Iowa State University

Inside Iowa State
March 8, 1996

Benefits office: Assessing your health care options

Assessing your health care options

When the discussion topic is health care, a question that always comes up is, "What is the best plan?" The best plan is one that best serves your health care needs while remaining affordable for you.

The following types of plans are available to most people:

  • INSURANCE/INDEMNITY: You select your own service provider (physician, hospital, pharmacy, etc.) generally without geographic restrictions. Charges are billed on a fee-for- service basis. The employer, who purchases the coverage for employees, contains costs by selecting from features such as deductibles, co-insurance (insurer and the insured split the cost of services), out-of-pocket maximums or requiring that patients get prior authorization for treatment.

  • PREFERRED PROVIDER ORGANIZATION (PPO): You select a service provider from a list of "in-network" providers, who are under contract to charge less to PPO members. As the insured, you keep costs down by choosing to use in-network providers. Providers generally are reimbursed on a fee-for- service basis. Deductibles and co-insurance features also apply.

  • HEALTH MAINTENANCE ORGANIZATION (HMO): From an HMO list of physicians, you select a primary care physician (PCP), who determines your treatment. There are geographical restrictions on where you can obtain services. If you use physicians other than your primary care physician, they must be part of the network of providers. Costs are contained when the primary care physician follows the guidelines and practices set up by the HMO. Physicians generally are reimbursed on a per-patient basis. There may be limited deductible and co-insurance features.

    In terms of choices for the insured, a PPO falls between an HMO and the insurance/ indemnity option. The long-term trend in health care has been toward greater managed care (moving toward HMO and PPO arrangements and away from insurance/indemnity contracts).

    Source: Gary Wiggins, Human Resources

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