Frequently Asked Questions: Health Insurance

• Health Insurance Concepts
  • What is a copay?
    What is a copay?

    A copay is a cost sharing system between you and the insurance company. You pay a flat fee, such as $25 for a doctor's office visit, required at the time any covered medical service is received. The insurance company is responsible for the difference. There may be different copays depending upon type of provider or service.

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  • What is a deductible?
    What is a deductible?

    A deductible is the fixed dollar amount you must pay of your own funds each calendar year before your health insurance begins to make payments for covered medical services.

    All deductibles reset once a year on January 1. Typically, the higher the deductible, the lower the premiums and vice versa. Deductible amounts usually differ out of network (proving to be higher).

    When selecting a plan, you should know what plan benefits are subject to the deductible, and what portion of the cost (set as percentages) is covered by the plan once it has been met. This is typically referred to as coinsurance. If the cost is covered 100% after the deductible, then coinsurance is not applicable. See "What is co-insurance?"

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  • What is a formulary prescription?
    What is a formulary prescription?

    A formulary list is a pre-approved list of preferred generic or brand name prescriptions that is covered under a healthcare plan. The list is determined by the insurance company and may be subject to change at any time.

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  • What is a full featured plan?
    What is a full featured plan?

    Full featured plans are also commonly called "traditional" healthcare plans that typically offer comprehensive coverage for a wide range of medical care, services, and treatment. As a result, these plans generally are more expensive as they provide for greater protection from larger medical expenses.

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  • What is a limited benefit plan?
    What is a limited benefit plan?

    Quite often called a "bare bones" plan, limited benefit plans provide much lesser benefits than a traditional health insurance plan in exchange for much lower premiums. When considering these plans, it is important to know exactly what types of care or services the plan will or will not pay for and how much coverage it actually provides. These plans usually include pre-existing conditions exclusions.

    While the plan administrators of most of these plans are HIPAA compliant (meaning they must follow certain aspects of HIPAA, ie. privacy rights and other regulations), these plans are not considered to be continuous creditable coverage under HIPAA as there are certain qualifications a health plan must meet in order to be considered continuous credible coverage.

    As a result, you may be subject to an exclusionary wait period for any pre-existing conditions that existed before your enrollment start date in a full featured healthcare plan, (such as a group or individual plan)if your prior coverage was under a limited benefit plan. The maximum look back period for pre-existing conditions before your enrollment start date may differ upon the insurance carrier and state/federal law.

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  • What is a medical discount plan?
    What is a medical discount plan?

    A medical discount plan is not insurance and doesn't pay for any of your costs, but offers reduced rates on eligible services by participating network providers. Reduced rates vary by provider and type of services received. It is your sole responsibility to pay all health bills incurred out of pocket.

    While NOT insurance, this provides an affordable alternative for individuals looking to minimize their out of pocket healthcare costs.

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  • What is a PPO?
    What is a PPO?

    PPO stands for Preferred Provider Organization. This is a type of health insurance plan that offers in-network as well as out-of-network coverage. However, out-of-network coverage is typically subject to either a higher deductible or lower co-insurance than in-network, often times both. No referrals are required in order to access care.

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  • What is an annual maximum?
    What is an annual maximum?

    An annual maximum the maximum dollar amount an insurance company will pay over the benefit of a year for all covered expenses.

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  • What is an EPO?
    What is an EPO?

    EPO stands for Exclusive Provider Organization. This is a type of health insurance plan that offers in-network coverage only. Enrollees must select in-network providers when seeking medical care, services, or treatment. No referrals are required in order to access care.

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  • What is an HMO?
    What is an HMO?

    HMO stands for Health Maintenance Organization. This is a health insurance plan that offers comprehensive health services with only modest co-pays and no deductibles or co-insurance. This plan features in-network coverage only. Referrals are required for any specialized medical care or service and are issued by your primary care physician (PCP) as need be.

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  • What is an HSA (Health Savings Account)?
    What is an HSA (Health Savings Account)?

    An HSA is a special type of account that offers tax benefits on money put aside for future medical expenses. Anyone who buys a qualified high deductible health plan (one that meets the requirements the government has determined), qualifies for an HSA.

