Health Insurance Basics: Part 2

Health Insurance Basics: Part 2

Does a Health Plan Typically Pay for Services from Any Doctor?

Not always. Some types of plans encourage or require consumers to get care from a specific set of doctors, hospitals, pharmacies, and other medical service providers who have entered into contracts with the plan to provide items and services at a negotiated rate. The providers in this designated set or network of providers are called “in-network” providers.

  • In-Network Provider: A provider who has a contract with a plan to provide health care items and services at a negotiated (or discounted) rate to consumers enrolled in the plan. Consumers will generally pay less if they see a provider in the network. These providers may also be called “preferred providers” or “participating providers.”
  • Out-of-Network Provider: A provider who doesn’t have a contract with a plan to provide health care items and services. If a plan covers outof-network services, the consumer usually pays more to see an out-of-network provider than an in-network provider. If a plan does not cover out-of-network services, then the consumer may, in most non-emergency instances, be responsible for paying the full amount charged by the out-of-network provider. Out-of-network providers may also be called “non-preferred” or “non-participating” providers.
Some examples of plan types that use provider networks include the following:
  • Health Maintenance Organization (HMO): A type of health insurance plan that usually limits coverage to care from doctors who work for or contract with the HMO. It generally won’t cover out-of-network care except in an emergency, or when a prior authorization to obtain care outside the network has been approved, or as otherwise required by law. An HMO may require a consumer to live or work in its service area to be eligible for coverage. HMOs often provide integrated care and focus on prevention and wellness. An HMO may require enrollees to obtain a referral from a primary care doctor to access other specialists.
  • Exclusive Provider Organization (EPO): A type of health plan where services are generally covered only if the consumer uses in-network doctors, specialists, or hospitals (except in an emergency). In general, EPOs do not require a referral from a primary care doctor to see other specialists, and in general there is very limited, if any, out-of-network coverage.
  • Point of Service (POS): A type of plan where a consumer pays less if they use in-network doctors, hospitals, and other health care providers. POS plans may require consumers to get a referral from their primary care doctor in order to see a specialist.
  • Preferred Provider Organization (PPO): A type of health plan where consumers pay less if they use in-network providers. They can use out-of-network doctors, hospitals, and providers without a referral for an additional cost.

Originally posted on CMS.gov

Health Insurance Basics: Part 1

Health Insurance Basics: Part 1

What is Health Insurance and Why is it Important?

Health insurance is a legal entitlement to payment or reimbursement for your health care costs, generally under a contract with a health insurance company. Health insurance provides important financial protection in case you have an accident or sickness. For example, health insurance may help to pay for doctors’ services, medications, hospital care, and special equipment when someone is sick or injured, often in exchange for a monthly premium. It may help cover a stay at a rehabilitation hospital or even a portion of home health care. Heath insurance can also keep a consumer’s costs down when they are not sick. For example, it can help pay for routine check-ups. Most health insurance also covers many preventive services at no cost, such as immunizations and cancer screening and counseling.

What is a Health Insurance Plan (also called a health plan or policy)?

A health insurance plan includes a package of covered health care items and services and sets how much it will pay for those items and services. In other words, a health plan will describe the types of health care items and services it will cover (help pay for), how much it will pay for those items and services (or groups of items and services), and for how long. Plans are often designed to last for a year at a time (known as a “plan year” or “policy year”). A health plan may be a benefit that an employer, union, or other group sponsor provides to employees or members to pay for their health care services.

What are Some Types of Health Care Coverage?

Health care coverage is often grouped into two general categories: private and public. The majority of people in the U.S. have private insurance, which they receive through their employer (which may include nongovernment employers or government employers at the federal, state or local level), buy directly from an insurance company, or buy through a Health Insurance Marketplace®.1 Some people have public health care coverage through government programs such as Medicare, Medicaid, or the Veteran’s Health Administration. Health care coverage can also be categorized by the scope of benefits it offers or how long the coverage lasts. Health insurance often includes a wide range of covered services, including emergency and nonemergency services as well mental health benefits. Some people have very limited insurance plans, such as plans with benefits for only specific conditions or diseases (included in the list of “excepted benefits” under the Affordable Care Act, such as vision-only plans or cancer plans).

