Health Insurance Discussion

Hi everyone. This thread is kind of a response to:

General Discussion & Chat: Need affordable health insurance plan

I’ve been trying to put together some unofficial insurance advice that might be useful. I work as a reinsurance analyst and do some volunteer work with Medicare recipients, so I've become the unofficial insurance guide for friends and family. I’ve seen how disheartening and surprising it is when people realize how expensive health coverage is when purchasing an individual policy. I’m hoping that some of the information I’ve picked up can be at least a little bit helpful to the DG community. Hopefully it will at least provoke some discussion which might be helpful. I’m not an agent or a broker, so I’m not as knowledgeable about individual plans as I am about group health plans and I can’t recommend specific carriers or policies. The following is basically just a general list of things that have been helpful to other people I've known who have had to navigate the insurance policy market. I'm also trying to put together a list of tips for understanding the policy you have. If anyone has any questions, or suggestions for the next list, please feel free to post them here, or to d-mail me. I’ll try my best to answer as quickly as possible. If I don’t know the answer, I’ll be happy to try to help you find it. So, please read below for some tips that have been helpful to my friends. Also, please let me apologize in advance for the length of this post. ;) Thanks. Melissa

I thought I should start with some basic insurance terms. This doesn't cover everything, but your should definitely understand these terms when shopping for insurance.

Individual Plan: “Individual” means that the insurance coverage is not connected to a company or group. You can buy an individual policy that covers your whole family.
Group Plan: The insurance coverage is written for a group. This is usually a company, but can also be a union, association or employer group.
Policy: A written contract for insurance.
Premium: Payment for the policy.
Deductible: The amount of money the policy holder must pay before benefits are paid by the insurer.
Coinsurance: A percentage of each claim paid by the policy holder after the deductible has been satisfied. Most plans will have an individual out-of-pocket maximum. The is the maximum amount of coinsurance which must be paid by the policy holder during a policy year.
Copay: The amount the policy holder is expected to pay at the time of a medical visit. Copays are a separate expense from the deductible and the coinsurance.

On to the tips:

1. Please shop carefully before you buy. Different policies can have huge benefit differences. Similar policies offered by different carriers can also have wildly different premium costs. It sometimes helps to find an agent licensed in your state to help you comparison shop. Usually agents receive their commissions from the insurer, so you won’t incur additional costs by using their services. It’s not unreasonable to get quotes from every carrier who offers an individual policy in your area.

2. If you are just leaving your group health plan, you may want to consider COBRA. Under federal law, many employers are required to offer most employees the option to continue their coverage for at least 18 months. You have 60 days in which to decide whether or not to elect continuation coverage under COBRA. If you do choose to elect COBRA, coverage will be enacted retroactively. As soon as you learn that you’ll be losing coverage under your group health plan, begin shopping for individual plans. 60 days is usually enough time to find out whether there is an individual policy that will work for you. If you find an individual policy, you can choose not to elect COBRA continuation coverage. However, if your medical history is proving a hindrance, or you are unable to find an individual policy for another reason, you can elect to continue coverage under COBRA. Also, COBRA covers all members of your family who were eligible dependents under your group health plan. So, if you find an individual policy for yourself, but it won’t cover your spouse’s pre-existing condition, you can keep your spouse covered under COBRA and elect the individual policy for yourself only. The main issue people have with COBRA is that you will be responsible for paying the full premium (your previous payments plus your employer’s previous payments) plus an additional administrative fee, which is usually 2%. Therefore, with COBRA, you usually end up paying 102% of the premium, which is often very expensive. Many people like to consider COBRA as a safety net. It’s not always the least expensive option, but it’s something to consider.

3. If you’re leaving your job and are still covered under your group health policy, contact your current insurer and ask if they have a conversion policy. These aren’t offered in all states and different states have different laws governing these policies, but it’s a good idea to check with your insurer. Conversion policies will not usually have the same benefits as the group policy and they are often more expensive than the group policy. However, they usually will not impose any additional pre-existing condition limitations.

