Health Insurance

Determining your specific health insurance needs and choosing a plan that is best for you and your family--and your pocketbook--can be a daunting task but it's a necessary one. Without insurance, one serious illness or accident could wipe you out financially. Married or single, children or no children, health insurance is simply one of those necessities of modern life that you must have in order to protect yourself.
Most people get health insurance through their employer or their spouse's employer. This is called group insurance because a group of individuals--the employees--are insured. If you are self-employed or don't work for a company that offers insurance, you might be able to obtain health insurance through membership in a labor union, professional association, club or other organization. Going through a group will probably be less expensive than getting an individual policy; it may also provide broader coverage.
But it is very important that people investigate whichever club, association or organization is offering the insurance plan to insure that it is solvent and reliable. A Commonwealth Fund study notes that such plans have a long history marred by financial instability and even fraud, and that licensing requirements that are often less stringent than those imposed on traditional insurers mean the plans have a greater risk of becoming insolvent when claims suddenly or unexpectedly exceed their ability to pay them.
You can contact an insurance agent-perhaps the agent who provides your car or home insurance-or research various companies by contacting their sales departments or reading about them on the Internet. Your state probably has an insurance commission or department that can provide a list of insurers (look the government listings section of your phone book); some agencies even provide information on the number of complaints filed against specific companies. Health insurance is so important that the Federal government passed a law called COBRA (Consolidated Omnibus Budget Reconciliation Act) that allows for coverage through an employer (with at least 20 employees) to be continued for at least 18 months under a variety of conditions. Additionally, many states have passed so-called mini-COBRA laws that apply similar requirements to employers with fewer employees. The conditions include:
you were covered through your employer or your spouse's employer, and you (or your spouse) left the job or were laid off
you were covered through your spouse's employer but are now widowed or divorced
you were covered under your parents' group plan while you were in school but are no longer a student.
In these cases, this law requires the health plan, including self-insured plans typically offered by most larger employers, to continue your coverage for up to 18 months (which varies depending on the reason you lost coverage). You should know, however, that the amount you pay for the insurance will be higher because the employer is not required to pay any part of the premium for you.
You should also know that, as part of the Health Insurance Portability and Accountability Act (HIPAA), insurance carriers cannot cancel coverage unless:
you don't pay your premiums, make late payments, commit fraud or lie to the insurer
your insurer is no longer offering your particular type of coverage
you have coverage with a managed care organization (such as a health maintenance organization) and move outside of the service area
you qualify for coverage as a member of an association and your membership to the association ends
The federal government also recently passed the first-ever federal privacy standards to protect patients' medical records and other health information provided to health plans, health care professionals, hospitals and other health care providers.
Developed as part of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and effective April 14, 2003, these new standards provide patients with access to their medical records and more control over how their personal health information is used and disclosed. Patients are now protected with the following key provisions:
Patients may access copies of their medical records within 30 days and request corrections if they identify errors and mistakes.
Covered health care providers must provide a notice to their patients how they may use personal medical information and their rights under the new privacy regulation.
Limits are set on how health care providers may use personal health information, but they are not restricted in sharing information needed to treat their patients. Personal health information generally may not be used for purposes not related to health care, and providers may use or share only the minimum amount of protected information needed for a particular purpose. Patients would have to sign a specific authorization before a provider could release their medical information to a life insurer, a bank, a marketing firm or another outside business for purposes not related to their health care.
Pharmacies and health care providers must first obtain an individual's specific authorization before disclosing their patient information for marketing purposes.
The new federal privacy standards do not affect state laws that provide additional privacy protections for patients.
Patients can request that their health care providers take reasonable steps to ensure that their communications with the patient are confidential.
Patients may file a formal complaint regarding the privacy practices of a covered health care provider by contacting the provider directly or by calling the U.S. Department of Health & Human Services at (866) 627-7748. Information about filing a complaint may also be accessed here.
Whether you are offered a choice of plans through an employer or are looking to purchase an individual policy, you need to compare options and costs because they vary from company to company. Even if your employer doesn't provide a choice, you need to understand what kind of protection your health plan provides and what you will need to do to get the health care services you need.
