Medically Reviewed by Ruth Robertson, M.Sc.
Senior Research Associate
Affordable Health Insurance Program
The Commonwealth Fund
New York, NY
What Is It?
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.
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.
Under the Affordable Care Act, which was signed into law in March 2010, health care is now more attainable and affordable for Americans than ever before. Some of these provisions are already in effect, and others will start in 2014. But the better you understand these changes and the way they may benefit you and your family, the better your chances of being able to take advantage of them. Some of the key changes are explained below.
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 ensure that it is solvent and reliable.
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 in the government listings section of your phone book or search online); 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 the Consolidated Omnibus Budget Reconciliation Act (COBRA) that allows for coverage through an employer (with at least 20 employees) to be continued for up to 18 months under a variety of conditions. (In some cases, certain qualifying events, or a second qualifying event during your initial period of coverage, may permit you to receive a maximum of 36 months of coverage.) Additionally, many states have passed so-called mini-COBRA laws that apply similar requirements to employers with fewer employees. The conditions vary from state to state but usually include:
- You were covered through your employer or your spouse's employer, and you (or your spouse) were laid off or reduced your working hours so you no longer qualified for their health plan. (An employee who was terminated for gross misconduct will not be eligible, however.)
- 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 large employers, to continue your coverage for up to 36 months (which varies depending on the state you live in and the reason you lost coverage). 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 will need to pay the entire premium plus an additional 2 percent for administrative expenses.
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 in the association ends.
The federal government also has 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 since 2003, these standards provide patients with access to their medical records and more control over how their personal health information is used and disclosed. Patients are 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, by filing a complaint online at http://www.hhs.gov/ocr/hipaa, or by calling the U.S. Department of Health & Human Services at (866) 627-7748.
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 you select.
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 on to Covertheuninsured.org. A project sponsored by the Robert Wood Johnson Foundation, this website provides information on where to go in your state for low-cost services.
The federal Affordable Care Act provides additional assistance for Americans who are uninsured due to a pre-existing condition. The Pre-Existing Condition Insurance Plan provides new coverage options to people who have been uninsured for at least six months due to a preexisting condition. The program serves as a bridge to 2014, when all discrimination against preexisting conditions will be prohibited. For more information on the program and how it works in your state, go to www.healthcare.gov/law/provisions/preexisting.
Under the Affordable Care Act, young adults are allowed to stay on their parents' plans until they turn 26. This does not apply if your son or daughter is offered insurance at work. Some states have their own laws, which allow children up to the age of 30 to remain on their parents' plans.
Fee-For-Service or Indemnity Insurance
Under a fee-for-service plan, you and your insurance company each pay a portion of your health care expenses. (Keep in mind not all health care 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 health care 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 your deductible for the year, the insurance company begins paying for part––usually about 80 percent––of your covered health care services. 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 needed 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 $6,000. You have a $500 deductible, which you pay, leaving $5,500. The insurance company pays 80 percent of that, or $4,400, leaving you a balance of $1,100. Your total cost (over and above the insurance premium): $1,600. If you'd already met your deductible, your cost would be 20 percent of the $6,000, or $1,200.
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 predetermined 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 before 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 preapproval 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 insured members 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. In the case of an "open access" HMO, you do not have to obtain a referral, but you may pay a higher co-payment to see a specialist. 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 co-payment––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 co-payments, 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, most HMOs require you to first ask your primary care physician for a referral. 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 choose to go to an outside provider without a referral, there will usually be some insurance coverage. But in both instances, you 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––the average co-pay is $22 per physician visit and $31 for a specialist visit, for example. There may also be a deductible like in a fee-for-service plan.
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.
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.
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, for example, 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 tests––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
Some health care insurers have started to offer high-deductible plans with deductibles of $1,000 and higher. 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, which means that, unlike some other tax-advantaged savings accounts, funds do not have to be spent in the year they are deposited and can be left to accumulate over time. Again, these will work best for the healthy and wealthy.
Since they were introduced, HSAs have become increasingly popular. A survey conducted by America's Health Insurance Plans revealed that the number of people covered by high-deductible HSAs rose to 10 million in January 2010, up 25 percent from January 2009. The fastest growing market for HSAs during this time period was large group coverage.
