Health Insurance 101

What is a Third Party Administrator?

A Third Party Administrator (TPA) is an organization that processes insurance claims or manages certain aspects of employee benefit plans for an employer. Often, in the case of insurance claims, a TPA handles the claims processing for an employer that self-insures its employees. An insurance company may also use a TPA to manage its claims processing, provider networks, utilization review, or membership functions.

PPO vs. HDHP

Preferred Provider Organizations (PPOs) feature a network of doctors, specialists and hospitals. 

Normally with a PPO you are not required to choose a Primary Care Physician and you have the option of receiving care from doctors, specialists and hospitals inside or outside of the provider network.  You also do not normally need a referral to see a specialist. 

Key features of a PPO are:

  • PPO plan premiums are generally higher than HDHP plans, which means you'll have to pay more out of your paycheck for the coverage, but less out of your pocket in deductible and coinsurance costs.
  • When you receive care from a doctor or hospital that is in the network, your costs tend to be lower.
  • When you receive care from a doctor or hospital outside the network your costs are likely to be higher and, in some cases, your care may not be covered at all.
  • PPO plans usually have a deductible. So, for example, if your PPO plan has a $500 deductible, your coverage doesn't begin until you've paid out-of-pocket for the first $500 of your own medical expenses. Preventive care services are not subject to the deductible.

High Deductible Health Plans:

High Deductible Health Plans (HDHPs) often involve pairing a high deductible PPO plan with a tax-advantaged account, such as a Health Savings Account (HSA).  For an individual to establish a Health Savings Account and contribute money to the account each year, he or she must be considered a Health Savings Account-eligible individual.  Eligibility includes enrollment in a Health Savings Account –qualified high deductible health plan.

Key features of an HDHP are:

  • An HSA is a savings account that you can use to cover a wide range of qualified medical expenses. HSAs have special tax advantages and are regulated by the Treasury Department.
  • If the plan uses a PPO network, you don't have to choose a primary care physician.
  • You have the option of receiving care from doctors, hospitals and specialists in the network or outside the network, and you don't always need a referral to see a specialist.
    • When you receive care from a doctor or hospital that is in the network, your costs tend to be lower.
    • When you receive care from a doctor or hospital outside the network your costs are likely to be higher and, in some cases, your care may not be covered at all.
    • When an HDHP includes a high deductible health plan, premiums are often lower than other types of health plans because you are responsible for a greater share of your health care costs.
    • If the health plan is an HSA-qualified high deductible health plan, and you are an HSA-eligible individual, you may establish an HSA and make contributions to the account each year.

Make the Most of Your HDHP

Health Savings Accounts (HSAs) work hand in hand with High Deductible Health Plans (HDHPs).  An HSA is a tax free account that allows you to deposit money into a savings account before it’s taxed and can be withdrawn tax free to pay un-reimbursed medical expenses, such as services that were applied to your deductible or coinsurance.

To take advantage of a health savings account, a member must be enrolled in a high deductible plan.  The IRS currently defines this as a plan with at least a $1250 single deductible or a $2500 family deductible.   Members under the age of 55 can deposit up to $3300.00 annually for single plans and up to $6550.00 annually for family plans.   People over age 55 can add an additional $1000 to the account. 

HSA funds can be used to pay qualified medical, dental or vision expenses.  See the IRS document to see if your expenses qualify. 

Unlike a Flexible Spending Account (FSA), the money that is deposited in a Health Savings Account can be carried over from year to year, so you do not need to worry about losing the money if you do not spend it all during the year.   This money also remains yours if you change jobs.

Which Plan is Best for Me?

When making a decision about which plan to select, helpful things to consider are:

  • How do you and your family normally use the benefits?
  • How do you prefer to pay for medical expenses?
    • Do you prefer to pay a set amount every month and have a low deductible?
    • Do you prefer to save your healthcare dollars until you have a medical need?
    • What is your pattern of saving and spending money?
      • Do you have an effective savings plan and are you able to contribute money to the Health Savings Account?

Ultimately, the only person who can determine which plan is the best fit for your needs is you, the member. If you need help comparing the plans, your employer’s human resource department and Adena Care are available to assist you with any questions you have while trying to determine which plan is best for your unique situation.