Understanding Health Coverage
You want to do what’s best for you and your family. Understanding health coverage will help you decode the maze of health benefit options available today. From HMOs and PPOs to Medicare and drug coverage, learn the facts so you may make more informed choices about your health coverage and your future.Getting Health Coverage
You can get health coverage through an employer or purchase it yourself.Getting Health Coverage
Many people get health coverage through their employer. This is called group coverage. Employers may offer several plans to choose from, and employees get a chance to change their plan once a year during open enrollment.Some people purchase their own coverage because it is not available through their employer. This is called individual health insurance coverage. Individual health insurance coverage is a good option for people who are:
- In between jobs
- Self-employed
- Early retirees
- Recent college graduates
- Part-time workers
Types of Health Coverage
Knowing what is covered ahead of time is a key to finding the right plan for you. From medical care to prescriptions to dental or vision, learn about the types of health coverage available to you.Types of Health Coverage
Health insurance plans come in all shapes and sizes. That's why it's important to assess your needs before you choose an insurance plan. First, determine what kind of coverage you need, for example, a major medical insurance plan or a temporary insurance plan. A major medical insurance plan usually renews on a yearly basis and does not expire until you decide to terminate the policy or discontinue paying premiums. On a temporary insurance plan, you can decide if you want coverage from one to six months at a time, for a maximum of 12 months.Major medical insurance plans usually offer an optional dental plan. The dental plan is only offered along with the health insurance plan - it cannot be purchased alone. Additional services that could be included with a health insurance plan are preventive care, prescription drug coverage and vision coverage. It is important to do research so you can find the insurance plan that provides the best coverage and services for you.
Types of Products
You’ve heard terms like PPO, HMO and deductibles, but what do they mean? Get the information you need to make your best choice with our guide to different types of products.Types of Products
The three most common types of health plans are Health Maintenance Organizations (HMOs), Preferred Provider Organization insurance plans (PPOs) and Consumer Directed Health Plans (CDHPs).HMOs
HMOs, available through participating employers, are a type of health plan that gives you access to certain doctors and hospitals, often called network or contracting doctors and hospitals (sometimes called "providers").HMO basics:
- When you sign up, you select a primary care physician (PCP) from a network of doctors.
- Your PCP is your first point of contact for most of your basic health care needs.
- Women can also select an OB/GYN for obstetrical and gynecological care.
- If you need special tests or need to see a specialist, your PCP will give you a referral to see another doctor.
The bottom line:
- HMO plans generally have lower up-front costs, or premiums, than other types of plans.
- HMOs usually feature copayments as well. Copayments are set amounts (usually a dollar amount or a percentage) that you pay for care. An example of a copayment is $20 for each office visit.
- HMO plans generally provide coverage only when you use doctors, hospitals and specialists that are in the network.
- If you seek care outside the network, other than in an emergency or with authorization from your HMO, your care typically will not be covered at all.
PPOs
Like HMOs, PPOs often feature a network of doctors, specialists and hospitals; however, there are some key differences between the two types of plans.PPO basics:
- With a PPO insurance plan, you don't have to choose a primary care physician.
- You have the option of receiving care from doctors, hospitals and specialists in the network or outside the network, and you don't always need a referral to see a specialist.
- PPO insurance plan premiums are generally higher than HMO plans, which means you'll have to pay more up front.
- When you receive care from a doctor or hospital that is in the network, your costs tend to be lower.
- When you receive care from a doctor or hospital outside the network your costs are likely to be higher, and you may be responsible for the difference between the amount your insurance plan pays and the provider's billed charges.
- PPO insurance plans usually have a deductible. So, for example, if your PPO insurance plan has a $500 deductible, your coverage doesn't begin until you've paid out-of-pocket for the first $500 of your own medical expenses. Preventive care services are not subject to the deductible
CDHPs and the HSA Option
Consumer Driven Health Plans (CDHPs) often involve pairing a high deductible PPO insurance plan with a tax-advantaged account, such as a Health Savings Account (HSA)1. For an individual to establish an HSA and contribute money to the account each year, he or she must be considered an HSA-eligible individual. Eligibility includes enrollment in an HSA-qualified high deductible health insurance plan.Guidance on choosing a health insurance plan: U.S. Agency for Healthcare Research and Quality (AHRQ)
.Key features:
- If the insurance plan uses a PPO network, you don't have to choose a primary care physician.
- You have the option of receiving care from doctors, hospitals and specialists in the network or outside the network, and you don't always need a referral to see a specialist.
- When a CDHP includes a high deductible health insurance plan, premiums are often lower than other types of health plans because you are responsible for a greater share of your health care costs.
- If the health insurance plan is an HSA-qualified high deductible health insurance plan, and you are an HSA-eligible individual, you may establish an HSA and make contributions to the account each year.
- An HSA is a savings account that you can use to cover a wide range of qualified medical expenses. HSAs have special tax advantages and are regulated by the Treasury Department.1
Resources
For more information about individual health insurance plans, visit the U.S. Agency for Healthcare Research and Quality (AHRQ). This website provides guidance on choosing a health insurance plan.
1 Health Savings Accounts (HSA) have tax and legal ramifications. Blue Cross and Blue Shield of Texas does not provide legal or tax advice, and nothing herein should be construed as legal or tax advice. These materials, and any tax-related statements in them, are not intended or written to be used, and cannot be used or relied on, for the purpose of avoiding tax penalties. Tax-related statements, if any, may have been written in connection with the promotion or marketing of the transaction(s) or matter(s) addressed by these materials. You should seek advice based on your particular circumstances from an independent tax advisor regarding the tax consequences of specific health insurance plans or products.