4. If you’re self-employed and own a business, most states will allow you to purchase a business health plan if you have at least one partner or employee. Some states will even allow a sole proprietor to buy insurance as a business. A plan purchased as a business plan would be a group health plan, which offers guaranteed coverage for pre-existing conditions if there has not been a break in coverage of more than 63 days. There can also be a significant premium difference between a group health plan and an individual health plan.

5. Check to see if you are eligible for any health plans offered through an association group. There are associations groups that negotiate health insurance plans for their members. Examples of trade association groups are the NASE (National Association of Self-Employed) and the NAHB (National Association of Home Builders). You may also have access to an association plan through a fraternal organization or local chamber of commerce. Check to see if an association group that you can join will offer a health plan. One word of warning regarding individual health plans offered through association groups. Sometimes, the premiums for individual plans offered through association groups will rise at rates significantly higher than trend. All individual plans will have rate increases, but these are sometimes higher. One reason for this is that the insurer sometimes find the risk unevenly distributed through the group and raises rates accordingly.

6. If you are age 50 or older, AARP offers comprehensive and catastrophic individual plans to its members in many states. A fully insured company underwrites these plans. Please keep in mind that these are individual health care policies negotiated by a group. However, it’s an option you may want to consider. Also, if you are eligible for an AARP membership, but your spouse is under the age of 50, you can cover your spouse as a dependent on these policies. Children are not eligible as dependents under the AARP policies.

7. Check to see whether you are eligible for any income-based state or federal healthcare programs, like Medicaid. Some states offer additional state-sponsored income-based healthcare programs. You can call your state department of insurance to see whether any additional programs are offered in your area.

8. As far as I know, every state has a program to help insure children. Even if you are employed and have coverage for yourself under a group health plan, your children might be eligible for state-sponsored coverage. The programs vary from state to state. If you’re interested in finding out more about your state’s program, you can begin at the following site.

http://www.insurekidsnow.gov/


9. Most colleges will offer a school-sponsored healthcare program. These will vary from state to state and college to college, but is something you may want to consider.

10. Know what type of policy you’re looking at. The individual marketplace offers many types of plans. Some of the most common are managed care (HMO’s, PPO’s, POS’s) plans, traditional fee-for-service, or indemnity, plans and high deductible plans.

An HMO, or Health Maintenance Organization, consists of a network of physicians, who usually work directly for the plan. Members of an HMO are usually responsible for paying a monthly premium and co-pays for services received from HMO providers. HMO's will sometimes have copays and deductibles. Special emphasis is placed on preventive care within an HMO network. With an HMO you will typically choose a primary care physician, or PCP. This physician is responsible for your health care. If you need to see a specialist, or must seek further medical care, you will usually need to obtain a referral from this physician. Your choice of doctors and hospitals is usually limited to those on the list provided by the HMO. If you don’t get a referral from your PCP, or if someone not on the list provides your medical care, you will usually not be covered. Unless the situation is an emergency, with the definition of emergency being very strictly defined, health care costs from non-HMO providers are not typically covered. Be sure to look into the policies carefully. Benefits and cost to the insured can differ between various HMO policies. Here are some general questions you might want to ask when looking at an HMO. Who are the health care providers in the network? Which doctors are accepting new patients? Is it difficult to change your PCP? What is needed to get a referral? What is covered? What is excluded? What are the benefit maximums? What services are covered when provided by a non-HMO provider? What costs is the insured responsible for?

A PPO, or Preferred Provider Organization, is a system of health care wherein providers contract with the PPO network to provide care to the members accessing the network. As a member, you will usually be responsible for paying premiums and deductibles, co-pays and coinsurance. Unlike an HMO, when enrolled in a PPO plan, you can usually see providers outside of the PPO network. However, benefits will be greatly reduced when you go outside of the network. Benefits and cost to the insured can differ between various PPO policies. Here are some questions you might want to ask when looking at a PPO plan. Who are the health care providers in the network? Is emergency care covered at the in-network level of benefits when provided by a non-network provider? What is covered? What is excluded? What are the benefit maximums? What costs is the insured responsible for?

