Health Insurance 101:

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You should know where to get health insurance, and understand the various types of private health insurance that are available. There are some important differences between indemnity plans, HMOs, PPOs, and POS plans. You should understand your own health insurance policy, and become familiar with common health insurance provisions, including limitations, exclusions, and riders. It's important to know what your policy covers, and what you'll have to pay for out of your own pocket.

You should know how to compare health insurance policy, and how to balance coverage against cost. While price is an important consideration, there are also other factors that may influence your decision when it come to choosing a health insurance plan. You should understand the taxation of health insurance benefits and premiums, especially if you're self-employed. You should also be aware of your COBRA rights, in the event that you lose your health insurance coverage.

When to get it
If you don't have health insurance right now, you should seriously consider purchasing it as soon as possible. No one can predict the future--you don't know when you might suffer an accident or become seriously ill. Health insurance can help to protect you against financial ruin.

Common Policy Provisions
A good health insurance policy contains several types of coverage. Basic insurance includes hospital, surgical, and physicians' expense coverage. In addition, major medical coverage is necessary in case of a catastrophic accident or illness. These may be purchased separately, but you will generally get more complete coverage if they are combined in a single policy. Your policy should discuss the cost of each type of coverage and describe exactly what each pays for. Your health insurance policy also contains important information regarding your out-of-pocket costs, namely deductibles and co-payments. The family coverage provisions will be important to you as well, if your spouse or dependents are covered by the policy. Information about out-of-pocket maximums and benefit ceilings should also be included.

Basic Coverages

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Surgical expense insurance
Surgical expense insurance pays surgeons' fees and related costs associated with surgery. Related costs might include fees for an assistant surgeon, anesthesiologist, or even the operating room if it is not covered as a miscellaneous hospital item. Surgical expense benefits are generally paid according to a set schedule, although some plans pay surgical benefits based on what is considered "usual, customary, and reasonable" (UCR) in a particular geographic area.

Physicians' expense insurance
Physicians' expense insurance, sometimes called "regular medical expense insurance," pays for visits to a doctor's office or for a doctor's hospital visits. Usually, the policy specifies a maximum benefit per visit (e.g., $25 or $50), as well as a maximum number of visits per injury or illness.

Major medical insurance
Major medical insurance is designed to protect you against losses from catastrophic illness or injury. It is usually an extremely broad policy with a very high maximum benefit. Most major medical policies provide at least $250,000 of coverage, although $1,000,000 or more in coverage is preferable. Although coverage varies from one plan to another, the following list features items that are included in most major medical policies:

• Hospital services and supplies (medical and surgical)
• Hospital room and board, including intensive and cardiac care
• Physicians' services (diagnostic, medical, and surgical)
• Nursing services
• Other medical practitioners' services
• Anesthesia and anesthesiologists' fees
• Ambulance service
• Laboratory and diagnostic tests, including x-rays
• Radiology and other therapy
• Blood and plasma
• Oxygen
• Dental treatment resulting from injury
• Prescription drugs
• Outpatient services
• Convalescent nursing home care
• Home health care
• Purchase of prosthetic devices
• Casts, splints, and crutches

Out-of-pocket maximum
Also called a "stop-loss" or "coinsurance maximum," this provision limits your liability for medical expenses. Imagine, for example, you run up $1,000,000 in medical bills. If you're required to pay 20% of your medical costs after you satisfy your deductible, you'd end up paying $200,000. Most people could not afford to pay this much. A good health insurance plan might pay 80% of the first $10,000 and 100% of any further expenses. Thus, your maximum liability would be $2,000 (plus any deductible).

Benefit ceiling
The benefit ceiling, or "maximum lifetime payout," is the maximum amount the insurance policy will pay. Most experts recommend a policy with a benefit ceiling of at least $1,000,000. While this may seem like an exorbitant amount, keep in mind that the expenses resulting from a catastrophic illness or injury can easily reach this level.

Family coverage
Many group insurance plans allow you to cover your spouse and other dependents, but family coverage will cost more than individual coverage. Many policies specify a family deductible, which is the maximum amount that the family as a whole must pay before insurance coverage begins. Rather than multiplying the individual deductible by the number of family members, the family deductible is often two or three times the individual deductible, regardless of how many family members are covered.