    You enjoy tax-deductible contributions, tax-deferred interest and tax-advantaged withdrawals for qualified medical expenses (these do NOT count towards meeting your deductible) OR for eligible expenses that qualify towards meeting your deductible. See "What is an eligible expense?" and "What is a qualified medical expense?" Unused balances from year to year roll over from year to year.

    Please refer to the IRS website for all applicable HSA guidelines which must be adhered to: IRS.

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  • What is co-insurance?
    What is co-insurance?

    Co-insurance is a policy provision under which you and the insurance company share the total cost of covered medical services after the deductible has been met set as fixed percentages.

    For illustrative purposes, a particular plan may provide 75/25% coinsurance (after a $2,000 deductible has been met) up to a specified amount called the coinsurance out of pocket maximum (in this case $3,000).

    This means that you'll pay the the first $2,000 of covered expenses subject to the deductible. Then, you'll pay 25% of all covered expenses up to the point that you've paid $3,000, (while the insurance company pays 75%). After that, the plan typically pays 100% of covered charges for the remainder of the year on an in network basis, up to the policy maximum.

    Please note that coinsurance percentages and coinsurance out of pocket maximums differ out of network with you covering a greater portion of the cost overall. Once met, most policies typically only cover the maximum allowable amount of the usual and customary rate (UCR). You can be balanced billed for the difference. See "What is the usual and customary rate (UCR)?"

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  • What is the total out-of-pocket maximum?
    What is the total out-of-pocket maximum?

    The maximum dollar amount that must be met by you out of your own funds during the benefit period, before the insurance company pays 100% of all covered expenses, usually up to an annual or lifetime maximum.

    Before this maximum is met, you and the insurance company share the cost of all covered expenses as set by the co-insurance after the initial deductible has been met. The amount is determined by adding your deductible and coinsurance out of pocket maximum together.

    For instance, if you have a $3,000 deductible and a coinsurance out of pocket maximum of $5,000, then your total annual expenses is $8,000 for eligible medical benefits. Regular premiums do not count towards meeting the maximum out-of-pocket total.

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  • What should I look for when evaluating health insurance choices and choosing the right plan for me?
    What should I look for when evaluating health insurance choices and choosing the right plan for me?

    Although everyone's individual needs are different, there are key factors that you should look at when making a fully informed choice for one plan over another. Here are several key questions you should ask yourself when looking over your healthcare options.

    When looking over your healthcare options, ask yourself:

    • How all-inclusive do I want coverage of healthcare services to be?
    • How much am I willing to spend on premiums?
    • What type of healthcare plan is this, ie. a medical discount plan, limited benefit plan, or a full featured plan?
    • Is it a group plan or an individual health insurance policy?
    • Is this plan considered to be continuous credible coverage under HIPAA?

    You should also make separate checklists and see what type of benefit coverage each plan offers for the following:

    • Preventative Care
    • Care by Specialists
    • Hospitalization
    • Emergency Care
    • Prescriptions
    • Mental Healthcare

    For each one, find out how much is your responsibility to pay or what circumstances, if at all, apply, before the plan begins to cover for each type of care or treatment. For instance:

    • What co-payments must you pay for certain types of services?
    • Are there any deductibles that must be met by you before the insurance starts to cover the cost?
    • If the deductible is met, what portion of the cost is paid by the plan?
    • How much will you have to pay if you go out-of-network?
    • Are there any limits to how much the insurance company pays over a given benefit period, for instance over a year or a lifetime?

    After you’ve done that, you are now ready to ask yourself: Is there a complimentary fit between what is provided under any particular plan and what you think you’ll need?

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• HIPAA Rules
  • How would health insurance providers know if I have a pre-existing condition?
    How would health insurance providers know if I have a pre-existing condition?

    Once coverage begins under any given health plan, any claims filed by you may be investigated as a possible pre-existing condition. Depending on state law, insurers can look back months or even years to see if the condition existed before your enrollment.

    If evidence is found, insurers can deny any claims or benefit coverage for that condition and all care/treatment related to it. However, only in the case of HIPAA qualified creditable coverage group health plans, the maximum look back period is six months.

