Introduction
People visiting the United States typically have the choice of two major types of visitors insurance plans when selecting health insurance for foreign visitors:
- Fixed Coverage: Limited coverage, less cost
- Comprehensive Coverage: Better coverage, more cost
We always recommend everyone purchase comprehensive coverage plans when shopping for visitors coverage. Risks of purchasing fixed coverage plans.
Fixed coverage visitors insurance plans provide a limited coverage, generally do not participate in a PPO network and have no network negotiated fees (contracted rates).
PPO Network
PPO plans have a list of participating providers (doctors, hospitals, labs etc.) that they are contracted with. Typically, most PPO plans have participating providers all over United States and you can search for in-network providers using various criteria such as zip code, city, state, name of the provider, type of the provider etc. When you visit the providers within the PPO network, they would charge you their contracted fees which are typically less than their regular fees. You can also visit the providers outside their PPO network but the benefits would be much lower and there will be no network negotiated fees.
Indemnity Plans
All health insurance plans sold in the U.S. are not PPO plans. There are many other types of plans such as HMO, POS, HSA, Indemnity plans and so on.
Indemnity plans pay a certain amount for each and every eligible expense and you will have to pay the balance out of your pocket. Indemnity plans do not have any participating providers, and do not have any contracted rates with the providers.
Healthcare Charges
The Healthcare industry in the U.S. is very complex. Unlike most other products or services you would avail, there are no set rates or price cards provided by the hospitals or doctors. Therefore, you would have no idea how much they would charge, until you get the bill. A doctor could charge $70 for a visit or they could charge $600 for a visit. It is really up to the doctor and it is allowed. There are no price regulations regarding what the reasonable charges should be. Healthcare providers can charge whatever they want. If they want to charge $40,000 for an emergency room visit, that is up to them. If they want to charge $300,000 for a surgery, that is absolutely legal, unfortunately. There is absolutely no price control. That is how the U.S. healthcare works.
When you have a PPO plan and visit a provider participating in the PPO network, they have contracted rates or network negotiated fees. Participating providers have to accept the negotiated rates as the full payment and they can not demand the balance from the patient.
Fixed Coverage Plans
Fixed coverage plans are typically indemnity plans. Therefore, they do not participate in PPO network and do not have contracted rates or network negotiated fees. In order for any insurance plan to participate in a PPO network, they would have to pay a certain amount for each and every customer irrespective of whether they have any claims or not. Additionally, the insurance company would have to typically pay substantial amounts such as 15% to 20% of the price reduction amount to the PPO network company for getting such discounts. Such expenses are not within the budget of the fixed coverage plans and therefore they do not have PPO networks.
If the doctor charges you $300 for a visit, and if the insurance plan participating in a PPO network has to pay 80%, then the lower the contracted fee, and the less they would have to pay. If they negotiate the amount down to $100, they would have to pay $80. If they negotiate it down to $200, they would have to pay $160. In absence of any negotiation, they would have to pay $240, which is 80% of $300. In such cases, if they are getting $200 discount, they can afford to pay 25% of the $200 savings to the PPO network company in order to save paying 80% of the original amount, which is still very beneficial.
However, in case of fixed coverage plan, the insurance plan pays $60 for a doctor's visit no matter how much a doctor's visit costs, they would have no savings in participating in PPO network and getting network negotiated fees. In fact, they would lose money participating in PPO network which is out of budget for such low cost fixed coverage plans.
Schedule of Benefits
Fixed coverage plans pay a fixed amount for each and every procedure. Please look at the brochure and certificate wording of each plan. You can also look at 'How Plan Works' links for each plan to understand typical scenarios of claim settlement.
E.g., you a visit a doctor for an illness who prescribes you some lab work and after that, he prescribes you the medicine.
Of course, how much all of that would cost would vary a lot and there is no set standard. But for a hypothetical example:
$240 for doctor visit
$100 for medicine
$300 for lab work
Total charges: $640
A sample schedule of benefits for $50,000 policy maximum and $50 deductible plan would be:
$60 for doctor visit
$150 for prescription medicine
$450 for laboratory expenses
In the above example, if it is an eligible claim, the insurance plan would be liable to pay you $60 + $100 + $300 = $460. Therefore, they would pay $460 - $50 deductible = $410. You would have to pay $640 - $410 = $230 out of your pocket.
There are no network negotiated fees to reduce your bill at all.
On the other hand, if you just visited a doctor who charged you $240, insurance company is supposed to pay you $60 and your deductible is $50, they would pay only $10 which is $60 - $50. If you had chosen $100 deductible, they would pay nothing because all of that $60 of eligible expenses would go towards your $100 and you would still be liable to pay $40 towards future expenses to satisfy our deductible.
Justification
Fixed coverage plans exist because so many people are looking for them. Most visitor health coverage companies in the U.S. offer both fixed and comprehensive coverage plans where the price difference is typically 2 to 3 times. There are so many customers who would like to consider allocating a small budget towards the health insurance, ignoring how the plan works. Insurance companies are simply catering to the demands of the customers. There is only so much that can be provided in a small price.
If we didn't sell fixed coverage plans, potential customers who are looking for them would simply buy from our competitors, from the insurance companies directly or from their home country where only fixed coverage plans may be available.
The most we can do is try to educate our our customers both on our web site and also over the phone (if they call asking related questions). All the information related to all the plans is readily available on this web site BEFORE you purchase the plan. Next to each such plan, we clearly write 'Direct Billing: Depends upon provider. No PPO. No contracted rates' with the links to articles to explain further details. Plan details are also sent to you after you purchase the plan. Unfortunately, too many people simply look only at the price and knowingly ignore everything else and buy fixed coverage plans.
Unreasonable Expectations
Many of them unreasonably expect that it will work the same way a comprehensive coverage plan would, which typically costs 2 to 3 times more. If you are looking to purchase an insurance and two products are around $300 and while other three products are around $800, as an educated consumer, you should really look into why there is such a huge price difference between them. If you bought a fixed coverage plan, it will work the way it was designed. Under no circumstances, will it provide the benefits of a comprehensive coverage plan, irrespective of how much pressure you try to put on us or on the insurance company. No matter how many false reviews you write or how many unjustified complaints you make, insurance company is not under any obligation to provide you any more benefits than what you purchased. Insurance companies also will not give you any refund or make other unreasonable accommodations simply because you claim that you didn't know.
Conclusion
We always recommend everyone to buy comprehensive coverage plans that provide better coverage, most of them participate in PPO networks and provide network negotiated fees. We would be very happy if every single one of our customers bought only the comprehensive coverage plans.
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