Insurance makes paying for care a lot easier.
Health insurance makes your
life easier by picking up large
portions of your cancer care
costs. Understanding how
different types of coverage
work is especially important
at a time when you’re likely
to face substantial expenses.
Varieties of insurance
There are two categories of comprehensive
health insurance, which covers
hospital stays, medical care, diagnostic
tests, prescription drugs, and other
options that vary from plan to plan. For
example, your insurance may or may not
cover certain complementary therapies.
Traditional fee-for-service plans pay a
percentage of the charges the insurer has approved
for covered services you receive. However, most
traditional plans require you to meet an annual
out-of-pocket deductible before coverage begins.
Then, the plan either pays its share directly to
the provider or reimburses you.
Managed care plans, which may
be preferred provider organizations
(PPOs), health maintenance organizations
(HMOs), exclusive provider
organizations (EPOs), or point of
service plans (POSs), negotiate prices
with participating healthcare providers
and cover your costs for approved
services, minus a per-visit charge,
if you use their network of providers.
In addition, most PPOs cover a
percentage of your out-of-network
expenses for approved services.
The cost of coverage
The amount you pay for health insurance
depends on several factors, some
of which may be beyond your control.
group health insurance, you
pay, on average, 28% of the
cost — often between $150 and $300 a month — for family, according
to the Employee Benefit Research
Institute (EBRI). You may also be
eligible for group coverage through
a professional, educational, or
If you don’t have insurance
through your employer and you buy
an individual policy that provides
family coverage, you pay the full
premium, which averages close to
$400 a month nationwide but can
be more than $1,000 in some states.
Another major difference — and it
can be significant — is that in most
states, insurers may charge more
to cover older people and those
with health problems or refuse
to cover you at all, based on
their under-writing criteria.
If you don’t qualify for
individual coverage, your state
may have a high-risk insurance
pool for which you’re eligible.
The drawback is that this alternative
tends to be expensive
because all the participants
have had health problems.
A top-line comparison
While you’ll want to do a detailed
comparison of the particular fee-for-
service, PPO, and HMO
alternatives you may be offered,
here’s a brief summary of some of
the ways in which they differ:
Premiums. In general, traditional
fee-for-service plans tend to have
the highest premiums and HMOs
the lowest, though there are always
Freedom of choice. Fee-for-service
plans allow you
to choose your
you to use their
doctors to have
but don’t require, in-network treatment. However,
sometimes using an out-of-network
doctor or hospital means all costs you
incur for related care are treated as
Covered costs. Fee-for-service plans
require you to pay an annual deductible
plus co-insurance, or a fixed
percentage of each medical claim.
For instance, your plan may agree
to pay 70% of the cost of a service,
while you’re required to pay the
remaining 30%. However, the amount
the insurance company pays is based
on the maximum it sets for the service and not necessarily the full amount
the provider charges.
For example, if your doctor
bills you $350 for a service, but the
insurer’s approved charge for that
service is $225, your insurance will
pay only $157.50 if it reimburses 70%
of each claim (70% of $225), and you
pay the remaining $192.50. If a service
isn’t covered, the insurer pays nothing.
PPOs typically require you to make
a copayment, or pay a fixed dollar
amount, for each covered service.
Certain services including annual
physicals and mammograms are often
exempt from the copay. Some PPOs,
though, use co-insurance rather than
a copayment for in-network services.
That typically increases your
HMOs don’t charge additional
fees for the services they provide.
However, they rarely cover healthcare
provided outside their own facilities.
There may be exceptions if the
HMO doesn’t have someone with
a particular expertise on staff.