A POS, or Point of Service, has characteristics of both the HMO and PPO plans. With the POS plan, to receive the highest level of benefits, you will need to utilize the contracted network of providers, like in a PPO plan. You will also usually be required to select a Primary Care Physician who is responsible for your health care, like in an HMO. If you need services from a specialist, your PCP will refer you to other providers within the contracted network. Unlike an HMO, in a POS plan you are usually able to see providers who are not within the contracted network. However, if you choose a provider who is not within the network, your benefits will be greatly reduced. You will also often be required to file your own claims with the insurer if you see a non-network provider. Benefits and cost to the insured can differ between various POS policies. Here are some general questions you might want to ask when looking at a POS plan. Who are the health care providers in the network? Is it difficult to change your PCP? What is needed to get a referral? Is emergency care covered at the in-network level of benefits when provided by a non-network provider? Will benefits be reduced even further if you don’t have a referral from your PCP to a non-network provider? What is covered? What is excluded? What are the benefit maximums? What costs is the insured responsible for?

The traditional fee-for-service, or indemnity plan, will reimburse you for medical expenses regardless of which health care provider you use. There are many different types of indemnity plans. Some plans will reimburse you for whatever the actual charges of the medical services were. Some plans will reimburse you for a percentage of the cost of the actual charges of the medical services. This is commonly 60%-80% of the actual charges. Some plans will pay a specific amount per day for specific procedures or services for a specific maximum number of days. Indemnity plans give you more freedom of choice in providers than HMO’s, PPO’s, or POS plans, but your out-of-pocket cost will often be much higher with an indemnity plan. Benefits and cost to the insured can differ between various indemnity policies. Here are some questions you might want to ask when looking at an indemnity plan. What is covered? What is excluded? How many days will the policy pay for specific health care benefits? What costs is the insured responsible for? What amount is reimbursed to the insured?

HDHP’s, or High Deductible Health Plans, were introduced in 2003. HDHP’s will typically have deductibles between $1,100 and $5,500 for single coverage and $2,200 and $11,000 for family coverage. Many people who choose to enroll in an HDHP do so for the opportunity to enroll in a supplementary HSA, or Health Savings Account. If you meet certain eligibility requirements, enrollment in an HDHP will enable you to become eligible for enrollment in an HSA. People who have prior Medicare coverage are not eligible for enrollment in an HSA. If you were enrolled in an HSA prior to becoming eligible for Medicare coverage, you are allowed to keep your HSA. The HSA account is a savings account in which the money you deposit is tax exempt, or can be claimed as a deduction, if used for medical expenses. I believe that the maximum amount that can be deposited yearly into this account is $2,850 for single coverage or $5,650 for family coverage. Before the age of 65, withdrawals from the account are not tax exempt if used for anything other than medical expenses. After the age of 65 withdrawals for any reason are tax exempt. Most HSA accounts are portable. Most HSA accounts do not have a minimum contribution requirement. Federal law permits a one-time rollover from an IRA, FSA or HRA account into an HSA account. Anyone can enroll in an HDHP plan, but there are eligibility requirements that must be met to enroll in a supplemental HSA account. Benefits and cost to the insured can differ between various HDHP policies. If you are interested in enrolling in an HDHP with supplemental HSA account, I would recommend contacting a licensed agent who is familiar with these policies and how they are administered in your state. Some states will allow state tax exemption with an HSA. The following website has a top 10 frequently asked HSA questions article which I thought was pretty helpful.

http://personalinsure.about.com/od/health/a/aa042206a.htm

11. Every state has different laws mandating what benefits must be offer in an individual policy. Call your state department of insurance and ask what the mandated benefits are. State laws will apply to all individual health plans and to many group health plans. One exception to this is a self-funded employer-sponsored group plan. These plans are not subject to most state laws.

12. Check for pre-existing condition exclusions. Ask whether your health conditions will be covered under the policies you are evaluating. Also, ask whether riders or waivers will be attached. For example, some companies will insure a person with a history of high blood pressure, but attach a rider excluding any circulatory system conditions from coverage. This means that not only would anything related to high blood pressure not be covered, but if the person had a heart attack that wouldn’t be covered either. Some states require that insurers selling individual health plans must offer policies without pre-existing condition exclusions or limitations, but this often results in higher premiums.