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 or permanent kidney failure 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 health care 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.
- Medicare Part C, also known as Medicare Advantage, provides Medicare beneficiaries with managed care-type plans. They may include HMOs, PPOs, private fee-for-service plans and special needs plans. For a single premium, Medicare Advantage plans typically cover hospital and physician services, diagnostic testing and some services not available under Parts A and B. You also may include prescription drug coverage in your Medicare Advantage benefit, called an MA-PD.
- Medicare Part D is the prescription drug benefit. Everyone with Medicare is eligible for this coverage, which is insurance that covers generic and brand-name prescription drugs through your local pharmacies. Prescription drug coverage can be purchased as stand-alone drug coverage or can be incorporated into a Medicare Advantage plan, as explained above. Stand-alone drug plans, called prescription drug plans, or PDPs, are managed by private plans and feature a variety of benefit designs and cost-sharing arrangements.
In addition, the Affordable Care Act has provided benefits for those who have Medicare prescription drug coverage but must pay for their drugs in the "doughnut hole," a gap in coverage that occurs after your plan has spent a certain amount of money for covered drugs. During this "doughnut hole," you have to pay all costs out-of pocket for your drugs (up to a limit).
Under the Affordable Care Act, if you have high prescription costs that put you in the "doughnut hole," you will get a 50 percent discount on covered brand-name drugs and will pay less for your generic drugs. The prescription drug coverage during the "doughnut hole" will improve again in 2013, and by 2020, the coverage gap will be closed, eliminating the "doughnut hole." At that time, you will pay only 25 percent of the costs of your drugs until you reach the yearly out-of-pocket limit.
More information on Medicare is available from the Centers for Medicare and Medicaid Services (CMS) at www.cms.hhs.gov.
- Medicaid: A joint federal-state health insurance program run by the states, Medicaid covers some low-income people. Eligibility and scope of services is decided by each state, and the name of the program differs by state (it is not always called Medicaid). You can contact your State Medicaid Program Office for more information. For a state-by-state list, see www.cms.gov/MedicaidEligibility/downloads/ListStateMedicaidWebsites.pdf.
- State Children's Health Insurance Program (SCHIP): Created by Congress in 1997, CHIP is designed as state and 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 CHIP eligibility beyond the federal eligibility limits, and others are covering entire families and not just children. Visit Insurekidsnow.gov or call this toll-free number to find out about your state's program: 1-877-KIDSNOW (1-877-543-7669).
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. For information about access in your area, call: 1-800-CDC-INFO (1-800-232-4636) or visit the website at www.cdc.gov/cancer/NBCCEDP/.
Under the Affordable Care Act, all group and individual market insurance plans that are not "grandfathered" (those created after March 23, 2010) must provide a set of preventive care services and immunizations for free, from the start of the new plan year after September 23, 2010. Medicare is also required to provide these services for free to its enrollees, as well as an annual wellness visit. The preventive services covered include:
- breast cancer screening every one to two years for women age 40 and older
- cervical cancer screening
- chlamydia screening for women to age 25 and older women at increased risk
- anemia screening for pregnant women; folic acid supplementation
- osteoporosis screening for all women age 65 and older, and 60 and older for those at high risk
- colorectal cancer screening
- blood pressure checks
- cholesterol screening
- genetic counseling for the breast cancer (BRCA) gene
For a full list, see www.uspreventiveservicestaskforce.org/uspstf/uspsabrecs.htm.
- Veterans benefits: The U.S. Department of Veterans Affairs administers many programs for veterans. See its website (www.va.gov) 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. An MSA is a personal savings account with pretax 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 paperwork you have to complete each time you see a health care professional vary widely. How can you possibly know what's best? While there's no way to predict with certainty your health care 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" at the National Association of Insurance Commissioners site (www.naic.org/).
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 to the plan. Consider how you will be covered until then.
Do you have a medical condition?
Under HIPAA, pre-existing conditions can be excluded under a new policy for a maximum of 12 months (18 months if you are a late enrollee, meaning that you sign up for a group health insurance plan at a later date than when you are first eligible) 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.) HIPAA also restricts insurance companies from looking back farther than six months for a condition that was present before the start of coverage in a group health plan.