There are three main types of health insurance, and sometimes employers offer one plan of each type from which you can choose. Both your needs and your budget will help determine which type of plan is best for you.
Many Americans do not have health insurance either because they cannot afford it or because their employer doesn't provide it. If you find yourself in this position, there are services that can help you get the health care you may need for your family-from preventive care and paying for prescription medications to low-cost services to manage existing conditions. For more information about finding these services, log onto Covertheinsuredweek.org. A project sponsored by the Robert Wood Johnson Foundation, this Web site provides information on where to go in your state for low-cost services.
Fee-For-Service or Indemnity Insurance
Under a fee-for-service plan, the insurance company reimburses you for a portion of the fees you pay for the covered healthcare services you are provided. (Keep in mind not all healthcare services may be covered. Read the policy closely to determine what is covered and what isn't.) This type of insurance offers the widest choice of health care professionals and hospitals; usually you can go to any health care professional or hospital you want.
You pay a premium or monthly fee to the insurance company. You have a deductible, or an amount you must spend on covered healthcare services out of your own pocket each year before the insurance company starts paying. The deductible can range from relatively low sums such as $250 to more than $1,000 per individual or more per family, per calendar year. Women, particularly older women, are most likely to have higher deductibles. The higher the deductible, the lower your premium.
After you have paid out your deductible for the year, the insurance company begins paying for part-usually about 80 percent-of your covered healthcare services. You can assign the benefits to the health care professional, so the insurer pays him or her directly. You will pay the other portion, which is called coinsurance. Most plans offer a cap on the amount you will have to pay for medical bills in any one year. When you reach the cap-which can range from about $1,000 to about $5,000 in one year-through both your deductible and coinsurance, the insurance company begins paying 100 percent of covered services. (Your premium does not count toward the cap.)
As an example, let's say you had an enlarged gallbladder that needs to be removed. The illness required a doctor's visit and tests, an overnight hospital stay with related care, surgery and the services of a surgeon, and prescription medications. The grand total is $3,000. You have a $500 deductible, which you pay, leaving $2,500. The insurance company pays 80 percent of that, or $2,000, leaving you a balance of $500. Your total cost (over and above the insurance premium): $1,000. If you'd already met your deductible, your cost would be 20 percent of the $3000, or $600.
Be sure the policy covers the types of services you or your covered family members might need. Some policies don't cover, for example, psychological services, drug or alcohol treatment, preventive health care coverage, immunizations or well-child care, or even specific conditions or illnesses such a pregnancy and delivery. If a type of service is not covered, you will have to pay 100 percent of the bill, and the money you pay will not be counted toward your deductible or your cap.
One caveat: most insurance plans pay only the "usual (or reasonable) and customary fee" for services and have pre-determined what that amount is. If your health care professional charges more than that, you will be expected to pay 100 percent of the difference, regardless of deductible or cap. You can speak to your health care professional in advance to determine if he or she will charge the reasonable and customary fee or more.
Fee-for-service is usually the most expensive type of coverage, but it does have some benefits:
You can make your own health care choices, choosing for example, which health care professionals-including specialists-you see, which hospitals you go to, etc., even if they're out of your local area, an advantage for travelers or people with covered children that live in another town.
You don't have to see your primary care physician prior to seeing a specialist. You have a little more control over what type of care to seek than with some other types of plans. Sometimes though, even fee-for-service plans require pre-approval of some types of care, such as hospitalization.
Health Maintenance Organizations
Purchasing a health insurance policy under a health maintenance organization (HMO) is similar to joining a buying club. You pay a monthly premium and the HMO provides care for you (and your family members if they are covered)-including visits to health care professionals, hospital stays, emergency care, surgery, lab tests, x-rays, etc.-through a network of professionals and hospitals. If the HMO has contracted with individual physician offices to provide care to its insurees at a reduced rate and pays them a set fee per HMO member, regardless of how much that member uses health services, this is called an Independent Practice Association (IPA) network. When you purchase your policy, you will be given a list of participating IPAs from which you can choose to seek care. HMOs develop networks by contracting with IPAs. They also develop networks by contracting with medical group practices or even individual practices. These latter physicians are not part of an IPA. Under another scenario, the HMO hires health care professionals, paying their salaries directly.