As noted above, many health plans offer coverage for a year. However, some plans offer coverage for less than 12 months, including plans created to fill gaps in coverage. These plans are called short-term limited duration plans, and they often offer fewer benefits as compared to other health plans and lack some of the consumer protections available under other forms of coverage.

Self-Insured Employer Plans vs. Fully-Insured Plans

For consumers who receive health insurance through their employer, there are typically two different funding structures employers use to provide coverage:

  • Some employers offer health care coverage to their employees through a self-insured plan. This is a type of health plan that is usually offered by larger companies where the employer collects contributions from employees via payroll deductions and takes on the responsibility of paying all related medical claims. These employers can contract with a thirdparty administrator (in some cases, a health insurance company acting as an administrator) for services such as enrollment, claims processing, and managing provider networks. Alternatively, these employers can self-administer the services. Self-insured plans are regulated by the federal government and are generally not subject to state insurance laws.
  • A fully-insured employer plan is a health plan purchased by an employer from an insurance company. The insurance company, instead of the employer, takes on the responsibility of paying employees’ and dependents’ medical claims in exchange for a premium from the employer.

Originally posted on CMS.gov

Why Health Insurance is Important

Why Health Insurance is Important

Protection from high medical costs

Health insurance provides important financial protection in case you have a serious accident or sickness.  People without health coverage are exposed to these costs. This can sometimes lead people without coverage into deep debt or even into bankruptcy.
It’s easy to underestimate how much medical care can cost:
  • Fixing a broken leg can cost up to $7,500
  • The average cost of a 3-day hospital stay is around $30,000
  • Comprehensive cancer care can cost hundreds of thousands of dollars
Having health coverage can help protect you from high, unexpected costs like these.
When you have coverage, your plan protects you from high medical expenses 2 ways:
  • Reduced costs after you meet your deductible Once your spending for covered services reaches your plan’s deductible, the plan covers part of your medical expenses.
    • Example: If your plan has a $1,000 deductible, you pay the first $1,000 in covered services. After that, your plan pays between 60% and 90% of your covered expenses, depending of what kind of plan you have. You pay between 10% and 40% of the costs as coinsurance or copayments.
  • Out-of-pocket maximum This is the total amount you’ll have to pay no matter how much covered care you get in a plan year.
    • Example: If your plan has a $3,000 out-of-pocket maximum, once you pay $3,000 in deductibles, coinsurance, and copayments the plan pays for any covered care for the rest of the year. This provides important peace of mind and protection from very high medical costs.

Pay less even before you meet your deductible

Even before you meet your deductible, you may save hundreds of dollars in medical costs.
This is true if your plan is a PPO, an HMO, an EPO, or another kind of plan with a network of care providers.

How you save money before you meet your deductible

Insurance companies negotiate discounts with health care providers, and as a plan member you’ll pay that discounted rate. People without insurance pay, on average, twice as much for care. This means when you use a network provider you pay less for the same services than someone who doesn’t have coverage – even before you meet your deductible.
  • Sometimes these savings are small. If you’re insured and use a network provider, you may pay $25 for a flu shot instead of the $40 someone without coverage pays.
  • In other cases the savings can be big. If use a network provider, you may pay $85 for an office visit instead of the $150 someone without coverage pays. Savings can be even higher for more expensive services.
So even if you don’t reach your deductible during the year, you can save a lot of money on your covered medical services just by being enrolled in an insurance plan.
Originally posted on HealthCare.gov
Benefits 101: What Is Accident Insurance?

Benefits 101: What Is Accident Insurance?

Accidents happen.  Whether you fall off a ladder, slip and break an arm, or get injured just living everyday life, an accident can happen.  Anytime.  Anywhere.

What Is Accident Insurance?

Accident insurance helps provide support when life’s most unexpected moments happen.  It makes an accident less painful financially because it helps to pay the bills that your medical insurance doesn’t completely cover.  It is important to understand that accident insurance is not intended to be a substitute for medical coverage.  Instead, it is used as additional coverage and financial assistance.

Accident insurance may be offered by your employer as a voluntary benefit.  Medical insurance doesn’t cover all of the expenses that result from an injury – you will likely owe a deductible and co-pays – and accident insurance helps fill in the gaps.

