Medical Expense Insurance and Managed Care
Plan structures
Basic medical covers hospital, surgical, and physician expenses; major medical adds broad coverage with deductibles and coinsurance; comprehensive combines both. Indemnity plans let the insured choose any provider with fee-for-service reimbursement. Managed care controls cost and choice: HMO (closed network, PCP gatekeeper, referrals required, usually no out-of-network non-emergency coverage), PPO (network discounts with out-of-network options at higher cost), POS (HMO-style gatekeeping with an out-of-network option), and EPO (network only, no referrals needed).
Cost controls
Preventive care, preauthorization, case management, internal limits, formularies, and utilization review. Stop-loss converts coinsurance into a maximum out-of-pocket. Coordination of benefits prevents duplicate payment; Medicare secondary payer rules determine when Medicare pays second.
Regulation
HIPAA portability and privacy, COBRA continuation, the ACA marketplaces with guaranteed issue, essential health benefits, metal tiers, subsidies, and open-enrollment periods. Short-term medical and indemnity/fixed-benefit products are not comprehensive coverage.
Traps
Managed care questions reward precision: HMO typically pays nothing for non-emergency out-of-network care; PPO pays reduced benefits; POS requires a referral but reimburses out-of-network use. Do not confuse a copay with coinsurance, or a deductible with an out-of-pocket maximum.
Rule of thumb
Rank plans by freedom of choice: indemnity > PPO > POS > HMO/EPO, and by cost sharing in the opposite direction.