Now that you've taken a closer look at the chaotic health care insurance market, you are in a better position to select a policy that meets your needs.  The following is an overview of the plans available to companies and consumers in New York State. While you may find that insurance company and tax code restrictions limit your freedom of choice, we will attempt to give you guidelines for making the most of your options within your coverage category:

1. Individual (those not eligible to join a group)

If you are an individual  who is retired or whose source of income is savings, disability payments, or other funds that are considered passive income (which means that you are not employed in any way) your plan choices will be limited because medical insurance companies will consider you to be a high risk. If, however, you can generate income as a one-person corporation, a person who receives a 1099 form, or someone eligible to file a schedule C income tax return, you can improve your chances of getting a better policy for less money.  And if you are over 49 years old, joining AARP may be worth it just for the insurance.

If not, here are your choices (all costs are approximate and for an individual policy):

A basic HMO  --- the cheapest of all plans; typically between $150 and $200/month;. total control of your medical care by the HMO.

A Point-Of-Service or PPO/HMO (an HMO with an out-of-network option) --- more expensive than a basic HMO; usually in the $250-$400/month range with an out-of-network deductible of $1500; similarly restrictive in-network with escape options of varying expense and degrees of control.

An indemnity insurance plan with a deductible of $2000 or $5000.--- offers the most freedom, but more expensive than any of the other options. Your fees for these policies will be significantly higher than those for comparable policies offered to individuals who can qualify as one-person groups or who can obtain insurance through a large group (such as AARP).

2. One Person Groups

As noted above, individuals who are self-employed, one-person corporations or who report their income on schedule C tax returns or receive 1099s,  have more choices at lower cost. Extra options include:

A Point-Of-Service/HMO with lower out-of-network deductibles, usually between $500 and $1000, and at a somewhat lower cost.

An MSA with a High-Deductible Indemnity policy --- The most unrestrictive of all options and approximately equal to or lower in cost than a point-of-service HMO (see MSAs above for details).;.

Managed Indemnity Plans --- These hybrid plans pay well for medical expenses but require some pre-approvals for hospitalizations and certain procedures.  In order to be approved, these procedures must only meet the plan's definition of reasonable medical necessity, a system which is often less restrictive than managed care.  These policies are expensive but offer an alternative for those who are uncomfortable with the MSA concept, which offers similar protection at a significantly lower cost.

Even if you are a one-person group, you may be able to take advantage of the less expensive medical insurance options offered to larger groups by purchasing your policy through a professional organization or union or some other group like AARP. Professional organizations are easy to join, and some unions extend their membership to self-employed people in fields related to those of their other members.  Union-based association plans are becoming increasingly common and popular. These are lower cost plans which are more likely to include PPO/Indemnity options.  Both  union-based association plans and professional group plans, however, carry the risk of being changed or canceled.  Many of these plans may also not fall under the full jurisdiction of the state insurance commission, so any problems with the plan will have to be addressed through the union or professional organization officials.

3. Small Groups (2-50 employees)

Plans offered to small groups are similar in scope, but, for actuarial reasons, tend to be about 20% cheaper than the same policies for one-person groups. The options in this category include:

Indemnity plans. -- Since covered medical services must only meet the standards of medical necessity,  these plans are the least restrictive.

Qualified MSA/Indemnity Plans With or Without a PPO Option -- Again, these are the most cost competitive programs available and  allow freedom of physician choice without the restrictions of managed care. At the moment there are relatively few of these programs available, but as the MSA  concept gains wider acceptance, a greater variety of plans will most likely become available.

PPO -- As mentioned earlier, this plan functions mostly like an indemnity plan.  The insurer contracts with a preferred provider organization that offers discounts to participating members.  The person using the insurance has the option of going in-network and paying a small co-payment for a physician's services, or going out-of-network and having the charges subject to a deductible and co-insurance payments.  Generally, the medical costs are approved according to the rules of medical necessity,  but some of the newer plans have added other exclusions and pre-certification requirements.  These new plans more closely resemble point-of-service plans.

Point-Of-Service/HMO  -- These are HMOs with all of the policy and medical decision management restrictions that point-of-service plans carry with them. They offer an out-of-network benefit that appears to be like an indemnity plan but there are many restrictions and pre-approvals necessary, especially when using out-of-network physicians.  These plans tend not to use medical necessity as a guideline like an indemnity plan, but rather have pre-determined limitations on coverage. 

4. Large Group (more than 50 employees)

If you work for a company with more than 50 employees, you are considered part of a large group, and  probably have the greatest choice of health plans at the lowest possible costs. Your employer can contract for straight indemnity insurance, PPO, Point-Of-Service and HMO  plans. Large employers also often allow employees to choose among different types of plans that require various levels of employee cost sharing.  In large companies, indemnity plans may be expensive, but they are an extremely good value (in terms of the quality and quantity of care offered for the price) when compared to the cost of lesser plans available to individuals or members of small groups.

The MSA/High-Deductible Indemnity Insurance option is not available to the employees of large corporations.  Hundreds of US companies, however, have approximated it by creating high-deductible indemnity policies tied to medical reimbursement plans that give employees year-end bonuses if they do not deplete the funds in their individual medical reimbursement accounts.

5. Self-funded Plans: An Important Option for the Large Employer

The self-funding option gives employers the flexibility to design plans which fit the needs of various groups of employees, particularly those that want maximum freedom of choice and quality of medical services with a minimum of third-party interference.  Self-insured plans are not subject to state mandates.  This alone can save 15-20% on premiums. In addition, if the employer has offices in several states, a self-funded plan will eliminate multiple compliance issues and standardize benefits.   Self-funded plans work on the same principle as an MSA.  The policies have two components: the high-deductible indemnity insurance and the portion that funds the first-dollar coverage. The employer determines the risk it is willing to assume with regard to individual employees, and the aggregate risk for the total group. For costs above  those amounts, the firm buys umbrella insurance, which because of its high deductible, tends to be inexpensive.

 6. Flexible Benefit Plans

Individuals in many companies have the opportunity to place pre-tax salary dollars (ie, wages) into accounts that they can use for various expenses, including health care.  The individual does not pay income tax on money in these plans, but if funds are not used by the end of the year they are forfeited.  If you are in a highly restrictive HMO or PPO,  this may be your best and least expensive way of financing out-of-network coverage.

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