Group Medical Plans
HMOs: Doctors are paid a set amount of money to provide a certain range of medical services for a health maintenance organization. You must choose from the doctors and hospitals affiliated with that HMO. Some HMOs have a specific place where all its doctors work. In this case, you are limited to that facility for your medical care. HMOs are less expensive, in part because you don't have as much choice. If you choose to see a doctor who is not part of the HMO, you may not be covered.
Point-of-service plans (gatekeeper): These plans are similar to HMOs and PPOs, in that a network of health care providers is associated with them. One difference is you must always see your primary-care physician first in this type of plan. You cannot see an out-of-network doctor for care without a referral from your primary-care physician. The cost for seeing an out-of-network doctor is higher. You will pay less if you go to your primary care physician.
PPOs (no gatekeeper): Preferred provider organizations are similar to HMOs, in that a federation of health care providers is involved. A PPO's list of providers, however, tends to be larger than that of an HMO. Choosing from the PPO's providers keeps down the cost of care. Most PPOs will cover costs of services of a doctor not associated with the plan, but at a higher cost to you. HMOs and PPOs are "managed care" plans. The insurance company manages the plan by controlling who provides health care. The company also monitors the use of its services by its members. The cost of these services also are evaluated in managing the plan.
Indemnity medical care plans: You receive medical care in exchange for paying a monthly premium under this coverage. No one controls who your provider is, so you may see any doctor you like. Premiums may be higher than other plans because you are not restricted in selection of a doctor. Some indemnity plans cover "wellness" care (visits to the doctor when you are not sick), and some do not. Check with your employer for the details of your plan.
A typical medical care plan adds about $2,500-$3,000 a year to your total compensation package if you are single. If you have a family, add about $6,000-$7,000 a year.