Examples of What Accident Insurance Covers:

  • Emergency treatment and medical exams
  • Hospital stays and surgical care
  • Diagnostic tests such as X-rays and CAT scans
  • Physical therapy and rehabilitation
  • Family lodging and travel needs related to follow-up care

Examples of What Accident Insurance Does Not Cover:

  • Injury due to extreme sports like bungee jumping or skydiving
  • Self-inflicted wounds or suicide attempts
  • Injury that occurs while doing criminal activities
  • Injury that occurs while under the influence of drugs or alcohol

How Does Accident Insurance Work?

You pay a premium every month for coverage which is often automatically paid through payroll deductions.  If you get injured, you submit a claim as well as any required verification for the accident. Then, once approved, the insurance payment will be sent directly to you – often in a one-time lump sum.  Some plans pay out according to your expenses up to a maximum specified in the policy while others pay out a predetermined amount based on the injury.

One of the biggest advantages of accident insurance is that the payouts come in cash, which can relieve the financial burden after an injury.  Additionally, there isn’t a waiting period, so you get the money immediately.  This money is given to you in addition to what your health insurance pays.  When you receive your payout, you can use the money to pay for any of your expenses – rent or mortgage payment, groceries, childcare, medical expenses, or other needs.  How you use the payment after your injury is up to you as you recover.

No one wants to think accidents can happen, but they do.  So, while life may dose out the accidents, remember there is insurance that can help.

Benefits 101: Premiums, Deductibles, Copays, and Out-of-Pocket Maximums

Benefits 101: Premiums, Deductibles, Copays, and Out-of-Pocket Maximums

Not understanding benefits terminology is near the top of the list of ways that open enrollment and benefits selection can stress you out.  Open enrollment is coming quickly and soon you will be talking about benefit options. The world of benefits and insurance can be confusing. In-network, out-of-network, deductibles, co-pays and co-insurance? What?

Let us help break it down:

Premium – a monthly payment you make to your health insurance provider- it is the cost of having health insurance coverage.  It’s perhaps the easiest component of a health plan – it’s the equivalent of a sticker price.

Here’s how it works: Coverage itself varies considerably from one health plan to another but in general, the less you pay for your coverage, the more you’re likely to have to pay when you need health care – and vice versa.

Co-insurance – A percentage of a health care cost—such as 20 percent—that the covered employee pays after meeting the deductible.

How it works: Let’s say you’ve paid $1,500 in health care costs and met your deductible.  When you go to the doctor, instead of paying all costs, you and your plan share the cost.  For example, your plan may pay 80% so then your share would be the remaining 20%.

Co-payment – The fixed dollar amount—such as $25 for each doctor visit—that the covered employee pays for medical services or prescriptions.

How it works: After your co-pay, your insurance picks up the rest of the bill for that visit.  Co-pays typically count toward your annual out-of-pocket maximum (but there can be exceptions depending on your plan).  The amount can vary depending on where you go for care, the type of doctor you see, and the type of prescription you are taking.

Deductible – How much you pay before your health insurance coverage kicks in.  Your deductible resets every year.

How it works:  If your plan’s deductible is $1,500, you’ll pay 100% of health care expenses until the bills total $1,500.  After that, you share the cost with your plan by paying co-insurance.

Network – “In-network” refers to doctors and other health providers that are part of the insurer’s preferred network.  Insurers sign contracts and negotiate prices with these in-network providers.  This isn’t the case for “out-of-network” providers.

Here’s why that matters: Expenses you incur for services provided by out-of-network professionals may not be covered or may only be partially covered by your insurance; you will generally have a higher deductible and out-of-pocket limit when you see an out-of-network provider.

Out-of-pocket Maximum (OOPM) – the absolute most you pay in one year for your health care expenses before your insurance covers 100% of the bill.

Here’s how it works: What you pay toward your plan’s deductible, co-insurance and co-pays are all applied to your out-of-pocket max.  If your plan covers more than one person, you will likely have a family out-of-pocket max and an individual out-of-pocket max. That means:

  • When the deductible, co-insurance and co-pays for one person reach the individual maximum, your plan then pays 100% of the expenses for that person.
  • When what you’ve paid toward individual maximums adds up to your family’s out-of-pocket max, your plan will pay 100% of the expenses for everyone on the plan.

Picking health insurance can be a dizzying adventure and making a mistake can be costly since you are generally locked into your health insurance for one year, with very limited exceptions.  But when you understand how open enrollment works and how it impacts your family’s household budget, you can make wise, informed choices.