The federal Affordable Care Act offers further protection for Americans with preexisting conditions. A new program called the Pre-Existing Conditions Insurance Plan (PCIP) makes health insurance available to all Americans who have been denied health insurance by private insurance companies due to a preexisting condition. The program provides a health insurance coverage option if you have been uninsured for at least six months, you have a preexisting condition or you have been denied health insurance coverage because of a medical problem, and you are a U.S. citizen or reside in the United States legally.
The Affordable Care Act also bans insurers from rescinding coverage when someone gets sick, and it bans placing lifetime limits on claims. Annual benefit limits are being phased out and will be banned completely in 2014.
For children, insurance companies are no longer allowed to deny coverage of a preexisting condition or to exclude those conditions from coverage.
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?
Health care 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 ends (it may be within 30 days after birth, for example). 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. This will change in 2014, when the new health care reform law will restrict insurers from being able to discriminate based on preexisting conditions, and all individual and small group plans will be required to provide an essential benefits package, which must include maternity coverage. Until then, keep this restriction in mind if you plan to become pregnant and have an individual insurance plan. Or check to see if you are eligible for the new Pre-existing Conditions Insurance Plan, which covers adults who cannot obtain health insurance due to a pre-existing condition.
Is your child soon to outgrow dependent status?
Under the Affordable Care Act, young adults are allowed to stay on their parents' plans until they turn 26. This right does not apply if your son or daughter is offered insurance at work, however. Some states have their own laws, which allow children up to the age of 30 to remain on parents' plans. 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. 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-day election 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 planning to retire early, the Affordable Care Act will help you avoid paying high insurance rates. To preserve employer coverage for early retirees until more affordable coverage becomes available in 2014, the new law provides financial support to employment-based plans. This money helps these plans continue to provide coverage to people who retire between the ages of 55 and 65 and to their spouses and dependants.
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; its website (www.ambest.com) describes its rating system and provides ratings online. Other ratings companies that provide free information online include: Moody's Investors Service, Standard & Poor's and Weissratings.com.
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. Look in the insurance company's literature to see if it 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 health care professionals are board certified, how the plan follows up on test results, etc. The American Medical Association also puts together a National Health Insurer Report Card.
Getting The Most From Your Plan
Here are some tips 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 websites 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 advance approvals or preadmission certification and how to obtain them.
- 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.
If You Don't Have Insurance
As more and more Americans become unemployed or self-employed, more individuals are losing access to group health insurance. If you fall into this category, realize that you do have options.
Every state in the United States has a program specifically for infants, children and teenagers in need of health insurance coverage called Insure Kids Now. This program covers prescription medications, doctors' visits, and other necessary medical services for little or no cost. Although the specific eligibility rules vary, most states will cover uninsured children ages 18 or younger whose families earn $45,000 or less per year for a family of four. For more information on Insure Kids Now, or to research whether or not your family is eligible, go to www.insurekidsnow.gov or call 1-877-KIDS-NOW.
Another option for you or your family if you are below certain income limits and do not have health insurance is Medicaid. All states' Medicaid programs cover hospital and outpatient care, home health services and doctor services. However, in some states, Medicaid requires that you pay a co-payment for some services. For more information on Medicaid and to find out whether or not you and your family are eligible, go to the Medicaid website at www.CMS.gov.
To find out more about obtaining health care coverage in your state, check out the Access to Health Insurance/Resources for Care (AHIRC) site at www.ahirc.org. Originally created by the Actors' Fund of America as a health resource for artists and people in the entertainment industry, the AHIRC has expanded to include resources for the self-employed, low-income workers, the underinsured, the uninsured who require medical care and other groups.
Facts to Know
Health insurance can help protect you and your family from the costs of illness or injury.
If you are self-employed or don't work for a company that offers health insurance, you'll have to get it on your own. Individual medical policies are sometimes more difficult to qualify for, more expensive and have more restrictions on coverage than group health insurance. You might be able to get coverage through a business, professional or fraternal organization or club. However, make sure you investigate these plans carefully to ensure their solvency. Otherwise, you can contact your state's insurance department for a list of health insurance providers in your area.
There are three main types of health insurance––indemnity plans, health maintenance organizations and preferred provider organizations––and sometimes employers offer one plan of each type from which you can choose. Your choice will depend on your health care needs and your pocketbook. Remember, lower premiums don't necessarily mean the plan is less expensive in the long run if services you need aren't covered.
