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New Jersey Health Insurance Delivery Systems

Delivery Systems

Individual plans may be purchased from a variety of carriers as either an indemnity plan (commonly known as a "traditional" or "fee-for-service" plan) or as a managed care plan (HMO, PPO or POS). The B&E Plan may also be offered as an Exclusive Provider Organization (EPO) plan. These options are outlined in more detail below.

Indemnity Plans

Generally, indemnity plans allow you to choose any physician or hospital and require you to file a claim after treatment and expenses are incurred. Thus, your choice of a licensed health care provider is made by you. The indemnity plans do, however, incorporate some elements of cost-containment, such as requiring pre-authorization of non-emergency hospitalizations and prior review and approval for certain services (for example, non-emergency surgery and certain tests and procedures).

The policy issued by your carrier carefully outlines the procedures you must follow. If you have questions about those procedures, you should contact your carrier or producer for further assistance.

Indemnity plans typically require you to satisfy a deductible before the carrier will pay benefits based on the covered charge. You are responsible for your coinsurance share. The standard individual plans have various deductibles and coinsurance options to choose from. Some carriers offer the B&E plan as an indemnity plan. Those carriers are identified on the rate comparison sheet.

"Covered charges" are charges for services and supplies which are covered by the policy or contract and which are less than or equal to the allowed charge for the service or supply.

For example, assume you have chosen Plan C with a $1,000 deductible. You receive a bill for $4,000 and the entire amount is considered a "covered charge." You will be responsible for the first $1,000, as your deductible. Of the remaining $3,000, your carrier pays 70 percent -- or $2,100. You would be responsible for the 30 percent balance -- or $900. Subsequent covered charges during that same year would be paid at 70 percent by the carrier, with you responsible for paying 30 percent. Once the sum of your deductible plus your 30 percent coinsurance share reaches the Maximum Out of Pocket (MOOP) of $3,500, the carrier pays for most further "covered charges" at 100 percent for the rest of the calendar year. Covered charges for prescription drugs are handled differently than covered charges for other services and supplies. Covered charges for prescription drugs will continue to be covered at the plan coinsurance (70% in this example) even after the MOOP has been satisfied, and will not be paid at 100%.

In the example above, the carrier considered the entire amount of the bill as a "covered charge." Sometimes the amount the provider bills exceeds the "allowed charge" for the service. When this happens, the carrier only pays benefits based on the "reasonable and customary charge." The covered person is responsible for the balance.

Health care services and treatments are covered as stated in the individual policy. There also may be limitations on the amount that is reimbursed for a provided service.

High Deductible Health Plans for use with a Health Savings Account (HSA)

Carriers may, but are not required to, offer the standard plans as high deductible health plans that could be used with an HSA. The deductible and maximum out of pocket provisions would operate differently than under a standard indemnity plan, as required by the Internal Revenue Code. Carriers, if any, that are making high deductible health plans available are identified on the rate comparison sheet. Please note that a standard plan bought with a $2,500 deductible does not satisfy the requirements for a high deductible health plan.

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