Health Insurance
Health insurance covers you and your family from the devastating financial effects of unexpected medical bills.
Policies can be issued to individuals, employer/employee groups, or to members of associations. Some coverage is provided by self insured funds, not regulated by the State of Florida. Although there are other forms of health insurance, the three main categories of health insurance are:
- Policies that provides managed care services, including major medical Preferred Provider Organization (PPO) coverage and Health Maintenance Organization (HMO) contracts;
- Policies that offer traditional major medical coverage, and
- Policies that provide limited benefits.
COBRA: “Consolidated Omnibus Budget Reconciliation Act of 1985,” a federal law extending group health coverage to qualified terminated employees and their families for up to 18 or 36 months. It applies to groups with 20 or more employees.
Coinsurance: Principle under which the company insurers only part of the potential loss, the policyowner paying the other part. For instance, in a major medical policy, the company may agree to pay 80 percent of the insured expenses, with the insured to pay the other 20 percent.
Deductible: A deductible is a stated initial dollar amount that the individual insured is required to pay before insurance benefits are paid. For example, if a plan has a flat $250 annual deductible, the insured is responsible for the first $250 of medical expenses every year.
The managed care system combines the delivery and financing of health care services. This limits your choice of doctors and hospitals. In return for this limited choice, you usually pay less for medical care (i.e., doctor visits, prescriptions, surgery and other covered benefits) than you would with traditional health insurance as long as you obtain services from an in-network provider or facility. The managed care network controls health care services.
The types of Managed Care are:
Preferred Provider Organizations (PPOs): PPOs offer a provider network to meet the health care needs of its insureds. An insurer contracts with a group of health care providers to control the cost of providing benefits to its insureds. These providers charge lower-than-usual fees because they require prompt payment and serve a greater number of patients. Insureds usually choose who will provide their health care, but typically pay a lower deductible and less in coinsurance with a preferred provider than with a non-preferred provider. Most group health policies fall under this category of major medical coverage.
Florida Statute References
HMO (Individual and Group): 627.6471
Small Group Health: 627.6471
Large Group Health: 627.6471
Individual Health: 627.6471
Out-of-State: does not apply
Standard & Basic (HMO & Insurance): 627.6471 and 627.6699
Health Maintenance Organization (HMO): HMO members pay a monthly fixed dollar amount (similar to an insurance premium), which gives them access to a wide range of health care services. In many cases, members also pay a predetermined amount, or copayment, for each doctor or emergency room visit and for prescription drugs, rather than paying the provider in full and obtaining a portion of the reimbursement later. Members must use the HMO’s network of providers, which may include the doctors, pharmacies and hospitals under contract with that particular HMO. Emergency services are covered regardless of the network status of the medical provider or facility.
Florida Statute References
HMO (Individual and Group): 641.19
Small Group Health: does not apply
Individual Health: does not apply
Large Group Health: does not apply
Out of State Group: does not apply
Standard & Basic (HMO & Insurance): does not apply
Point of Service plans (POS): A Point of Service plan is a HMO plan with an out of network option. In a POS plan, insured members may choose, at the point of service, whether to receive care from a physician within the plan’s network or to go out of the network for services. The POS plan provides less coverage for health care expenses provided outside the network than for expenses incurred within the network. Also, the POS plan will usually require you to pay higher deductibles and coinsurance costs for medical care received out of network.
Florida Statute References
HMO (Individual and Group): 641.31
Small Group Health: does not apply
Individual Health: does not apply
Large Group Health: does not apply
Out of State Group: does not apply
Standard & Basic (HMO & Insurance): does not apply
Exclusive Provider Organizations (EPOs:) In an EPO arrangement, an insurance company contracts with hospitals or specific providers. Insured members must use the contracted hospitals or providers to receive benefits from these plans. Emergency services are covered regardless of the network status of the medical provider or facility.
Florida Statute References
HMO (Individual and Group): does not apply
Small Group Health: 627.6472
Individual Health: 627.6472
Large Group Health: 627.6472
Out of State Group: does not apply
Traditional health coverage is provided by major medical policies and is more expensive because it provides more benefits than basic policies. A major medical policy normally pays a percentage of covered expenses (normally 80%), after you pay the deductible. Insurance companies use fee schedules to determine the reasonable and customary cost of a procedure; however, this cost may differ from the actual charge you receive. Maximum out-of-pocket limits restrict the amount of coinsurance you pay. Not all policies include such limits, but those that do pay 100 percent of remaining covered expenses after you pay a stated amount of coinsurance. You are not restricted to a particular network of medical providers under a traditional major medical policy.