Limitations, Exclusions, and Riders
It would be nearly impossible to find a health insurance policy that covers every illness or medical condition. Most policies specify certain types of injuries, illnesses, or procedures for which they provide a lower level of coverage. Certain illnesses, injuries, and procedures may not be covered at all. Limitations are conditions or procedures covered under a policy but at a benefit level lower than the norm. Exclusions, on the other hand, are conditions or procedures that are completely omitted from coverage. Your health insurance policy should list all limitations and exclusions.

What are some common limitations and exclusions?
Limitations and exclusions vary from policy to policy. Following is a list of common limitations and exclusions a standard policy might include, although the trend is to cover many of these conditions and procedures:

• Pre-existing conditions A pre-existing condition is an illness or injury that began or occurred before you obtained coverage under this policy. Pre-existing conditions are often excluded from coverage, or may be covered after a specified waiting period.
• Nonduplication of payments/coordination of benefits In order to prevent double coverage, many insurance policies specify that benefits will not be paid for amounts that are reimbursed by other insurance companies. This provision limits the total payment of benefits to 100% of covered expenses.
• Alcohol and/or drug abuse treatment
• Care covered by the Veterans Administration or workers' compensation
• Cosmetic surgery Cosmetic surgery required as the result of an accidental injury or congenital defect is generally not excluded.
• Dental expense Some policies do cover reconstructive dental treatment resulting from accidental injury.
• Experimental procedures
• Hernia
• Infertility treatment
• Injury incurred while committing a felony
• Injury, illness, or death that occurs while under the influence of intoxicants or narcotics
• Military duty This provision usually suspends the policy while the insured is serving in the military.
• Noncommercial airline travel
• Organ transplants
• Self-inflicted injuries or suicide
• Sexually transmitted diseases
• Vision correction
• War or acts of war that result in injury or death

What is a rider?
Insurance policies are usually written in a standard form, most of which is dictated by state insurance law. If you need additional coverage or if there are changes to the standard document, these changes can be made by way of a rider. The information to be conveyed in the rider is typed up on a separate piece of paper, which is attached to the standard policy. An endorsement can accomplish the same goal; the only difference is that an endorsement is actually incorporated into the body of the existing policy. Some common health insurance riders are as follows.

Multiple indemnity
In some health insurance policies, accidental death or dismemberment benefits may be doubled or tripled depending on the cause of death or specific type of dismemberment. This multiple indemnity may be included in the policy by way of a rider.

Waiver of premium
Some policies may allow you to skip premiums during periods of extended hospitalization.

Exclusion
Also called an "Impairment rider," this rider is used to specify a medical condition that might normally be covered but is not covered because it is a pre-existing condition. Although the particular condition is not covered, use of this rider allows the applicant to obtain insurance for other healthcare needs when this condition might otherwise make the person uninsurable.

Additional coverage
If the insurer agrees to provide coverage that is not included in the standard insurance contract, this coverage might be described in a rider.

Indemnity Plans vs. Managed Care
Health insurance plans can be broadly divided into two large categories: (1) indemnity plans (also referred to as "reimbursement" plans), and (2) managed care plans.

Indemnity plans
An indemnity plan reimburses you for your medical expenses regardless of who provides the service, although in some cases your reimbursement amount may be limited. The coverage offered by most traditional insurers is in the form of an indemnity plan. How is the benefit amount calculated with an indemnity plan? Different plans use different methods for determining how much you will receive for your medical expenses. Following are descriptions of the most common methods.

Reimbursement--actual charges
Under this type of plan, the insurer will reimburse you for the actual cost of specified procedures or services, regardless of how much that cost might be.

Reimbursement--percentage of actual charges
Under this type of plan, the insurer pays a percentage of the actual charges for covered procedures and services, regardless of how much those procedures and services cost. A common reimbursement percentage is 80%. This has the same effect as a 20% co-payment.

Indemnity
Under this type of plan, the insurer pays a specified amount per day for a specified maximum number of days. Although your reimbursement amount does not depend on the actual cost of your care, your reimbursement will never exceed your expenses.

Managed care plans
There are three basic types of managed care plans: (1) Health Maintenance Organizations (HMOs), (2) Preferred Provider Organizations (PPOs), and (3) Point of Service (POS) plans. Although there are important differences between the different types of managed care plans, there are similarities as well. All managed care plans involve an arrangement between the insurer and a selected network of health care providers (doctors, hospitals, etc.). All offer policyholders significant financial incentives to use the providers in that network. There are usually specific standards for selecting providers and formal steps to ensure that quality care is delivered.