In any case, you will choose or be assigned a primary health care professional who provides most of your medical care, referring you to specialists and other health care professionals as needed. As with fee-for-service plans, you need to read policies carefully to determine what services will be covered and what won't. Outpatient mental health care, for example, is usually only provided on a limited basis.
As part of an HMO, you present a card (instead of having to fill out forms) and pay a small fixed copayment-typically about $10 per doctor visit and $25 per hospital emergency room treatment, for example-and the HMO pays everything else (as long as it's covered under the policy). There are no deductibles to worry about.
Going back to our gallbladder illness example, your out-of-pocket expenses would consist only of the small copayments, say $10 for the doctor visit and tests; $25 for the hospital stay, surgery and related care and tests; and $5 for the generic prescription medications, for a grand total of $40.
While the costs are lower and more predictable than under a fee-for-service plan, there are some drawbacks:
Your choice of health care professionals and hospitals is limited to those who have contracted with the HMO. (Exceptions may be made in emergencies or when medically necessary depending on your policy.)
If you want to see a specialist, some HMOs require you to first ask your primary care physician for a referral, although this is becoming much less common. If you can't get a referral, you may have to pay extra (up to 100 percent of the fees) to see the specialist.
Because HMOs and/or the primary care physicians receive a fixed fee for your medical care, it's in their interest to make sure you get preventive and basic care before your problems become serious, an effort for which these plans are to be commended. On the other hand, HMOs have more of a reputation than fee-for-service plans for attempting to put limits on the care you may receive through various administrative processes and medical review.
Some HMOs offer an option called a point-of-service (POS) plan. Under a POS plan, if an HMO doctor refers you to a health care professional outside of the plan, the HMO still pays all or most of the bill. In addition, if you chose to go to an outside provider without a referral, there will usually be some insurance coverage. But in both instances, will pay a larger share of the bill than if you had remained within the network.
Preferred Provider Organizations
A preferred provider organization (PPO) is a combination of a traditional fee-for-service plan and an HMO. Like an HMO, for the fullest coverage, you are limited to health care professionals (sometimes called network or preferred providers) with which the plan has contracted. The PPO usually has a wider list of health care professionals from which to choose who have agreed to charge the PPO's usual and customary fees. Like an HMO, you have a co-payment for each doctor visit or hospital admittance. The co-payment is sometimes a little higher than that of an HMO-$15 per physician visit, for example. There may also be a deductible like in a fee-for-service plan.
Using the gallbladder illness example, your out-of-pocket expenses may consist of $15 for the first doctor visit, $35 for the hospital stay, and $10 for the prescription drugs, for a total of $60. If you decided to use a surgeon who was not in the PPO network, though, you would be expected to pay a percentage-say 50 percent-of his or her fee, which could add several hundred more dollars to your expenses.
If you choose a health care professional outside the plan, you will still receive some coverage but the amount will vary. You will have to pay the rest of the bill yourself.
A Word About Managed Care
Almost all plans-with the exception of some traditional indemnity plans-have some sort of managed care program to help control costs. Managed care is designed to provide high quality care at the lowest cost possible. This includes a detailed plan with a set of rules to be followed by the patient. In HMOs, for example, the role of the primary care physician as "gatekeeper" is designed as a care-management tool. Other managed care tools include hospital preadmission requirements and drug formularies. A formulary is a listing of drugs covered by the health plan, usually arrayed in tiers, with each tier having a different patient cost-sharing obligation. For some tiers, e.g., non-preferred brand name drugs, the patient coinsurance may be quite high, while the coinsurance for generic brands may be quite low.
While it's received a lot of "bad press" over the years, managed care can benefit the insured by helping you to receive both preventive care-for example, regular Pap smears-as well as helping you to effectively and regularly manage and monitor chronic illnesses such as diabetes so they don't lead to serious complications. Another purpose is to avoid unnecessary care. The key to making sure you are not denied the health services you need under the guise of "managed care" is to be a proactive consumer. Know in advance what health services you are entitled to, and understand and follow the process for filing complaints if you feel you are not getting those services.
