Types of Private Health Insurance

Sherrie Bennett

Having a baby is expensive. By many estimates, if you give birth to a healthy baby, the initial medical expenses (through delivery) may still total $15,000-and if there are medical complications, the total bill can skyrocket. For this reason alone, it pays to have health insurance for both mothers and newborns.

If you don't have insurance, you should understand the types of private and government-funded health insurance that are available, and the benefits and features of those plans.

Types of Private Health Insurance Plans

Private insurance can either be:

• Employer-provided group coverage
• Individually-purchased family coverage

Typical health insurance plans include:

Fee-for-service or indemnity plans allow you to choose any medical provider for health care treatment. Following treatment, you pay the bill and then send a claim to your insurer for reimbursement.

Managed care plans provide both insurance and health-care services. Instead of paying every time a medical service is delivered, members pay a fixed monthly fee for health care, regardless of the amount of care needed.

Managed care programs also offer coverage for a variety of preventive services.

Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs) are among the most common managed care plans.

HMOs generally require members to use their contracted physicians and facilities. Some HMOs have Point of Service (POS) options allowing members to use medical providers outside the plan's network and still qualify for partial reimbursement.

PPOs generally encourage members to use the medical providers within the plan's network. Members are allowed to consult with providers outside the network, but will have higher out-of-pocket costs.

Self-funded or self-insured plans are employer-provided health plans where companies insure their own workers instead of buying protection from insurance companies.

State and Federally Funded Insurance Plans

If you are unable to purchase private health insurance, you should investigate whether you're eligible for a state-funded or federally funded insurance plan.

Medicaid is a state-administered program that offers health insurance to low-income individuals. Eligibility rules vary from state-to-state, and in some instances children may be eligible for enrollment even if their parents are ineligible.

Because regular medical treatment during the course of a pregnancy is vital to the good health of both the mother and child, Medicaid has special rules that ease the eligibility requirements for pregnant women. If you attempted to enroll in Medicaid before becoming pregnant and were denied, you should still reapply for coverage while pregnant. If accepted, you'll be covered for at least 60 days following delivery.

Depending on your state's plan, your health insurance may be structured in a format that's very similar to private health insurance plans. Very often, in fact, government-funded plans and private plans are run by the same insurance companies.

Health Insurance Benefits

Health insurance plans contain various benefit provisions including:

• Hospital-surgical benefits cover inpatient hospital services and surgical procedures, including the cost of diagnostic tests, nursing care, and room and board
• Basic benefit provisions may cover specific medical tests, ambulance service, and oxygen
• Comprehensive or major medical benefits cover both inpatient and outpatient physician and hospital services not covered under the basic benefits portion of the health plan
• Separate riders providing coverage for items such as prescription medications, eyeglasses, and other benefits

Health Insurance Restrictions

In addition to deductibles and co-payments, health insurance policies may contain other restrictions:

• Covered medical treatments or services are generally subject to the condition that the treatment must be medically necessary. The insurer may deny payment for care determined by the insurer to be medically unnecessary, such as experimental or cosmetic treatments.
• Expenses are limited to reasonable and customary charges, generally determined by statistical analysis of physicians' charges for particular procedures within a specific geographic area
• Pre-existing conditions are health problems that have been diagnosed or treated prior to the effective date of the insurance and frequently require waiting periods before coverage is allowed. Under the Health Insurance Portability and Accountability Act of 1996 (also known as HIPAA), if you are eligible for an employee-sponsored health insurance plan, your pregnancy cannot be considered a pre-existing condition, nor can pre-existing exclusions apply to your newborn provided your child was insured within 30 days of his or her birth.

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