Health maintenance organizations (HMOs)
HMOs provide medical treatment on a prepaid basis, which means that HMO members pay a fixed monthly fee, regardless of how much medical care is needed in a given month. In return for this fee, most HMOs provide a wide variety of medical services, from office visits to hospitalization and surgery. With a few exceptions, HMO members must receive their medical treatment from physicians and facilities within the HMO network.

Preferred provider organizations (PPOs)
A PPO is made up of doctors and/or hospitals that provide medical service only to a specific group or association. Rather than prepaying for medical care, PPO members pay for services as they are rendered. The PPO sponsor (usually an employer or insurance company) generally reimburses the member for the cost of the treatment, less any co-payment. In some cases, the physician may submit the bill directly to the insurance company for payment. The insurer then pays the covered amount directly to the healthcare provider, and the member pays his or her co-payment amount. The price for each type of service is negotiated in advance by the healthcare providers and the PPO sponsor(s).

Point of service (POS) plans
A point of service plan is a type of managed healthcare system where you pay no deductible and usually only a minimal co-payment when you use a healthcare provider within your network. You also must choose a primary care physician who is responsible for all referrals within the POS network. If you choose to go outside of the network for healthcare, you will likely be subject to a deductible (around $300 for an individual or $600 for a family), and your co-payment will be a substantial percentage of the physician's charges (usually 30-40%).

So which is better?
In general, managed care plans are better suited for the average individual because they end up being more cost effective in the long run. In contrast, indemnity/reimbursement plans usually hit you with more out-of-pocket charges (in the form of deductibles and co-payments) and often place caps on the amount of benefits you can receive over your lifetime. Indemnity plans do give you more freedom, however, than managed care plans in terms of using the healthcare provider of your choosing. So, as with anything else, the choice between managed care and indemnity plans ultimately depends on your personal circumstances and preferences. If your goal is to minimize costs, you're probably better off with a managed care plan. On the other hand, if your goal is maximum flexibility and cost is not a major factor, you should consider an indemnity/reimbursement plan.

HMOs, PPOs, and POS Plans

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HMOs	TOP / MENU

Unlike many traditional insurers, HMOs do not merely provide financing for medical care. The HMO actually delivers the treatment as well. Doctors, hospitals, and insurers all participate in the business arrangement known as an HMO.

HMOs provide medical treatment on a prepaid basis, which means that HMO members pay a fixed monthly fee, regardless of how much medical care is needed in a given month. In return for this fee, most HMOs provide a wide variety of medical services, from office visits to hospitalization and surgery. With a few exceptions, HMO members must receive their medical treatment from physicians and facilities within the HMO network. The size of this network varies depending on the individual HMO. When you join an HMO, you choose a primary care physician (PCP) who is your first contact for all medical care needs. The primary care physician provides your general medical care and must be consulted before you can see a specialist. Because of this control system, HMO costs tend to increase less rapidly than other insurance plans.

Advantages of HMOs

Low out-of-pocket costs
With most types of insurance, you are responsible for paying a percentage of the bill every time you receive medical care. Additionally, there may be a deductible that must be met before insurance starts picking up the tab. In contrast, HMO members pay a fixed monthly fee, regardless of how much medical care is needed in a given month. Instead of deductibles, HMOs often have nominal co-payments.

Focus on wellness and preventative care
By reducing out-of-pocket costs and paperwork, HMOs encourage members to seek medical treatment early, before health problems become severe. Additionally, many HMOs offer health education classes and discounted health club memberships.

Typically no lifetime maximum payout
Unlike most health insurance plans, HMOs generally do not place a limit on your lifetime benefits. The HMO will continue to cover your treatment as long as you are a member.

Tight controls can make it more difficult to get specialized care
As an HMO member, you must choose a primary care physician (PCP). Your PCP provides your general medical care and must be consulted before you seek care from another physician or specialist. This screening process helps to reduce costs both for the HMO and for HMO members, but it can also lead to complications if your PCP doesn't provide the referral you need.

Care from non-HMO providers generally not covered
Except for emergencies occurring outside the HMO's treatment area, HMO members are required to obtain all treatment from HMO physicians. The HMO will not pay for non-emergency care provided by a non-HMO physician. Additionally, there may be a strict definition of what constitutes an emergency.