A New Development: Consumer-Driven Healthcare
Health care insurers are currently developing new products aimed at shifting more cost risk to workers and their families. These are also known as high deductible plans with deductibles ranging from $1,000 and higher. This means that consumers are responsible for first dollar expenses. They work best for the healthy and wealthy.
Health Savings Accounts (HSAs) were passed as part of the Medicare prescription bill in 2003. They allow people who buy high-deductible plans to open a savings account to save pretax dollars to use for uncovered care. These accounts can be rolled over. Again these will work best for the healthy and wealthy.
While it is still too early to know if such plans will become widely available and what their impact will be on the ability of people to get the health care that they need, we can expect to hear more about them in the coming months. Employers are particularly interested in them as cost-containment strategies, but only a few have yet moved in this direction.
Other Types Of Insurance
There may be other types of health insurance available to you or your family, including:
Medicare: Americans age 65 and over and younger people with certain disabilities can be covered under the federal health insurance program called Medicare. If you are eligible for Social Security or Railroad Retirement benefits and are at least 65, you and your spouse automatically qualify for Medicare. Part A of Medicare covers hospital expenses and is free. Part B provides payments for healthcare professionals and services and supplies they order. You have to pay a premium for Part B. Medicare does not cover most nursing home care, long-term care services in the home, or prescription drugs. You can buy a private "Medigap" insurance policy to cover most medical bills-deductibles and/or coinsurance amounts and/or services-not covered by Medicare. There's also no limit on how much you may have to pay for health care in a year-unlike private plans. More information on Medicare is available from the Centers for Medicare and Medicaid Services (CMS) (see Resources section).
Medicare Prescription Drug Benefit: Starting in 2004, Medicare-approved drug discount cards became available for immediate savings on prescription drugs. Medicare will contract with private companies to offer new, voluntary drug discount cards. A Medicare-approved drug discount card offers a discount off the full retail price of prescriptions. Savings are estimated to be 10-25% on many drugs. These voluntary cards are being offered until December 31, 2005, when this program ends and the new comprehensive prescription drug benefit begins.
If your income is no more than $12,569 as a single person, or no more than $16,862 for a married couple, you might qualify for a $600 credit to help pay for your prescription drugs. If you qualify, Medicare will put a $600 credit on your Medicare-approved drug discount card that you can use when you get your prescriptions. You won't have to pay the annual enrollment fee for the discount card if you qualify for the $600. Card sponsors are allowed to start enrolling people with Medicare as early as May 2004. To see if you qualify for one of the new Medicare-approved drug discount cards and to learn more about Medicare health plans that offer prescription drug benefits,

Medicaid: A joint federal-state health insurance program run by the states, Medicaid covers some low-income people, especially children and pregnant women, and disabled people. Eligibility and scope of services is decided by each state. You can contact your State Medicaid Program Office for more information. State Children's Health Insurance Program (SCHIP): Created by Congress in 1997, SCHIP is designed as state/federal partnership, similar to Medicaid, with the goal of "expanding health insurance to children whose families earn too much money to be eligible for Medicaid, but not enough money to purchase private insurance." Some states have expanded SCHIP eligibility beyond the federal eligibility limits, and others are covering entire families and not just children.

Though not a health care insurance plan, The National Breast and Cervical Cancer Early Detection Program does ensure that underserved women have access to screening tests for breast and cervical cancer. Mammography screening and Pap tests can help identify these cancers at early stages, when treatment has a better chance of success. Services are provided either for free or on a sliding scale, based on your income.
Veterans benefits: The U.S. Department of Veterans Affairs administers many programs for veterans. See their Web site for information about benefits, facilities, programs for senior veterans, the facts about enrollment for VA health care and more.
Medical Savings Account: Medical Savings Accounts (MSAs) were established by the Health Insurance Portability and Accountability Act of 1996. A MSA is a personal savings account with pre-tax advantages to help pay for un-reimbursed medical expenses. It is used to pay for health care not covered by insurance, including deductibles, co-payments, or other out-of-pocket expenses not covered by a health insurance plan.
There are also types of insurance that cover long-term or nursing home care and other services that may not be covered by Medicare or most private health insurance policies.
