HCRA Health Insurance –More Flexibility, More Control

Sometimes call an indemnity plan, Health Care Reimbursement Accounts (HCRA) my bear looking into. At first, an HCRA insurance plan may seem to be a far inferior policy compared to many Preferred Provider Organization (PPO) plans that many companies offer. Not only do they tend to pay less toward health care claims than most company supported managed-care plans, they generally make the policy holder pay more out-of-pocket and deal with more paperwork when it comes time to file a claim.

More and more because of the changing lifestyle we lead, HCRA policies are becoming the favored type of policy for a greater number of people. People who choose HCRA plans may do so because they favor health care providers who are not part of a managed-care network, or because they do a great deal of traveling and need the flexibility to seek care away from home, PPO’s or Managed Health Care plans tend to be localized, crafted around the services and providers in a particular area.

One of the things that separate an HCRA plan from a PPO plan is a provider network. Managed-care plans usually require the insured to use providers and facilities within a network of health care providers who have arranged with the insurance company to provide services at a pre-established rate or fee. This allows the insurance company to know how much to expect to pay for covered service within the guidelines of the plan. It also allows the provider to know to in advance, which services will be covered and which will not. Usually within a PPO network, the insurance company has made arrangements with the network providers so paperwork can be filed directly from the provider to the insurance company.

The insurance company pays the PPO providers directly for the services they provide to patients who are covered, requiring the policy holder to pay only the preset co-payments at the time of services. What has spawned so many programs like these usually has little to do with the quality of care that is received, rather faster and more reliable billing and payments to physicians. Physicians or collective groups of physicians and medical facilities have opted to take less for their services in exchange for assuming less risk of loss due to non payment from patients.

With Health Care Reimbursement Accounts or with an indemnity plan, there is usually no network of pre-approved providers. This changes several of the risk factors for the insurance company, and creates more man hours in claim processing. The policy holder may choose a provider that charges more than the insurance company expected to pay for a particular service. For this and other reasons, insurance companies offering Health Care Reimbursement Accounts or indemnity plans can to some extent protect themselves from the choices their policy holders may make.

They usually will require a higher annual deductible that must be met before coverage begins. Also they often require policy holders to pay the full cost for the service out-of-pocket and then to file the paperwork of the claim themselves to seek reimbursement for the care. Or they may require policy holders to pre-qualify or submit for approval procedures and services that will exceed a preset dollar amount. They may set a penalty pay out percentage for claims that are filed with out the pre-approval, even in emergency situations. This protects the insurance company from paying for services that are not covered under normal circumstances by their plans and also from paying more than what is reasonable for services provided to their policy holders.

Insurance companies will usually base their payout for services by a local UCR table, which stands for Usual, Customary and Reasonable. UCR tables use an average of cost of services billed by providers in a particular area to determine usual, customary and reasonable costs.

An HCRA plan on the surface may seem like it would be a poor choice for a insurance seekers to make, but given the reasons already mentioned and others, HCRA plans can make more sense, money and care wise for many customers. HCRA plans normally do not require that customers a primary care physician (PCP) or obtain a referral to receive care. They are free to pick and choose what they feel best fits their health care needs, within the provisions of the plan of course. In this way, it’s one of the easiest plans to use. Policy holders seek their health care whenever and from whomever they choose.

One occasion where Health Care Reimbursement Accounts may be particularly beneficial has shown up many times in recent history. Large companies make PPO agreements with providers usually in a local or nation wide network. These networks have good to excellent coverage’s in the areas for which they were designated for. But many times these large companies have subdivisions or branch locations that are in areas not covered by the PPO. Yet the subdivisions only have PPO coverage through the predetermined PPO network. Some times it can mean that employees in smaller branch or subdivisions must either pay higher prices, sometimes significantly higher prices, for using out of network providers, or travel sometimes up to 300 miles or more to find PPO providers. In instances like this the HCRA plans make much more sense, and in the long term will ultimately save the policy holder money.

How you determine which plan (HCRA or PPO) is best for you, may rely on your personal situation, or it may come down to personal preference. Regardless of your reason for choosing a particular type of plan over another, it is wise to be well informed of how the different plans will work for you or your family. The decision should be considered carefully. Both plans have their strengths and weaknesses. Using the knowledge of what they are, and how each works will help you to most accurately determine which plan will best fit your needs.