PPOs	TOP / MENU

A PPO is actually a group of doctors and/or hospitals that provides medical service only to a specific group or association. The PPO may be sponsored by a particular insurance company, by one or more employers, or by some other type of organization. PPO physicians provide medical services to the policyholders, employees, or members of the sponsor(s) at discounted rates and may set up utilization control programs to help reduce the cost of medical care. In return, the sponsor(s) attempts to increase patient volume by creating an incentive for employees or policyholders to use the physicians and facilities within the PPO network. Rather than prepaying for medical care, PPO members pay for services as they are rendered. The PPO sponsor (employer or insurance company) generally reimburses the member for the cost of the treatment, less any co-payment percentage. In some cases, the physician may submit the bill directly to the insurance company for payment. The insurer then pays the covered amount directly to the healthcare provider, and the member pays his or her co-payment amount. The price for each type of service is negotiated in advance by the healthcare providers and the PPO sponsor(s).

Advantages of PPOs

Free choice of healthcare provider
PPO members are not required to seek care from PPO physicians. However, there is generally strong financial incentive to do so. For example, members may receive 90% reimbursement for care obtained from network physicians but only 60% for non-network treatment. In order to avoid paying an additional 30% out of their own pockets, most PPO members choose to receive their healthcare within the PPO network.

Out-of-pocket costs generally limited
Healthcare costs paid out of your own pocket (e.g., deductibles and co-payments) are limited. Typically, out-of-pocket costs for network care are limited to $1,200 for individuals and $2,100 for families. Out-of-pocket costs for non-network treatment are typically capped at $2,000 for individuals and $3,500 for families.

Disadvantages of PPOs

Less coverage for treatment provided by non-PPO physicians
As mentioned previously, there is a strong financial incentive to use PPO network physicians. For example, members may receive 90% reimbursement for care obtained from network physicians but only 60% for treatment provided by non-network physicians. Thus, if your longtime family doctor is outside of the PPO network, you may choose to continue seeing her, but it will cost you more. More paperwork and expenses than HMOs

As a PPO member, you may have to fill out paperwork in order to be reimbursed for your medical treatment. Additionally, most PPOs have larger co-payment amounts than HMOs, and you may be required to meet a deductible.

POS Plans

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Advantages of POS plans

Maximum freedom
POS coverage allows you to maximize your freedom of choice. Like a PPO, you can mix the types of care you receive. For example, your child could continue to see his pediatrician who is not in the network, while you receive the rest of your healthcare from network providers. This freedom of choice encourages you to use network providers but does not require it, as with HMO coverage. Minimal co-payment

As with HMO coverage, you pay only a nominal amount for network care. Usually, your co-payment is around $10 per treatment or office visit. Unlike HMO coverage, however, you always retain the right to seek care outside the network at a lower level of coverage.

No deductible
When you choose to use network providers, there is generally no deductible. Thus, coverage begins from the first dollar you spend as long as you stay within the POS network of physicians. No "gatekeeper" for non-network care If you choose to go outside the POS network for treatment, you are free to see any doctor or specialist you choose without first consulting your primary care physician (PCP). Of course, you will pay substantially more out-of-pocket charges for non-network care.

Out-of-pocket costs limited
Healthcare costs paid out of your own pocket (i.e., deductibles and co-payments) are typically limited. The average yearly limit for individuals is around $2,400. For families, the average yearly limit is approximately $4,000. Disadvantages of POS plans

Disadvantages of POS plans

Substantial co-payment for non-network care
As in a PPO, there is generally strong financial incentive to use POS network physicians. For example, your co-payment may be only $10 for care obtained from network physicians, but you could be responsible for up to 40% of the cost of treatment provided by non-network doctors. Thus, if your longtime family doctor is outside of the POS network, you may choose to continue seeing her, but it will cost you more.

Deductible for non-network care
In most cases, you must reach a specified deductible before coverage begins on out-of-network care. On average, individual deductibles are around $300 per year, and the average annual family deductible is about $600. This deductible amount is in addition to the co-payment for out-of-network care.

Tight controls to get specialized care
As in an HMO, you must choose a primary care physician (PCP). Your PCP provides your general medical care and must be consulted before you seek care from another doctor or specialist within the network. This screening process helps to reduce costs both for the POS and for POS members, but it can also lead to complications if your PCP doesn't provide the referral you need.

