Most insurance plans work on a shared cost system. While you pay the insurance company to cover your medical care, you'll also pay for at least some portion of your medical bills. That can be hard to navigate in a system where payments vary so widely. But it's best to start with knowing how your plan works, and what portion you'll be responsible for.
First, you'll have to satisfy an annual deductible before insurance even kicks in. It could be anywhere from a few hundred dollars to several thousand, depending on what type of plan you have.
After you've met your deductible, you'll still owe a portion of each bill. With a co-payment, you'll pay a flat fee for each bill, depending on the type of service. With co-insurance, you'll owe a percentage of the total bill, often 20% or more depending on your plan and the type of care. If the provider you choose charges unusually high prices, your share may be considerably higher. That's because your insurer will base its 80% share on the "usual and customary" price for the service in your area, not on the actual bill.
Under the new rules laid out by the Affordable Care Act, all plans must cover preventative care at 100%.
With a health maintenance organization (HMO), deductibles are often smaller than with other plans and sometimes there are none. Co-payments are fixed and low.
However, you can choose only among doctors, hospitals, and other providers who have contracts with your HMO, and you can only receive medical services pre-authorized by the plan. You need to designate a primary care physician to oversee all of your care and give you referrals for specialists. If you use non-authorized providers or receive non-authorized care, your HMO will not pay any of the bills.
Similar to an HMO, an exclusive provider organization also requires you to use providers in the plan's network and will not cover any care outside of the network. The difference is that you won't need to designate a primary care physician or get referrals for specialists. Also, the structure in which the providers pay the insurance company is a little different.
With a preferred provider organization (PPO), you have a bit more flexibility. You use a network of doctors and hospitals that have contracts with your insurer, and you won't need a primary care physician to refer you to specialists. You can also choose to go outside the network, but you'll pay more for it -- out-of-network care usually comes with a higher deductible and higher co-payments.
With a point-of-service plan (POS), you can keep your costs low by using a network of doctors and hospitals that have contracts with your insurer. However, if you choose, you can go outside the network, but you'll need a referral from your primary care physician and you'll pay a deductible and higher co-payments.