fee for service (often known as "traditional" or "indemnity" plans)
3. managed care

Fee-for-service plans mean the doctor or other health care professional will be paid a fee for each health care service provided to the patient. Patients can see the doctor of their choice and the claim is filed by either the health care professional or the patient.

Managed care plans provide coverage for comprehensive health services to their members and offer financial incentives in the form of lower out-of-pocket costs to patients who use doctors participating in a network. More than half of all Americans have some kind of managed care plan – the three types include health maintenance organizations (HMOs), preferred provider organizations (PPO) and point-of-service (POS) plans.

What is an HMO?
An HMO is a type of managed care health insurance plan that allows you to receive care through a network of participating doctors and hospitals. Generally, you select a primary care physician who coordinates your care and refers you to specialists when needed. Out-of-network care is generally not covered under an HMO plan, unless the member requires care that is not available in the existing network.

What is a PPO?
A PPO is a type of managed care health insurance plan that combines features of a fee-for-service plan and an HMO. In a PPO, members who seek care within the network of participating doctors and hospitals pay lower out-of-pocket costs. Members can also seek care from nonparticipating doctors and hospitals, but pay a higher portion of the cost of care.

What is a consumer-directed health insurance plan?
Also referred to as "consumer-driven," or "consumer choice," this type of health plan gives members more choice and flexibility in making health benefits decisions and more control over their health benefits dollars. These plans often include a health fund or account for covered medical expenses. Depending on the type of fund or account, unused dollars may be rolled over annually to cover medical expenses in subsequent years for the duration of the members' enrollment in the plan. There are several types of consumer-directed plans, including Health Savings Accounts (HSAs), Health Reimbursement Accounts (HRAs) and Flexible Spending Accounts (FSAs).

AvMed's HSA is a High Deductible Health Plan (HDHP) that can be paired with a Health Savings Account (HSA). An HSA is a tax-free account that you can use as a long-term savings fund for health care expenses. It provides you with lower monthly premiums and with referral-free access to the doctors and hospitals of your choosing.

What is a health insurance premium?
A premium is the fee you and/or your employer pay to your insurance company to purchase a health insurance plan. This can be paid on a monthly, quarterly or annual basis.

The lowest premium isn't always the cheapest plan. What your insurance covers is just as important as what you pay up front. Ultimately, the cheapest plan is the one with the best price for the benefits you're most likely to use.

How does a health insurance deductible work?
A deductible is the amount that you must pay for covered services in a specified time period in accordance with your plan before the plan will pay benefits. A member of a high-deductible health plan, for example, might be required to pay for the first $1,000 of medical care prior to receiving coverage under the terms of his/her benefits plan.

With AvMed Individual Health, once a member meets the individual deductible amount, AvMed will begin to pay their portion for covered services for that member. AvMed’s plans have a generous 3-month deductible carry-over provision. This means that any services that applied to your deductible in October, November or December will count against your next year’s deductible.

What is a co-payment?
A co-payment is the specified dollar amount or percentage required to be paid by you or on your behalf in connection with benefits. For example, most HMO plans have co-payments in place for certain services such as doctor's visits, prescription drugs, hospital stays, etc.

What is co-insurance?
A percentage a member must pay toward the cost of covered services once the deductible has been met. The co-insurance amount will vary depending on the network selected.

What are out-of-pocket costs?
Out-of-pocket costs include premiums, co-payments, deductibles, co-insurance or other fees that you are required to pay outside of your health benefits plan.

To protect you from catastrophic costs, AvMed's plans include an annual out-of-pocket max to protect you. The out-of-pocket max is the total amount per calendar year you will pay for covered services, after you have met your deductible. After the out-of-pocket is met, AvMed will pay 100% of your covered services until the following calendar year.

How do I pick a health insurance plan?
If you have a choice of plans through your employer or you are purchasing your own coverage, it's important to understand your choices and pick the plan that is right for you and your family. There are several questions to ask yourself when reviewing health insurance plan options:

• How affordable is the cost of care?
• How much are monthly premiums?
• How much are the deductibles?
• Are the co-payments or co-insurance flat fees or percentages of service fees?
• What out-of-pocket expenses have to be paid before the plan begins reimbursement?
• How does the reimbursement process work?
• What is the cost of out-of-network care?

Does the plan cover the services that I may use? For example:

• Doctors, hospitals, laboratories and other health care professionals in the network
• Out-of-network care
• Treatments for pre-existing medical conditions or chronic conditions
• Prescription drugs

What is the quality of the health insurance plan? Research factors of the plan such as:

• Ratings of the plan by independent government and non-government organizations
• Accreditation from groups like the National Committee for Quality Assurance (NCQA) (NCQA) or the Joint Commission on Accreditation of Healthcare Organizations (JCAHO)
• Patient complaints
• Member drop-out rates for the plan
• Other patient experiences with the plan
• Doctor experiences with the plan

Comparing plans is tough but necessary. Unfortunately, there is no such thing as standard coverage. Benefits and costs vary widely from plan to plan. If you have choices, you'll have to examine each one closely to find the best deal. Call us; we will gladly help you through it or you can compare plan options on AvMed's Web site.

You can check out networks before signing up.
A growing number of public and private sources compile information on the track records of individual doctors, hospitals and health plans. You can refer to our Web site to compare physicians, hospitals and quality.

So...how do I get health insurance?
Typically, employers offer a health insurance plan as part of a benefits package. It's very important that you ask about benefits before you accept the job. In fact, benefits account for about 30 percent of an employer's cost for employee compensation. Wages and salaries are only about 70 percent. In some cases, you may get to choose between different types of plans. Determine what's best for your medical needs and your wallet. If your employer doesn't offer health insurance, you should consider purchasing an individual plan.

AvMed Individual Health offers single and family health benefits flexible enough to fit your specific needs, including competitively priced options and easy access to a large network of doctors and hospitals. In addition, our prevention and education tools can help you manage your future health goals.

What exactly does health insurance cover?
It really depends on the type of plan you choose. Things to keep in mind include whether or not the plan covers preventive visits (like annual physicals and well woman visits) and options like vision benefits, dental coverage and prescription plans.

AvMed strongly believes that preventive health is the cornerstone to staying healthy. That is why your plans do not make Preventive Care services subject to your in-network calendar year deductible. AvMed truly wants our members to take an active role in managing their health and wellness. We encourage you to get the proper age and gender specific screenings and immunizations to keep you healthy and prevent future health problems.

Even good coverage can have loopholes. You can count on hospital stay. Most policies cover doctor visits, but benefits for mental health, prescription drugs and dental care are strictly optional.

How can parents help college graduates?
Stress the importance of health insurance — and the implications and risks of going without. Talk about the costs associated with health insurance and how a small monthly payment will protect against the charges for an unexpected hospital visit or illness.

Whether you are a recent graduate or just moved out on your own, AvMed has plans that provide you real coverage at an affordable price.

Lastly, make sure your new grad has a good understanding of the basics. Explain from your own experience how insurance works and the range of options available.

AvMed Individual Health plans are designed especially for students, families, the self-employed, part-time workers and early retirees. With AvMed you get choices, so you can find the right plan at the right price. You can even Apply Online or by phone. For more information about providers, plan options, comparing physician and hospital quality, visit AvMed's Web site at www.avmed.org/individual or call 800-390-9355.

You have enough on your plate. So let AvMed make your health plan simple. For your free quote, click here