For group health plans, pre-existing conditions are typically defined as any condition for which you have received treatment, or for which a reasonable person would have sought treatment, within the 6 month period prior to being covered under the new policy. Under a group health plan, if you have not had a break in coverage of more than 63 days, prior creditable coverage will mitigate the effects of any pre-existing condition exclusions. Individual health plans will often request medical history as far back as 5 or 6 years. Even with creditable coverage, many individual health plans will deny coverage, raise premiums or attach riders when a pre-existing condition is encountered.

13. If you are denied coverage due to your medical history, many states (I think it’s 32 now) have a health insurance risk pool. You can call your state department of insurance to find out whether this is something offered in your area. Benefits, eligibility requirements and premiums will vary from state to state. Most pools will not offer coverage if you are eligible for Medicare or Medicaid. If you are eligible for COBRA continuation coverage, many risk pools require that you exhaust that coverage before applying to the risk pool. This means that if you decline COBRA coverage you may not be eligible for enrollment in the state risk pool. Some states have placed an enrollment cap on the number of participants allowed coverage under the plan, meaning that those states have extensive waiting lists. Also, premiums can be very high, due to the fact that all members are high-risk. Here in Texas premiums for the risk pool are at about 200% of statewide average premiums. However, if you have an illness and are being denied coverage, this is something you may want to consider.

14. Please ask about and be aware of benefit maximums. Most policies will have limits on benefits. These limits can apply to any type of benefit, from office visits to home health to outpatient mental health. Sometimes this will take the form of a maximum dollar amount that will be paid. Sometimes the policy will restrict the number of days of care allowed. Individual policies tend to have more restrictive benefit maximums than group policies. Please check all benefit maximums under the policy you’re looking at.

15. Please request and read an outline of coverage. This is one of the most important things you can do, even if you already have insurance coverage. This also sometimes called an SPD, or summary plan description. Don’t buy a policy without thoroughly reviewing the SPD first. Please read this carefully, in order to be aware of both covered and excluded benefits. If you have a hard time understanding what something means, speak with an agent or with the company. They should be able to provide a clearly worded description of benefits to you. Also, if you’re having trouble understanding the insurance terms, there are some helpful websites if you Google the term you’ve come across. You’re also welcome to d-mail me and I’ll be happy to help you figure it out.

16. Please investigate and know the company you’re dealing with. Check with your state insurance department to verify that the company is licensed. Any agent you deal with must also be licensed by the state. All agents should be able to verify to you that they are licensed by the state. Also, most state insurance departments will maintain a company complaint index. When you are trying to decide on policies, you can check the state complaint index to see which carrier has received the least consumer complaints. This can sometimes be helpful in making a final decision. You can also check the company’s status with the Better Business Bureau at www.bbb.org.

17. If you decide to purchase a policy, please read and complete the application carefully. If you leave something out, especially something pertaining your medical history, the company could later use that as a reason to cancel your policy or deny you benefits.

18. It’s usually not a good idea to pay with cash. You might want to pay instead by check, money order or bank draft. If you’re working with an agent, please keep in mind that the payment should be made to the insurance company and not to the agent. I’d also recommend requesting a receipt with the insurer’s name, address and telephone number for your records. Your policy should be delivered promptly, usually within 30 days. If the insurer doesn’t deliver it within 60 days, you should probably contact your state health insurance department.

19. Finally, the Agency for Healthcare Policy and Research has 3 guidelines that I think are very helpful for estimating costs and comparing policies. The link is:

http://www.ahrq.gov/consumer/


I hope that helps a little. Remember, if you have any questions regarding specific terms or concepts, I'll be happy to answer them. Thanks again. Melissa

Thanks AGAIN, Melissa!

Kay and Melissa, I'm going to cross-post this thread and its predecessor in the Healthy Living Forum - wish this could be a sticky there.

Can't thank you enuf

I'm happy to help. Wasn't sure how to cross post threads, or I would have tried to make it easier by doing so with the first forum. :) As soon as I've completed the other guide, I'll let everyone know. Please let me know if there are specific issues you'd like me to address in that one. Thanks. Melissa