Fee-for-service plans require you to pay monthly premiums, an annual deductible, and coinsurance, which is usually a percentage––often 20 percent––of your health care bills. You can usually go to any health care professional or hospital you want (as long as the type of services provided are covered).
Health maintenance organizations or HMOs require you to pay monthly premiums and a co-payment every time you see a health care professional or go to the hospital. You must choose from a list of health care professionals and hospitals. And, in many cases, you must see your primary care physician for referrals to specialists.
Under a point-of-service or POS plan, if your primary care physician refers you to—or you decide on your own to see––a health care professional outside of the plan, the HMO still pays all or most of the bill, although you will pay more than if you saw a plan physician.
Preferred provider organizations or PPOs require you to pay monthly premiums and a co-payment every time you see a health care professional or go to the hospital.
In most HMOs and PPOs, the physician accepts the plan payment as payment in full, except for your co-payment. Some insurance plans may only pay for their percentage of a "usual and customary fee" and set these fees themselves. For example, an insurance company may set the fee for a gynecological exam at $60. If your health care professional charges $75 (and refuses to reduce his or her fees), you will be responsible for paying the additional $15, money out of your pocket that won't count toward your co-payment, coinsurance, deductible or cap.
A law called COBRA allows you to keep your group health insurance for up to 18 months after leaving an employer. (Certain qualifying events, or a second qualifying event during your initial period of coverage, may permit you to receive a maximum of 36 months of coverage, however.) If you are retiring, staying home with children, changing jobs or becoming self-employed, you should consider how you'll be insured; often, taking advantage of COBRA is your best bet.
As part of the Health Insurance Portability and Accountability Act (HIPAA), all insurance carriers cannot cancel coverage unless: you don't pay your premiums, make late payments, commit fraud or lie to the issuer; your issuer 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.
Questions to Ask
Review the following Questions to Ask about health insurance so you're prepared to discuss this important health issue.
For all types of plans:
How much are the monthly premiums, deductibles, co-payment amounts and caps? How does changing one amount affect the others?
What does the policy cover? Does it cover maternity, prescription drugs, out-of-hospital care or home care? Are there limits on the number of days the insurance company will pay for these services?
What does the policy exclude?
Will the policy cover any medical conditions for which I'm currently being treated? Are there limitations or a waiting period involved in the coverage?
Is there a lifetime maximum cap the insurer will pay? This is important to know if you or someone in your family has a chronic or expensive illness or medical condition. Experts recommend that you choose a plan that has at least a $1 million maximum benefit.
What are the processes for getting emergency care? When does care need to be pre-approved? What are the rules for using urgent care facilities?
What preventive services, such as well-child visits, immunizations, mammograms, or checkups, are covered?
If the plan is an HMO or PPO:
Are there many health care professionals from which to choose? Are they located conveniently to where you live or work?
How difficult is it to change primary care physicians? How often may you do this?
How are referrals to specialists handled?
What if you are out of town and need medical care?
What hospitals are available? Are they located conveniently to where you live or work?
How far in advance must routine visits be scheduled?
Is it possible to see a health care professional outside of the network? If so, how much will you have to pay?
I paid for all my own health care throughout the year because I never reached my $500 deductible. Now that it's January again, my insurance company wants me to start from zero dollars and spend $500 again before they'll start paying my claims. Is this right?
Count yourself lucky that you weren't sick enough to incur any large health care costs. Yes, indemnity plans require the deductible to be paid each year. If your health is still excellent, you might want to check the plan's various deductible options. Would a higher deductible save you money? Of course, you need to balance the risk that you might incur more expenses in the coming year.
I have diabetes, and my husband is changing jobs. Will I be able to get health insurance from his new employer?
If you were insured during the past 12 months, you can be covered under his new plan with no waiting period for treatment of your diabetes. If not, you might consider staying on his old plan under COBRA provisions until you have been insured a full 12 months; otherwise, you could incur a waiting period under the new plan. Make sure, though, that you time the ending of your COBRA coverage with an open enrollment period on your husband's new plan so you won't have a period in which you're uninsured.
I really like my ob/gyn. Will I have to change if I get a new health insurance plan?