What types of providers offer individual insurance?
Most people purchase individual health insurance coverage through traditional insurers. Some managed healthcare systems provide coverage on an individual basis as well. In fact, some states require HMOs to offer coverage to individuals during a special open enrollment period each year.

How do you get individual insurance?
To get individual insurance, you can either contact the insurer directly, or get in touch with your insurance agent. You will probably want to get quotes from several insurance companies before you choose one, just to make sure you are getting the best coverage for your money.

Before issuing an individual insurance policy, the insurer will want to know everything about your personal health history. It is unwise to try to hide a pre-existing condition from your insurer, since many insurers use information from the Medical Information Bureau to determine whether an applicant is insurable. If the insurer doesn't want to cover a particular health condition, you may still be able to get a policy with an exclusion rider. But, if it is later discovered that you withheld information from your insurer, your coverage could be canceled altogether.

What are the benefits of individual coverage?
If available, group insurance is generally a better option, since it is usually more comprehensive and less expensive than individual insurance. However, individual coverage is infinitely better than being uninsured in the event of illness or injury. Although you may think you can do without health insurance, you are taking a major risk if you choose not to get coverage. An unexpected illness or serious injury can put you and your family in financial peril. In a group insurance situation, the provisions of the policy are negotiated between the insurer and master policyowner (usually an employer or association). With individual insurance, you are directly in control of your policy. You can negotiate to have certain provisions included or excluded, and you can often choose your deductible amount and co-payment percentage. Keep in mind, however, that these things will affect your premiums.

What are the disadvantages of individual coverage?
Often, your employer or association pays at least part of the cost of group insurance. When you purchase individual insurance, however, you are responsible for 100% of the cost. Individual insurance often doesn't provide as much coverage as group insurance policies in the same price range. Moreover, individual insurance is often more expensive to make up for the insurer's increased risk exposure.

Individual insurance coverage is, ironically, much easier to come by when you are healthy. If you are already sick or have a history of health problems, you may find it difficult to obtain coverage. Group insurance, by contrast, is usually available without taking a medical examination or answering health questions.

What should you look for in an individual policy?
If you can find one that offers individual insurance, an HMO, PPO, or POS plan can often give you the most cost-effective insurance coverage. However, if you are getting individual insurance from a traditional insurer, here are some things you should look for:

Financial stability
An insurer with an "A" or "A+" rating from A.M. Best, Moody's, or Standard & Poor's. It does you no good to have guaranteed renewable insurance if your insurance company goes belly-up.

"Guaranteed renewable" provision
This means the insurer can't cancel your coverage if you become ill. As long as you continue paying your premiums, your insurance coverage continues. Your premiums may go up over the years, but they will rise for all policies in your class (not just yours).

Coverage of pre-existing conditions
Many insurance companies impose a waiting period before covering preexisting conditions. The shorter this period, the better. Three months to one year is standard. Anything over a year is extremely undesirable.

Major medical coverage
Major medical coverage (which covers all hospital costs including rooms, emergency-room care, anesthesia, tests, x-rays, and drugs) is preferable to hospital-surgical coverage (which covers only hospital and surgical services). Many policies do cover outpatient treatment, although cosmetic and other truly "elective" surgeries are rarely covered.

High benefit ceiling
Policies with unlimited payouts are rare in this day and age. However, you will want to find a policy with the highest lifetime payout possible. Anything less than $1 million may be insufficient to cover you in the event of a catastrophic illness.

Out-of-pocket maximum
Also called a "stop-loss," this limits your out-of-pocket costs. Choosing an out-of-pocket maximum is a personal matter, since it really depends on how much you can afford to pay. Lower out-of-pocket maximums can mean substantially higher premiums, and if you might never have to worry about your out-of-pocket costs unless you become seriously ill.

Waiver-of-premium provision
This allows you to skip your premium payments if you become seriously ill. The provision can be very important if you are unable to work for an extended period of time.

The highest deductible and co-payment you can reasonably afford
Lower deductibles and co-payments mean your costs will be lower if you actually ever get sick, but you pay dearly for this protection. By agreeing to a higher deductible and/or co-payment, you can cut your insurance premiums dramatically. And as long as you retain a reasonable out-of-pocket maximum, you shouldn't have to worry about medical costs getting out of hand.

