Understanding Traditional Healthcare Plans
The healthcare program that you may recognize as a "traditional" plan is also known as a Basic Indemnity Plan. With this type of plan, you pay for your doctor's office visits, prescriptions and other services, and then you are reimbursed by the insurance company for a portion of these expenses. With a traditional plan, you are also usually required to fill out and submit a claim form to the insurance company in order to receive your reimbursement. Once the claim is received, the health insurer sends you a statement that outlines the services you received, how much will be paid and how much you are required to pay. This is called an Explanation of Benefits (EOB).
In general, traditional plans may require you to meet a deductible. A deductible is the amount you must pay each year before the health plan will reimburse you for any of your healthcare expenses. After you've met your deductible, you may be required to pay a percentage of any future healthcare expenses for you or your family. This is called co-insurance.
Another expense to you is your employee contribution. This is the amount you must contribute (usually on a monthly basis) toward the cost of your insurance coverage. This is often something you pay through payroll deduction. Your employer pays the remainder of the cost as a benefit to you.
With a traditional plan, you can choose any doctor in general or specialty practice, but you may be required to get approval before hospitalization.
Traditional plans offer participants a lot of choices in selecting where to seek medical care. However, the cost may be greater, and you may be asked to be involved with filing paperwork related to your healthcare charges.