    *States also differ upon which standard is used in defining a "pre-existing condition." Some states use the "objective standard," which defines a "pre-existing condition" as anything for which you've received medical advice, diagnosis, care, or treatment.

    Conversely, most states support a much broader definition based on the "prudent person" standard. Under this standard, a "pre-existing condition" also includes anything may not been diagnosed, but showed symptoms for which an "ordinarily prudent person" would have sought medical advice, diagnosis, care, and treatment.

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  • I've had a medical condition in the past. Can my plan deny coverage under the claim that it's a pre-existing condition?
    I've had a medical condition in the past. Can my plan deny coverage under the claim that it's a pre-existing condition?

    Under HIPAA qualified continuous creditable coverage group health plans, it would in all actuality be dependant upon whether or not you had received any type of medical advice, care, or treatments within a six month period prior to the effective start date of your enrollment.

    If it has been longer than six months since you've received any medical advice or care related to that condition, then it cannot be subject to a pre-existing condition exclusionary wait period. *This is not applicable to individual health insurance policies.

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  • If I get coverage as a sole proprietor or self-employed individual, how does this differ from a group health plan or an individual plan?
    If I get coverage as a sole proprietor or self-employed individual, how does this differ from a group health plan or an individual plan?

    Technically, this depends upon state law and the insurance carrier. For instance, in NY, individuals are eligible for "group coverage" as a sole proprietor. Essentially, under NY state law, sole proprietors are enrolling in group coverage as a "group of one." These differ from individual health policies which are not considered to be group coverage, and as such, are subject to state laws while group coverage are subject to state and federal laws, including HIPAA.

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  • What does not qualify as creditable continuous coverage under HIPAA?
    What does not qualify as creditable continuous coverage under HIPAA?

    In most cases, limited benefit plans and medical discount programs are not considered to be creditable continuous coverage and should not be mistaken for major medical or full featured plans.

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  • What is a pre-existing condition and what's the difference between the "objective standard" and the "prudent standard" of the definition of a pre-existing condition?
    What is a pre-existing condition and what's the difference between the "objective standard" and the "prudent standard" of the definition of a pre-existing condition?

    A pre-existing condition is a medical condition or healthcare problem that existed before enrolling in a healthcare plan. The "objective standard" of the definition states that a pre-existing condition is anything for which you've received medical advice, care, diagnosis and treatment prior to your enrollment.

    By contrast, the "prudent standard" of the definition states that a pre-existing condition is any condition for which symptoms were present although medical advice, care, diagnosis, or treatment may not have been received prior to enrollment. Under the "prudent standard," an "ordinarily prudent" individual surely would have sought medical advice, care, diagnosis, or treatment for any symptoms that were present prior to enrollment.

    Most states implement the prudent standard of the definition.

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  • What is a pre-existing condition, as defined under HIPAA?
    What is a pre-existing condition, as defined under HIPAA?

    A pre-existing condition is anything for which medical advice, diagnosis, care, or treatment was recommended or received within six months before the effective start date of enrollment in a group healthcare plan. Under the law, group health plans may not impose an exclusionary wait period for pre-existing conditions longer than 12 months (or 18 months for late enrollees). *This is not applicable to individual health insurance policies.

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  • What is a state high risk pool?
    What is a state high risk pool?

    State high risk pools are state programs that offer health insurance to "uninsurable" individuals who are unable to obtain health insurance coverage through a group plan, are ineligible for Medicaid/Medicare, and cannot afford an individual health insurance policy.

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  • What is and qualifies as creditable coverage under HIPAA?
    What is and qualifies as creditable coverage under HIPAA?

    Creditable coverage is defined as certain types of prior health insurance coverage that may qualify in order to shorten or waive a pre-existing condition waiting period. This includes most comparable group healthcare plans, in certain cases, individual health insurance policies, Medicaid, Medicare, COBRA, state health benefits risk pools, the Peace Corps Act, or public healthcare plans.

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  • What is HIPAA?
    What is HIPAA?