If you are joining a plan that requires you to use a health care professional on the plan's approved list, you'll want to make sure your ob/gyn is on that list. Otherwise, you might have to pay for his or her care out of your own pocket or change health care professionals. Note: If you have previously needed a referral from your primary care provider to see your ob/gyn, check with your insurer. Health care reform allows women to access obstetric and gynecologic services directly under all plans not "grandfathered" (those created after March 23, 2010).
Will my health insurance pay for pregnancy and fertility treatment?
You'll have to read your plan's policy. If you can't find an answer there, call your plan's member services department. Many insurance policies do not cover pregnancies or fertility treatments. Others cover only some types of fertility treatments. As is the case with any elective medical care, you need to check your policy closely and learn about what it will and will not cover before you incur any costs.
The one plan my employer offers is an HMO that I feel doesn't provide adequately for my family and me. What can I do?
Unfortunately, you need to either buy this group insurance or buy a policy on your own. You can also appeal to your employer to offer more choices in the future. If the company you work for pays only a set amount per employee per month, offering more choices shouldn't cost it more money. Your portion of the premiums may be higher, though.
My insurance company won't pay its portion––80 percent––for my visit to a health care professional. The insurance company has paid 80 percent of a lesser amount. Do I have to pay the balance?
Most likely, yes. Your insurance company probably has written into the policy that it pays its portion of only the "usual and customary fee." The usual and customary fee for services of the type you received are probably less than your health care professional charged. (Ask the member services department of your insurance company; also find out what the usual and customary fee is.) You can ask your health care professional if he will reduce his fees to bring them in line with the usual and customary. If he or she doesn't agree, you are most likely responsible for this amount.
Should I pay more for the point-of-service plan or stick with the HMO?
Look at the list of health care professionals available under the less-expensive HMO option; are you satisfied with it? If so, you may not need to purchase the POS plan. Keep in mind that the difference between what the plan reimburses and what an out-of-plan provider charges may be quite different, and you have to pay the difference.
I have a winter home in Florida where I spend half the year. How does this affect my health insurance?
You want to make sure you purchase a policy that allows you to get health care services in both your hometown and in Florida. In many cases, HMOs and PPOs don't allow this.
Organizations and Support
Agency for Healthcare Research and Quality (AHRQ)
Address: Office of Communications and Knowledge Transfer
540 Gaither Road, Suite 2000
Rockville, MD 20850
America's Health Insurance Plans (AHIP)
Address: 601 Pennsylvania Avenue, NW
South Building, Suite 500
Washington, DC 20004
Centers for Medicare and Medicaid Services
Address: 7500 Security Blvd.
Baltimore, MD 21244
Consumer Coalition for Quality Health Care
Address: 1612 K St., Suite 400
Washington, DC 20006
Address: 1201 New York Avenue, NW, Suite 1100
Washington, DC 20005
Address: 1612 K Street, NW, Suite 300
Washington, DC 20006
Healthcare Leadership Council (HLC)
Address: 1001 Pennsylvania Avenue N.W., Suite 550 South
Washington, DC 20004
Address: One Renaissance Blvd.
Oakbrook Terrace, IL 60181
Address: Centers for Medicare & Medicaid Services
7500 Security Boulevard
Baltimore, MD 21244
Hotline: 1-800-MEDICARE (1-800-633-4227)
National Coalition on Health Care
Address: 1200 G Street, NW, Suite 810
Washington, DC 20005
National Committee for Quality Assurance (NCQA)
Address: 1100 13th St., NW, Suite 1000
Washington, DC 20005
National Partnership for Women & Families
Address: 1875 Conneticut Avenue, NW, Suite 650
Washington, DC 20009
National Patient Advocate Foundation
Address: 725 15th Street, NW, Tenth Floor
Washington, DC 20005
National Women's Health Network (NWHN)
Address: 1413 K Street, NW, 4th floor
Washington, DC 20005
Patient Advocate Foundation
Address: 700 Thimble Shoals Blvd, Suite 200
Newport News, VA 23606
MedlinePlus: Health Insurance
Address: Customer Service
8600 Rockville Pike
Bethesda, MD 20894
Agency for Healthcare Research
Address: Customer Service
540 Gaither Road, Suite 2000
Rockville, MD 20850