Hassle-Free Health Coverage: Traditional insurance vs. Managed Care
If you want to share in the decision-making, greater flexibility and direct access to providers, you'll want to look into an indemnity plan. If you want lower premiums, managed care will usually work better.
Most people know this much about health insurance. But how do these two main versions of health coverage compare in a more detailed way? Here are some quick comparisons:
- Choice
Indemnity Insurance: You can select any doctor, hospital or other health care provider.
Managed Care: You can select any health care provider in the network. If you use a provider outside of the network, you pay some or all of the bill.
- Seeing a specialist
Indemnity Insurance: You can use any specialist. However, some plans require pre-approval for certain procedures performed by specialists.
Managed Care: Your primary care doctor determines if and when you need to see a specialist. (Sometimes you can see a specialist who is part of the network without permission.) If you use a specialist without HMO approval (or outside the approved list), you will have to pay the entire bill.
- Out-of-pocket costs
Indemnity Insurance: You may have to pay an annual deductible of $200 to $1,000. You also may be responsible for co-insurance payments of something like 20 percent of your medical bills, up to a certain limit (the stop-loss amount) each year. Sometimes, you pay for routine doctor visits and prescription drugs.
Managed Care: You may have to pay co-payments (usually $3 to $10) for network doctor visits and prescription drugs. When you use a provider outside of the network, you may have to pay a deductible-after which the plan will pay part of the total charges.
In short, an indemnity plan-even with its limitations-offers you the freedom of choice but usually requires you to pay more out-of-pocket expenses than you would with an HMO or PPO.
The idemnity plan may not cover you for any routine care-annual checkups and other preventative treatments-either.
Of course, you can get these services under an indemnity plan. You just have to be willing to absorb the related costs-at least large parts of them-by yourself.