Vision Care Insurance

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• Yearly eye exams
• Glasses (with an annual limit)
• Contact lenses and fitting (with an annual limit)
• Glaucoma screening

Some vision plans may provide more extensive coverage (such as certain eye surgeries), while others may limit coverage to "reasonable and customary" charges incurred during routine eye exams. Reasonable and customary charges generally don't include the cost of glasses and contact lenses. With some employer-sponsored vision plans, coverage may be even more narrowly limited to the medical treatment of certain eye conditions. This is rare, however.

How much does it cost?
Vision care insurance is generally available for a small, nominal annual premium (often as little as $50 a year). What's more, your employer may pay the premium, or part of it, thereby further reducing your cost. How does it work?
Vision care insurance may provide direct payment to the eye care provider for the services you receive. Or you may be required to cover the charges out-of-pocket at the time of service, and then file a claim for reimbursement. It depends on the specific plan.

Where do you get it?
Almost everyone who has vision care insurance gets their coverage through work. Employer-sponsored vision care plans may be self-funded or self-administered plans. Vision insurance may also be part of an employer's group health insurance plan, or one of several options from which employees can choose under an employer's cafeteria benefit plan. Commonly, an employer will purchase group vision insurance through an HMO, insurance company, or other organization that offers group vision care plans. Individual vision care policies are scarce because they're generally not cost effective from an insurer's standpoint. If you don't have access to vision care coverage through your employer, you will likely have a difficult time obtaining this kind of insurance through an individual, stand-alone policy. Some individual health insurance policies may include vision coverage, however, or allow you to add it for a slightly higher premium.

Who should have it?
Anyone who has access to employer-sponsored vision coverage should probably take advantage of it because the minimal cost is outweighed by the benefits. If you don't have coverage and you have no vision problems, you should probably just forego vision insurance and "pay as you go" for annual eye exams. However, if your vision expenses are relatively high (glasses, contacts, etc.) and you don't have employer coverage, you may want to look into other ways of obtaining vision insurance.

Dental Insurance
Dental insurance is insurance that provides coverage for services relating to the care and treatment of your teeth and gums. Typically, it provides coverage for some or all of the following dental services:

• Diagnostic procedures
• Semiannual checkups (including cleanings) and periodic x-rays
• Procedures that restore teeth
• Oral and maxillofacial surgery (teeth extraction and oral surgery)
• Periodontics (treatment of bone and gum diseases)
• Prosthodontics (fillings, dentures, bridges, and crowns)
• Orthodontics (repositioning of the teeth)
• Oral surgery
• Root canal therapy

What does it cost?
Dental insurance is typically inexpensive. For most people, the cost is less than you spend eating at McDonald's over the course of a year (depending, of course, on your affinity for Big Macs). If you have employer-sponsored dental insurance, the cost to you will be even less because your employer probably pays all or most of the premium. Dental insurance is generally very affordable for the average consumer.

How does it work?
Dental insurance may provide direct payment to the dentist for the dental care and treatment you receive. Or you may be required to cover the applicable charges out-of-pocket at the time of service, and then file a claim for reimbursement. It depends on the specific plan.

With group dental insurance, deductible and co-payment features usually come into play, often with a separate co-insurance percentage for orthodontia and other specified procedures. Often the deductible does not apply to routine cleaning and oral examinations. Most plans also place a limit on the total amount of dental benefits you can receive each year. Finally, if you've just enrolled in a dental plan, be aware that there may be a waiting period before dental benefits kick in.

Where do you get it?
Dental insurance has become more common in recent years. Of the roughly 55 percent of Americans who have dental insurance, most receive their coverage through their employer. Employer-sponsored dental insurance may take the form of a health insurance plan that includes dental coverage, a separate dental plan, or a benefit choice within a cafeteria plan. Unfortunately, if you don't have access to employer-sponsored coverage, you may have a difficult time finding dental insurance. Despite the variety of dental plans available, plans for individuals are few and far between. And dental coverage is seldom found in individual health insurance policies either, except coverage for accidental dental injuries. This doesn't mean you're out of luck if you're looking for individual coverage, but it does mean that your options may be limited. Availability rather than cost is often the major hurdle faced by individuals in search of dental insurance. In fact, one of the few types of plans that's readily available to individuals is what's known as a dental discount plan, which isn't even a true "insurance" policy.

