HEALTH INSURANCE BASICS
WHAT ARE MY HEALTH INSURANCE CHOICES?
There are essentially two types of health insurance plans: indemnity plans (fee-for services) or managed care plans. The differences include the choice of providers, out-of-pocket costs for covered services and how bills are paid. There is no one “best” plan for everyone. Some plans are better than others for you or your family’s health care needs, but no one plan will pay for all the costs associated with your medical care.
Here is a brief description of the types of available health insurance plans: Indemnity Plans; Managed Care Options; and Government-sponsored Health Insurance
A. INDEMNITY PLANS
Cafeteria/Flexible Spending Plans are employer-sponsored plans that allow the employee to design his or her own employee benefit package, choosing between one or more employee benefits and cash. Several types of Flexible Benefits or Cafeteria Plans are used by employers, including a pre-tax conversion plan, multiple option pre-tax conversion plan, medical plans plus flexible spending accounts, and employer credit cafeteria plans. For more information about these choices, contact your employee benefits department.
Indemnity Health Plans allow you to choose your health care providers. You can go to any doctor, hospital or other provider for a set monthly premium. The plan reimburses you or your health care provider on the basis of services rendered. You may be required to meet a deductible and pay a percentage of each bill. However, there is also often an annual limit on out-of-pocket expenses, so that once an individual or family reaches the limit, the insurance covers the remaining eligible medical expenses in full. Indemnity plans sometimes impose restrictions on covered services and may require prior authorization for hospital care or other expensive services.
“Basic and Essential” Health Plans provide limited health insurance benefits at a considerably lower cost. When buying such a plan, it is extremely important to read the policy description carefully because these plans don’t cover some basic treatments, such as chemotherapy, certain prescriptions and maternity care. Furthermore, rates vary considerably because, unlike indemnity plans or a managed care option, premiums are community rated and are based on age, gender, health status, occupation or geographic location.
Health Savings Accounts (HSA) are a recent alternative to traditional health insurance plans. HSAs are basically a savings product designed to offer individuals a different way to pay for their health care. HSAs enable you to pay for current health expenses and save for future qualified medical and retiree health expenses on a tax-free basis. Instead of paying a premium, you establish a tax-free savings account that covers your out-of-pocket medical expenses. This means that you own and control the money in your HSA. You make all decisions about how to spend the money without relying on a third party or a health insurer. You also decide what types of investments to make with the money in the account in order to make it grow. However, if you sign up for an HSA, you are generally required to buy a High Deductible Health Plan as well.
High-Deductible Health Plans (HDHP) are sometimes referred to as catastrophic health insurance coverage. An HDHP is an inexpensive health insurance plan that kicks in only after a high deductible is met of at least $1,000 for an individual or $2,000 for a family.
B. MANAGED CARE OPTIONS
Health Maintenance Organizations (HMOs) offer access to an extensive network of participating physicians, hospitals and other health care professionals and facilities. You choose a primary care doctor from a list provided by the HMO and this doctor coordinates your health care. You must contact your primary care doctor to be referred to a specialist. Generally, you pay fewer out-of-pocket expenses with an HMO, but you are often charged a fee or co-payment for services such as doctor visits or prescriptions.
Point-of-Service (POS) plans are an indemnity-type option in which the primary care doctors in the POS plan usually make referrals to other providers within the plan. If a doctor makes a referral out of the plan, the plan pays all or most of the bill. However, if you refer yourself to an outside provider, the service is covered by the plan, but you will be required to pay co-insurance.
Preferred Provider Organizations (PPO) charge on a fee-for-service basis. The participating doctors, hospitals and health care providers are paid by the insurer on a negotiated, discounted fee schedule. Costs are lower if you use in-network healthcare services, but you have the option of going out-of-network. If you choose an out-of-network provider, you are generally required to pay the difference between what the provider charges and what the plan pays.
C. GOVERNMENT-SPONSORED HEALTH INSURANCE
Medicaid is a federal/state public assistance program created in 1965. It is administered by the states for people whose income and resources are insufficient to pay for health care or private insurance. All states have Medicaid programs, though eligibility levels and coverage benefits vary.
Medicare is a federal government program for people 65 and older, or those with certain disabilities, that pays part of the costs associated with hospitalization, surgery, doctors’ bills, home health care and skilled-nursing care.
State Children’s Health Insurance Program (SCHIP) is administered at the state level and provides health care to low-income children whose parents do not qualify for Medicaid. SCHIP may be known by different names in different states.
Military Health Care includes TRICARE/CHAMPUS (Civilian Health and Medical Program of the Uniformed Services) and CHAMPVA (Civilian Health and Medical Program of the Department of Veterans Affairs) as well as care provided by the Department of Veterans Affairs (VA).
