Health Maintenance Organizations (HMOs)

An HMO is a managed health care system providing medical services on a prepaid basis. HMOs emphasize preventative medicine and early treatment. HMO members may be required to pay a copayment for basic health care services. Under an HMO a subscriber chooses a Primary Care Physicians (PCP). A PCP is the first physician you see for a medical condition. If a specialist is needed for a particular medical condition the PCP will coordinate the appropriate contracted physician. Generally, HMOs do not have deductibles and encompass richer benefits than a PPO plan. However, they are more restrictive than a PPO plan as you do not have the freedom to go to any doctor you choose.

Preferred Provider Organizations (PPOs)

PPOs are a group of independent hospitals and physicians, in a certain geographical area, that agree to provide services to subscribers at a predetermined cost. Insurance carriers and the physicians agree upon negotiated rates that are less than the physicians would charge patients not enrolled in a PPO. PPOs provide flexibility as they enable subscribers to choose which specialists they would prefer to go to. In other words, you are not bound to one doctor such as a primary care physician in an HMO. If a subscriber decides to see a provider outside of the network, the PPO usually pays a reduced amount of the cost. Deductibles are generally incorporated in a PPO plan, which is the amount the insured needs to contribute before the insurance carriers benefits start.

1. COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985)

Employers with 20 or more employees must provide a health coverage continuation option to all covered employees and dependents up to 36 months. The period of time someone is eligible can vary from 18 to 36 months depending on their qualifying event. Some qualifying events include but are not limited to:

• Termination of employee (unless it due to a criminal act).
• Reduction of hours for employee, hence no longer qualifying as a full time employee
• Coverage may continue up to 29 months if an individual qualifies for Social Security Disability
• Coverage may continue for dependents up to 36 months for certain qualifying events.
• The employee must elect to continue coverage within 60 days of the qualifying event.

2. HIPAA (Health Insurance Portability and Accountability Act of 1997)

HIPAA was designed to provide coverage for people with preexisting conditions. Prior to this legislation, an employee with preexisting conditions was normally unable to obtain coverage when changing employers. HIPAA guarantees the continuation of health benefits to individuals who have been covered for 12 months immediately preceding a change of employment and who choose to participate in the new employer's group health plan. (No Waiting Period).

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