How To Choose An Insurance Plan
Features of different plans-what is covered, what is excluded, costs, co-payments, hospitalizations, and prescription drugs-and the amount of paper work you have to complete each time you see a healthcare professional vary widely. How can you possibly know what's best? While there's no way to predict with certainty your healthcare needs and expenditures for the coming year, there is a way to get a feel for which type of plan might be most appropriate.
First, look at your medical and insurance records from last year as a guide to what services you might use this year. Second, consider special situations. Are you in your childbearing years? If so, you need (and in some cases may be required to get) maternity coverage. Are you at the age where you need an annual or biannual mammogram or other cancer screening tests? Do you have children who need well-child visits and immunizations? Do you or any family members have any medical histories that predispose you to certain conditions? Do you want to make sure you have mental health services available to you or your family? Do you feel strongly about using particular doctors or hospitals?
Using last year's records, you can plug in the dollar figures you would have spent under the various plans you may be considering, starting with the annual premium and deductible (if there is one) and then adding on coinsurance or co-payments for doctor visits, hospital stays and prescription drugs.
Before signing up with any insurer you might also want to see whether its customers have lodged many complaints by visiting "Consumer Information Source", the National Association of Insurance Commissioners site.
Other Special Situations
Are you planning to get married soon? Get all the details on your spouse's plan and how it works, how much you'll have to pay to be added onto the policy, what it covers and excludes, etc. Also, there may be a special enrollment period-a particular time of the year during which you can be added onto the plan. Consider how you will be covered until then.
Do you have a medical condition?
Pre-existing conditions can be excluded under a new policy for a maximum of 12 months within a group coverage policy only. (In some cases, this time limit can be reduced further; contact your state's insurance office to find out how.) However, under a law called the Health Insurance Portability and Accountability Act, if you have a pre-existing condition but have been insured for the past 12 months, a new employer's health plan cannot require a waiting period. This means that if you remain insured for 12 months or more, you will be able to go from one job to another and your pre-existing condition will be covered without a waiting period. If you are going to be subject to a waiting period, can you afford to pay your own care for the condition for the excluded time were you to change plans?
Do you have a chronic illness?
If you have an illness that requires special care, you need to determine how a plan you might purchase handles care by specialists. If it's an HMO or PPO, is your specialist on their approved list? In addition, if your illness or condition requires you to take prescription medications, you need to determine how much the plan makes you pay for those. Are prescription medications covered, and what will your co-payment be? High deductible plans are not good choices for those with chronic illnesses.
Are you pregnant or are you going to become pregnant?
Healthcare plans cannot consider pregnancy a pre-existing condition, so if you aren't covered now or want to change, you won't have to be concerned about the maternity care being excluded under such a clause unless you have individual, not group, coverage. Find out how to enroll your new baby under your policy and be sure to do so before any enrollment period (it may be within 30 days after birth, for example) is up. Policies cannot consider any illnesses or conditions in your infant to be pre-existing conditions if you enroll the baby during this period. It's important to cover newborns immediately to take advantage of this. The same policies apply to any children you adopt. Then, find out if the plan covers well-baby care and immunizations. If not, you should budget for these expenses.
If you have individual coverage, however, beware. Many insurance plans purchased on the individual market do not include maternity coverage except at additional cost, and even then the restrictions are great and the benefits very thin.
Is your child soon to outgrow dependent status?
Your child may be covered under your policy until he or she is 18 or 19, or older 25 if he or she is a full-time student. If your child is about to lose dependent-child status, find out how to elect COBRA coverage, if that's your plan, and be sure to file the paperwork within the time limit of 60 days. You need to exercise your COBRA rights within the 60-day time limit. If you still haven't heard if your child can get an individual insurance policy, opt for the COBRA to protect their HIPAA guaranteed access right. They can always switch later.
Are you getting ready to retire?
You'll need to determine what health benefits will extend to you and your spouse during your retirement years. If you are with a private insurer at that time, find out what will happen when you retire. Federal law requires health plans to provide at least a 60-dayelection period (with the clock beginning on either the date you lose coverage or the date you receive notice of your right to choose COBRA, whichever is later. Will there be gaps between the end of that coverage and the time you will be eligible for Medicare and Medigap insurance coverage? Have you budgeted for Medicare Part B and Medigap in your retirement plan?
