Understanding Your Coverage

There are many different types of health insurance available including traditional health insurance, managed health care plans, health maintenance organizations (HMOs), preferred provider organization plans (PPOs) and point of service (POS) coverage.

Traditional health insurance covers and reimburses medical expenses such as hospitalization, doctor visits, surgery, diagnostic tests and prescription drugs. Managed health care covers these expenses plus wellness and preventive screenings. They manage the cost and quality of your health care.

HMOs charge monthly premiums and contract with physicians and hospitals in the state to provide care to their members. HMO plans require you to see specific providers to get your full benefit. PPOs are similar but offer you a little more freedom. With a PPO, you will pay less if you visit a preferred provider rather than someone "out of network." PPO providers usually don't require you to get a referral to see specialists.

POS plans are a type of HMO that contracts with specific providers and allow you to see an out-of-network provider at a higher cost. Often, a POS plan requires you to select a primary care physician and get referrals from that physician to see specialists. But a few POS plans are called "open access" and do not require referrals.

You will usually see the terms deductible, coinsurance and copayment in your insurance policy. These relate to the amounts you will be responsible for paying. But what do they mean?

Common Terms:

Deductible — The initial amount members must pay on covered expenses. Typically, a higher deductible means you pay less for your premium every month.

Coinsurance — The amount that you must pay. This is usually stated in your plan as a percentage of the total cost for approved charges. The coinsurance is payment in addition to your deductible. For example, your plan may pay for 80 percent of approved charges, which means you will pay the remaining 20 percent. Always check with your plan before receiving services to keep you from being surprised when your bill comes.

Copayment — A set amount that you must pay when you receive covered treatment under a managed care plan. Your policy summary will tell you what that amount is (usually $10 or $20). This amount must be paid before you leave the provider's office.

Out-of-pocket maximum —Many policies limit the total amount of coinsurance you pay each year. Once you have spent the maximum out-of-pocket amount, your insurance company will pay 100 percent of covered charges the rest of the year.

For more information about health insurance, visit the NC Department of Insurance website.

DISCLAIMER: This information is accurate as of May 5, 2010. Vidant Health does not control the content on any of the Internet sites we link to. We are providing these links as a service only.