Who should have dental insurance and who shouldn't?
If your employer offers dental insurance, you should almost always enroll in the plan because the coverage will probably cost you little or nothing. If coverage is not available through your employer, you should weigh your options carefully. Individual dental insurance is usually very inexpensive, but it is difficult to find. And there's no reason to throw even a little money away on insurance you don't really need. Why pay monthly premiums, deductibles, co-payments, and so on if you're young, have healthy teeth, and rarely go to the dentist except for a yearly cleaning? If this is your situation, it's generally more cost effective to "pay as you go" for your dental expenses as they arise. This is known as "self-insuring." On the other hand, buying your own dental insurance might be a good idea if you've had a history of dental problems and expect to have more, if you smoke (which can cause yellowing and/or decay), or if you're over 40 (age-related decay). If any of these applies to you, make a point of seeking out individual dental coverage.

Trends in Managed Care
If you're like most Americans with health insurance, you probably belong to some type of managed care health plan. Managed care has grown rapidly in recent years and a number of trends have emerged. Although patients are generally happy with the lower out-of-pocket costs associated with managed care, the emphasis on cost-cutting has led to a certain backlash. Most states have enacted managed care consumer protection laws, and even Congress has been debating a patients' bill of rights. In addition, physicians have made some attempts to unionize.

On the other hand, although HMOs and other managed care delivery systems have concentrated on lowering costs, many of them have been socked by rising claims and pharmacy costs. Profits have declined. Consequently, some companies have merged and some have withdrawn from particular states altogether.

What is managed care?
First, a little history. In the past, health insurance was usually provided by traditional fee-for-service insurers, such as Blue Cross/Blue Shield. You paid the health care provider and submitted a claim to your insurance carrier. Then, after your deductible was satisfied, you were reimbursed for some or all of the expenses you incurred. You could go to a doctor or specialist as many times as you wanted. However, these uncontrolled claims resulted in high loss ratios for insurance companies, which, in turn, caused them to increase health plan premiums significantly.

Because the industry needed to lower and control costs, managed care became popular. Managed care refers to an overall strategy for containing or minimizing medical care costs while delivering appropriate medical care. In managed care, patients pay significantly reduced fees to see their primary care physicians, but often can't see specialists or other medical service providers without their primary physician's approval.

To contain costs, managed care companies exercise control by denying or allowing insurance coverage, promoting generic drugs, and encouraging wellness programs and prevention measures. In fact, some companies now send registered nurses to workplaces on a periodic basis to educate employees regarding weight loss and non-smoking.

Changes in managed care
Managed care grew rapidly in the form of health maintenance organizations (HMOs), which require that the primary care physician act as gatekeeper for further care. In response to the public's frustration at being unable to access certain providers without authorization, preferred provider organizations (PPOs) and point of service (POS) plans have been developed in recent years to allow members to use both in- and out-of-network doctors and hospitals. However, these plans often require higher co-payments and deductibles.

State consumer protection laws
Most states have enacted at least one law concerning managed care. These laws may:

• forbid financial incentives for physicians who limit care
• prohibit gag clauses (clauses that forbid physicians from disparaging the health plan)
• specify when emergency room care is necessary
• provide for complaints/appeals of coverage decisions
• require minimum hospital stays for maternity care.

Federal legislation
In 1998, a presidential health care commission released a proposed Consumer Bill of Rights and Responsibilities. It addressed information disclosure to patients, choice of providers and health plans, access to emergency services, participation in treatment decisions, nondiscrimination, confidentiality of health information, complaints and appeals, and consumer responsibilities. Congress, arguing that this measure was too costly, called for too much regulation, and made HMOs too vulnerable to lawsuits, did not approve it. Instead, both the House and Senate have come up with their own patients' rights bills. The future probably holds some form of federal codification of managed care rights for patients.

Unions
In recent years, many physicians organizations (such as the American Medical Association) have pushed for unionization. In large part, this movement has stemmed from the growth of the managed care industry. In explaining why they want to join a union, several doctors have cited a loss in their decision-making authority and a drop in reimbursements from HMOs. In an attempt to cut costs, some HMOs specify the number of patients doctors should see per hour and deny coverage for certain procedures deemed medically necessary by the physicians. Doctors, watched over by plan accountants, are encouraged to minimize the number of tests, referrals, and hospitalizations they order. In addition, physicians whose expenditures for patients are regarded as too high are sometimes dropped from the health care plan. Expect the unionization movement to gain strength.

How to Evaluate Health Insurance Plans
Perhaps you're shopping for an individual health insurance plan. Or, maybe you're trying to choose a plan from among several options offered by your employer. Whatever the case, you'll need to do your homework to select the policy that's best for you. Below are some questions you can ask when you're evaluating health care policies.