If you are considering plans from various insurance companies, you might want to check the financial stability of each company; you want to make sure your insurance company will have the ability to pay your claims. You can check insurance company ratings through a number of companies: A.M. Best Company rates insurance companies in terms of their financial stability; their website describes their rating system and provides ratings online. Other ratings companies that provide free information online include: Duff & Phelps Credit Rating Co., Moody's Investors Service, Standard & Poor's and Weiss Ratings Inc.
Because HMOs, PPOs and indemnity plans are regulated by federal and/or state agencies, you can compare the quality of various health plans by inquiring about them at your State Department of Health or Insurance Commission. Additionally, several national organizations, such as the National Committee for Quality Assurance, review and accredit plans and institutions (see the Resources section). Look in the insurance company's literature to see if has a process for ensuring good medical care, for example by reviewing its own services and having a procedure in place to resolve problems or complaints. Another resource is business or consumer organizations that put together report cards detailing various aspects of quality such as member satisfaction, how many of the plan's healthcare professionals are board certified, how the plan follows up on test results, etc.
Getting The Most From Your Plan
Here are some tips from the Agency for Healthcare Research and Quality for getting the best care:
Read your health insurance policy and member handbook. Make sure you understand them, especially the information on benefits, coverage, and limits. Sales materials or plan summaries cannot give you the full picture. See if your plan has a magazine or newsletter; it can be a good source of information on how the plan works and on important policies that affect your care. Talk to your health benefits officer at work to learn more about your policy.
Ask how the plan will notify you of changes in the network of providers or covered services while you are part of the plan.
Find out if the plan offers an advice hotline. Some plans have toll-free phone services or Web sites that help members decide how to handle a problem that may not require a doctor's visit.
Find out how your plan provides care outside the service area and what you must do to get care. This is especially important if you travel often, are away from home for long periods, or have family members away at school.
Make sure you understand when you need and how to obtain advance approvals or pre-admission certification.
Ask how your plan handles getting a second health care professional's opinion on whether surgery or another treatment is needed. Are second opinions encouraged or required? Who pays?
In the case of a serious medical problem, your plan might provide someone to oversee your care to make sure all your needs are being met.
If you have a true medical emergency, you should go to the nearest hospital as fast as possible. But, you should know what kind of medical problems are defined as emergencies and how to arrange for ambulance service, if needed. Most plans must be told within a certain time after emergency admission to a hospital. If the hospital is not part of the plan network, you may be transferred to a network hospital when your condition is stable.
Learn how the plan handles urgent care after normal business hours. Urgent care is for problems that are not true emergencies but still need quick medical attention. Check with your plan to find out what it considers to be urgent care. Examples may include sore throats with fever, ear infections, and serious sprains. Call your primary care physician or the plan's hotline for advice about what to do. The plan may also have urgent care centers for members.
Ask your health care professional about regular screenings to check your health. Discuss your risk of getting certain conditions. What lifestyle choices and changes might you need to make to lower your risks or prevent illness?
Ask about the risks and benefits of tests and treatments. Tell your health care professional what you like and dislike about your choices for care.
Make sure you understand and can follow the health care professional's instructions. You may want to bring another person along or take notes to help you remember things.
Write down your concerns. Start a health log of symptoms to help you better explain any health problems when you meet with your health care professional.
Set up health files for family members at home to help monitor care. Include health histories of shots, illnesses, treatments, and hospital visits. Ask for copies of lab results. Keep a list of your medicines, noting side effects and other problems (such as other drugs and foods that should not be taken at the same time).
Despite your best research and effort, there may be times when you do not get satisfactory care or service. In this case, you need to know how to complain and what your rights are. Contact the member services department of your plan for more information or to file a complaint. Be sure to keep copies of all your claim forms and bills and all correspondence. In addition, keep records of phone calls, noting the date, time, person you spoke with, and the nature of the call. If your problem isn't resolved, you can contact your state insurance commission.