    HIPAA stands for the Health Insurance Portability and Accountability Act. This is a federal law that offers you certain protections when transferring your healthcare coverage from one plan to another, limits exclusions for pre-existing conditions, includes provisions that address privacy and security of health data, and prohibits discrimination against you based on your health status, disability, medical history, or genetic information.

    *All aspects of HIPAA regulation may not be applicable to individual health insurance policies.

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  • What is the difference between individual health insurance plans and group health plans?
    What is the difference between individual health insurance plans and group health plans?

    A group health plan covers a group of people and is subject to state and federal law. Group plans are traditionally offered by employers, unions, and trade and member associations. Individual health insurance plans are subject to state laws which differ from state-to-state. When considering individual health insurance plans, ask yourself the following questions:

    • What are the rules and regulations for individual health policies in my state?
    • Am I a "HIPAA eligible" individual and if so, is this individual policy applicable to HIPAA rules and regulations?

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  • What types of healthcare plans are not subject to HIPAA and why?
    What types of healthcare plans are not subject to HIPAA and why?

    HIPAA is a federal law that applies to group health plans and is enforced by the Secretary of Labor. Private health insurance, on the other hand, is state regulated. Therefore, the individual health insurance market must adhere to all state rules and regulations of any given particular state. All state rules and regulations differ from state to state and exclusions may apply as appropriate.

    Individual health insurance policies or state high risk pool plans are not subject to HIPAA except in the case where it grants access to individual healthcare policies for "HIPAA eligible" individuals only.

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  • When would I be subject to an exclusionary wait period for pre-existing conditions under HIPAA continous creditable coverage, such as a group health plans?
    When would I be subject to an exclusionary wait period for pre-existing conditions under HIPAA continous creditable coverage, such as a group health plans?

    You may be subject to an exclusionary waiting period for pre-existing conditions if any of the following conditions apply:

    • You are not currently insured but sought medical advice, care, or treatment within the last six months before the effective start date in any given health insurance plan
    • If you were previously insured, but there's been a gap in coverage longer than 63 days
    • You currently are insured, but your current health insurance plan does not qualify as creditable coverage

    *Note: Group health plans may not impose a pre-existing condition exclusionary waiting period for pregnancy whether or not the woman had previous health coverage.

    In addition, a pre-existing exclusionary wait period may not be applied to newborns, newly adopted children or children placed for adoption under 18, as long as the child was covered within 30 days of the date of birth, adoption or placement for adoption and provided there was no significant break of coverage longer than 63 days.

    *This is not applicable to individual health insurance policies.

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  • Who qualifies as a "HIPAA eligible" individual?
    Who qualifies as a "HIPAA eligible" individual?

    "HIPAA eligible" individuals must have exhausted all options for coverage under any group plan and must meet all of the following criteria:

    • Have had continuous coverage for a minimum of 18 months with the most recent period under a group health plan without a significant break in coverage of more than 63 days in a row.
    • Have been offered the option for continuation of COBRA coverage, and have elected and exhausted it, or are ineligible for continuation of COBRA coverage altogether, or other similar state programs
    • Did not have their group coverage terminated because of nonpayment of premiums or fraud
    • Are not eligible for coverage under another group plan, Medicaid, or Medicare.

    In this case, only applicable individual health policies or state high risk pool plans may not exclude coverage for pre-existing conditions nor turn down an application for coverage only if all of the criteria is met as a "HIPAA eligible" individual and the individual applied within 63 days of the last date of coverage under a group plan.

    Individual market carriers may elect their two most popular individual health policies or "representative plans" for "HIPAA eligible" individuals. These are the only plans that may not impose pre-existing condition exclusions, but HIPAA does not limit premium rates on these individual policies.

    *Note: all "HIPAA eligible" individuals must apply to the appropriate entity as mandated by their state of residency. For instance, some states guarantee access to healthcare for "HIPAA eligible" individuals to high risk pools only, while other states guarantee access to all individual markets carriers, or both.

    Individual market carriers may impose a wait period for pre-existing conditions or deny coverage to "HIPAA eligible" individuals if access to non-group healthcare is provided by state high risk pools only.

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