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Consumer's Guide to North Carolina Health Insurance

A Consumer's Guide To Health Insurance from Your North Carolina Department of Insurance

You should consider several different options when shopping for a health insurance plan. This guide can help you choose the type of plan that best fits your needs.

Major Medical Health Insurance

The two basic types of major medical (or comprehensive) health insurance plans are "traditional" plans and "managed care" plans. Many people are covered under major medical plans, either through an employer group or by purchasing individual policies.

Traditional Health Insurance

A traditional plan (also known as an "indemnity" or "fee for service" plan) is designed to cover a broad range of medical expenses such as hospitalization, doctor visits, surgery, diagnostic tests and prescription drugs. Most major medical policies require policyholders to satisfy out-of-pocket deductibles each plan year, and (after deductibles are met) to pay a portion of the cost ("co-insurance") for covered services. A traditional plan will allow patients to use a doctor or hospital of their choice. The plan will pay claims based on charges that your provider has agreed to in advance, or based on Usual, Customary and Reasonable (UCR) charges that represent an average charge for the service provided, in your local area. Many traditional plans limit the total amount of benefits that can be paid out during the policyholder's lifetime.

Managed Health Care Plans

HMO, HMO Point of Service, and PPO benefit plans are the three most common types of managed care plans. The term "managed care" refers to health plans that attempt to manage both the cost and quality of health care services for their members. These plans involve certain processes and requirements that are different from those found in traditional health plans. These requirements are designed to encourage patients to seek the most appropriate health care in the most cost effective setting possible. Some approaches used by managed care plans include:

• Requiring or encouraging members to use a contracted network of doctors, hospitals and other health care providers. This enables plans to negotiate discounts on behalf of members, thus keeping costs down. Members' out-of-pocket expenses are generally higher for care received outside of the plan network. Some HMO plans will not cover services received outside of the network (except for emergency services), while HMO Point of Service plans and PPO benefit plans cover some or all of the cost for services received outside of the network.
• Reviewing medical treatments and services before agreeing to pay. This process, known as Utilization Review, determines whether the treatment or service is medically appropriate for your health condition. If the Utilization Review process finds that the services you have requested are not medically necessary for your condition, then the plan will not pay for those services. More information about Utilization Review is on page 4.
• Limiting visits to specialists. Some managed care plans may require members to see their primary care physician (PCP) before seeing a specialist. Because charges for specialist's services are typically higher than for that of a PCP, this is a method of reducing unnecessary visits to expensive specialists. If a referral to a specialist is needed, the PCP can usually assist with the arrangements; however, it is the member's responsibility to verify with the plan that the referral has been approved.