Economics of Health Care
Find out more about health care costs through our Economics of Health Care series. Its educational materials will help you identify health care costs, understand cost drivers and learn what we can all do to lower these costs.Economics of Health Care
At Blue Cross and Blue Shield of Texas, we strive to provide affordable health care to all Texas residents. As a consumer, it’s important for you to know what your insurance pays for and what medical services and procedures actually cost.
With this in mind, we’ve created a new series: Economics of Health Care.
With this in mind, we’ve created a new series: Economics of Health Care.
Growth in medical care costs is projected to outpace inflation and increases in employee earnings. But what costs are rising the fastest, and why? Find out what's driving the increasing cost of health care.
Understanding heath care costs
The rising costs of health care are creating an unsustainable burden on consumers, employers and the government. But what things cost the most? Find out how your health insurance premium dollars are being spent.
Understanding heath care costs 
The rising costs of health care are creating an unsustainable burden on consumers, employers and the government. But what things cost the most? Find out how your health insurance premium dollars are being spent. Glossary of Terms
Some insurance and medical jargon may make understanding health insurance difficult. We want to make it easier for you by providing clear definitions of common health insurance terms.
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Glossary of Terms
A
allowable amount
The maximum amount determined by the healthplan to be eligible for consideration of payment for a particular service, supply or procedure.allowable charge
The maximum amount a healthplan will reimburse a doctor or hospital for a given service.annual deductible
The amount of eligible expenses you are required to pay annually before reimbursement by your healthplan begins.annual out-of-pocket
The maximum amount, per year, you are required to pay out of your own pocket for covered health care services.B
C
claim form
A form generally filled out by a provider and submitted to your healthplan for consideration of payment of benefits under that healthplan.claim
An itemized bill for services that have been provided to a subscriber, a subscriber's spouse or dependents.COBRA
A federal act that requires group healthplans to allow employees and certain dependents to continue their group coverage for a stated period of time following a qualifying event which causes the loss of group health coverage. Qualifying events include reduced work hours, death or divorce of a covered employee and termination of employment.coinsurance
A percentage of an eligible expense that you are required to pay for a service covered by your healthplan.
Coordination of Benefits (COB)
An arrangement where, if you or your dependents are covered under more than one group healthplan, the plans work together to coordinate reimbursement for the medical services you received.copayment
A fixed dollar amount you are required to pay for a covered service at the time you receive care.covered person
The person in whose name a health care policy is issued and, in the case of family coverage, the member's/subscriber's dependents.covered service
A service that is covered according to the terms in your health care policy.D
deductible
A fixed amount of the eligible expenses you are required to pay before reimbursement by your healthplan begins.dependent
A person, other than the member/subscriber (generally a spouse or child), who receives health care coverage under the member's/subscriber's policy.domestic partner
A person with whom the member/subscriber has entered into a long-term, committed relationship. The relationship must meet the health care plan's specific criteria for a domestic partner.drug formulary
A list of commonly prescribed drugs (also known as a prescription drug list). Not all drugs listed in a plan's prescription drug list are automatically covered under that plan.E
effective date
The date on which your health care coverage begins.emergency medical care
Services provided for the initial outpatient treatment of an acute medical condition, usually in a hospital setting. Most healthplans have specific guidelines to define emergency medical care.Explanation of Benefits (EOB)
The form sent to you after a claim has been processed by your healthplan. The EOB explains the actions taken on the claim such as the amount paid, the benefit available, reasons for denying payment and the claims appeal process.exclusions
Specific medical conditions or circumstances that are not covered under a health plan.F
family coverage
Health care coverage for a member/subscriber and his/her eligible dependents.G
generic substitute
A prescription drug that is the generic equivalent of a drug listed on your health plan's formulary.group
A group of people covered under the same health care policy and identified by their relation to the same employer.H
Health Maintenance Organization (HMO)
An organization that provides comprehensive health care coverage to its members through a network of doctors, hospitals and other health care providers.HIPAA
A federal law which outlines certain rules and requirements employer-sponsored group healthplans, insurance companies and managed care organizations must follow to provide health care insurance coverage for individuals and groups; most recently amended to add privacy rules which became effective April 14, 2003.I
individual coverage
Health care coverage for a member, but not the member's spouse and/or dependents.in-network
Covered services provided or ordered by your primary care physician (PCP) or another network provider referred by your PCP.inpatient services
Services provided when a member/subscriber is registered and treated as a bed patient in a health care facility such as a hospital.insured person
The person to whom health care coverage has been extended by the contract holder, sometimes referred to as a member/subscriber.J
K
L
M
maximum allowance
A fixed amount that providers agree to accept as payment in full for a particular covered service.maximum annual benefit
The maximum dollar amount your healthplan will pay for a particular health care service or for all health care services provided to you during one year.Medicaid
A joint federal and state funded program that provides health care coverage for low-income children and families, and for certain aged and disabled individuals.medical group
A licensed group of doctors or health care providers that contract with a health plan to deliver health care services to plan members/subscribers.Medicare
The federal program established to provide health care coverage for eligible senior citizens and certain eligible disabled persons under age 65.Medicare Part A
The federal program established to provide health care coverage for eligible senior citizens and certain eligible disabled persons under age 65. Medicare Part A provides basic hospital insurance coverage automatically for most eligible persons.
Medicare Part B
The federal program established to provide health care coverage for eligible senior citizens and certain eligible disabled persons under age 65. Medicare Part B provides benefits to help cover the costs of doctors' services.Medicare Part C
The federal program established to provide health care coverage for eligible senior citizens and certain eligible disabled persons under age 65. Medicare Part C (also known as Medicare+Choice) expands the list of different types of entities allowed to offer health plans to Medicare beneficiaries.member
The person to whom health care coverage has been extended by the contract holder (generally their employer); sometimes referred to as the insured or insured person; generally used in the health maintenance organization (HMO) context.
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