State-specific Plans are available for low-income uninsured individuals. These plans are known by different names in different states.
Indian Health Service (IHS) is a Department of Health and Human Services program offering medical assistance to eligible American Indians at HIS facilities. In addition, the HIS helps pay the cost of selected health care services provided at non-HIS facilities.
ARE THERE ANY OTHER SOURCES FOR COVERING MEDICAL EXPENSES?
Yes. Here are a few:
- Auto Insurance
- Disability Income Insurance
- Homeowners Insurance
- Long-Term Care Insurance
- Workers’ Compensation Insurance pays for medical care and physical rehabilitation following an injury on the job, and helps to replace lost wages while you are unable to work. State laws, which vary significantly, govern the amount of benefits paid and other compensation provisions.
ARE THERE ANY SPECIALTY HEALTH INSURANCE POLICIES?
Yes, there are certain types of policies that can be issued to meet very specific or unique situations. Talk to your agent or insurance company representative before purchasing any of these policies to ensure that they meet your specific needs and to determine the cost implications as these policies can be expensive. Here are a few.
- COBRA (Consolidated Omnibus Budget Reconciliation Act) allows you and your dependents to continue in your employer’s group health plan after you retire, quit, are fired or laid off, or if you are working reduced hours. You may choose to continue in the group health plan for a limited time and pay the full premium, which includes the share your employer paid on your behalf. Coverage is available for up to 18 months, or 36 months for dependents in certain circumstances. If you opt for COBRA benefits, you must also fill out the appropriate forms, provided by the employer’s benefits department, within 60 days of leaving your job or you may be denied coverage. As you must pay the full premium, COBRA coverage can be expensive, but may be worth considering if you have a pre-existing condition that would make it hard to get health coverage elsewhere.
- Critical Illness Policies either pay out a lump sum or provide income in the event you are diagnosed with certain specified conditions such as cancer, a heart attack, renal failure or Alzheimer’s disease. Once known as “cancer insurance”, t is an indemnity type policy that pays out a predetermined sum even if you subsequently make a full recovery. This type of policy often comes with significant restrictions, such as: -a waiting period after diagnosis to receive payment -specific criteria to meet to receive payment -riders that must be purchased -limitations on pre-existing conditions.
- Life Insurance Riders are separate plans purchased with a set premium and are attached to your primary life insurance coverage to provide additional benefits. These riders provide various forms of additional protection tailored to your needs. Riders are available for waiver of premium, disability, guaranteed insurability, cost of living, long term care and accelerated death benefits. The qualifying conditions are explained in the rider explanation form that you receive at the time of application.
- Medical Expense Policies for College Students are available through colleges or universities. If the college-sponsored plan is inadequate for your needs, if you are no longer eligible for coverage under your parents’ plan or if you attend a school outside the HMO or PPO region of your parents’ plan, some companies offer special health insurance policies designed only for students. These plans vary according to the state in which you live, but they generally cover college students of all ages, offer a choice of deductibles, doctors and hospitals, and provide year-round coverage that stays with the college student even if she/he changes or leaves school.
- Medigap is health insurance sold by private insurance companies to fill the gaps in the original Medicare plan coverage. In order to qualify for Medigap, you must already be eligible for Medicare. Medigap policies help pay some of the health care costs that the original Medicare Plan doesn’t cover. If you are in the original Medicare Plan and have a Medigap policy, then Medicare and your Medigap policy will pay both their shares of covered health care costs. There is a choice of up to 12 different standardized Medigap policies (Medigap Plans A through L). Participants pay the monthly Medicare Part B premium as well as a premium to the Medigap insurance company. If you are married, you and your spouse must each buy separate Medigap policies. It is important to compare Medigap policies because costs can vary significantly from one company to another.
WHAT CAN I DO IF I AM HAVING TROUBLE SETTLING MY CLAIM?
If you are unsatisfied with how your insurance company is handling your claim, you have several options:
- Talk to the agent or company representative who sold you the policy. Let the agent know that you are dissatisfied and explain the specifics of your problem.
- Contact the claims manager of the company. Provide a written explanation of your problem with copies of supporting documentation. Remember to send only a copy and not any original documentation. If you are insured with a smaller company, consider writing directly to the president. Going to the top can sometimes speed the process.
- Contact your state insurance department. Insurance is a regulated industry and your state department of insurance should be able to help you resolve your problem.
- Consult an attorney. If you have tried all four of the above tips and still cannot resolve the claim, you have the option of talking to an attorney. You may have to pay a consultation fee for your initial visit, so make sure you know how much this will cost. Meet with an attorney who has solid references or get the name of someone from your local bar association. Prepare for the visit by bringing a copy of your insurance policy and other relevant documents. Get the fee structure in writing before you decide to pursue the case.
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