How much does the plan cost?
When you're evaluating a health insurance plan, the first thing you'll probably look at is how much the plan costs. Consider the following questions:

How much will you pay each month for coverage?
You'll probably pay a lot more for individual health insurance than you will if you buy group health insurance. But, if individual health insurance coverage is your only option, you should compare the premiums charged by several companies before deciding on a plan. Premiums vary widely, because there's no such thing as a standard plan.

What's your employer's contribution towards the premium?
If you're evaluating employer-sponsored group coverage, remember that your employer may pay all or part of the total premium (e.g., your employer pays 80%, you pay 20%). The more your employer pays, the less you'll pay. It's important to know what percentage of the premium your employer pays because if you lose your job, you may be able to continue your health insurance coverage under COBRA. If you choose to do this, you'll have to pay the total premium yourself.

Will your premiums increase as you age?
Your age, health, and personal habits may affect the cost of an individual health insurance plan. Find out now what you can expect in the future.

How does the cost of the plan compare with the benefits you'll receive?
It's impossible to separate cost from coverage when you're evaluating health insurance. It's possible that you might get excellent coverage at an affordable price. But often, you'll have to compromise--to get the coverage you want, you may have to pay more for it. What you definitely don't want to end up with is a plan that offers limited benefits at a high price.

What about deductibles, co-payments, and coinsurance?
Deductibles, co-payments, and coinsurance requirements can greatly affect the overall cost of a health care plan, so you should look closely at them when you are evaluating potential plans. The deductible is the amount that you have to pay toward your medical expenses before the insurance company begins to pay claims, while the co-payment is the amount you'll have to pay each time you visit a health insurance provider. Coinsurance is the percentage of your medical costs you'll have to pay after you satisfy the deductible (not including any co-payments you are required to make). Here are some points to consider:

• Will you have to satisfy an individual deductible? A family deductible?
• Do you have to satisfy the deductible annually, or every time you seek medical care?
• Do different deductibles apply to different types of care? For instance, you may have to satisfy a $500 per year deductible for hospitalization, but only a $100 per year deductible for doctors' visits.
• Will you have to pay a co-payment every time you seek medical care?
• How much will the co-payment be when you see your doctor for routine care? When you see a specialist? When you are admitted to the hospital? For outpatient care? (Different co-payments may apply in each case.)
• What percentage of your medical costs will you have to pay (coinsurance) after you satisfy your deductible?
• What is your out-of-pocket maximum? Most plans have an out-of-pocket maximum which is the most you'll have to pay towards your medical expenses each year. For instance, after you satisfy your deductible, your plan might require you to pay 20% of your hospital bill, but only up to $2,500 per year. Once you reach your out-of-pocket maximum, the plan will pay 100% of the remaining charges.
• Can you lower the premium you'll pay by choosing to pay higher deductibles and/or co-payments? Consider this when looking at individual health insurance plans.

• What specific types of illnesses and injuries are covered, and which are not?
• Does the plan fully or only partially cover the following expenses: surgery, hospitalization, routine medical exams, diagnostic procedures, visits to a specialist, maternity care, immunizations, rehabilitation, and home health care?
• How much freedom do you have to choose your own doctors and health care providers?
• Does the plan require you to get approval from the insurance company for coverage of certain types of care?
• Does the plan offer any extras, like vision care, dental care, or prescription drug coverage?
• Does the plan offer mental health coverage?

Does the insurer provide good customer service?
When you call your insurance company, you want to speak to a knowledgeable, polite, customer service representative. Unfortunately, particularly busy insurance companies may keep you on hold for a long-time before you get through to any customer service representative. For this reason, look for a company that has a toll-free telephone number and longer-than-average customer service calling hours.

How does the insurer pay claims?
You should find out how the insurance company pays claims. Will the provider bill the insurance company directly, or will you be expected to pay the provider, then file a claim with your insurer? In terms of cost, it doesn't really matter, but it's a lot more complicated if you have to fill out forms or pay up front every time you seek health care. Also check with your doctor to find out whether the insurer you are considering generally pays claims on time.

Is the insurer financially stable?
Make sure that the insurer you choose is financially sound and will be able to pay its claims. You can get information on the financial stability of the insurer you are considering from your state's insurance department or from a ratings service organization.

From Fidelity.com