Choosing a Health Insurance Plan

Doctor & Patient. Photo © Stockbyte

What is health insurance?

While most people know they need health insurance when they have a condition like asthma, many do not know that there are a number of different options that will vary the cost and accessibility of healthcare.

Indemnity Health Insurance Plans

With an indemnity health insurance plan you will have a tremendous amount of freedom to choose your own doctors and facilities where you receive asthma care, primary care or specialty care.

You will not be required to see certain doctors, obtain referrals, or choose a primary care physician to manage your healthcare (although you still can and there are many advantages to doing so).

What Will This Freedom Cost Me?

However, all of this choice is not without costs. Freedom will cost you both time and money.

You will often have to complete more paperwork and experience more out of pocket expenses with an indemnity health insurance plan. In my experience, more paperwork also means that you will be spending more time on the phone or emailing your insurance company when either of you have questions.

With most indemnity health insurance plans you will have to pay for your healthcare at the time of service and then be reimbursed later by your insurance company. This means more out of pocket expenses for you in the short term and submitting a claim to your insurance company for reimbursement.

You will also usually have an annual deductible. This means that you will pay all expenses up to a certain point ranging from a few hundred dollars to several thousand dollars before your insurance company reimburses any of your healthcare expenses. The higher your deductible the less expensive your monthly premium will be.

After meeting your deductible, your company will generally pay claims at some percentage for a service. For example, many plans pay 80% and you pay 20% after a deductible is met.

For example, if your doctor charges $150 for your annual check up, you will likely have to pay $150 dollars at the time of service. If you have not yet met your deductible you will be responsible for the entire $150. If you have met your deductible than your insurance company will reimburse you $120 after the appropriate paperwork is submitted in an 80/20 plan.

However, if your doctor charges more for a particular service than your insurance company allows, you will be responsible for the difference. If your insurance company only allows $100 for an annual checkup then you will only be reimbursed $80.

As you can see, it is really important to understand all of the costs and implications when choosing a healthcare plan.

Fee For Service Health Insurance Plans

A fee for service health insurance plan has many of the benefits of an indemnity plan, but you do not have the out of pocket expenses. In most of these plans, the healthcare provider or hospital bills your insurance company directly for their portion of costs, usually a percentage like the 80/20 split described above.

If you are going for your annual pulmonary function tests (PFTs), the hospital will bill your insurance company for the percentage of the bill they are responsible for. If the PFTs cost $200 and you are in an 80/20 plan, the hospital will directly bill your insurance company the $160 and you will be responsible for the remaining $40. In a fee for service plan you will still have an annual deductible, but plans usually pay for at least 50% of expenses after the deductible is met. The higher the percentage your insurance company is responsible for will mean higher premiums for you.

Managed Care Plans

In managed care plans your costs will likely be lower, but you may have less choice than with the other plans.

Your insurance company will contract with doctors and hospitals to provide services. As a result, you will need to use a doctor or hospital approved by your insurer. Your plan will likely have provisions if you choose to an “out-of-network” provider, but you will pay more.

Doctors and hospitals agree to lower costs in exchange for the built in referrals that result from being a preferred provider. In this option, you may have fewer choices in exchange for lower costs.

Additionally, a managed care plan may require that you pick a primary care provider to manage or coordinate your care.

Managed care plans can lower costs by:

  • Focusing on prevention. Your managed care plan may ask you to participate in a disease monitoring program using a service like Propeller Health where your doctor can see how often you are using your rescue inhaler and potentially intervene if necessary.
  • Only paying for services deemed medically necessary. For example, a managed care plan may require certain documentation before putting you on a treatment like Xolair.
  • Limiting or restricting medications. Your insurance company may require you to pay more for certain combination medications like Advair rather than using each of the components separately.

What Does Health Insurance Cover?

While your plan will outline in more detail, most plans cover the following:

  1. Asthma Medications
  2. Emergency room visits
  3. Regular doctor visits
  4. Testing
  5. Hospital admissions


  1. Choosing a Health Insurance Plan. Accessed December 26, 2013

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