Frequently Asked Questions Health Insurance
What is a premium?
A premium is the monthly cost of keeping your insurance policy in effect. Health insurance premiums are determined by a variety of factors, including your medical history, your lifestyle, and your current health status.
What is a deductible?
A deductible is an amount of medical expenses you are responsible for paying before your insurance starts covering you. A common deductible is $500 this means you would be responsible for paying the first $500 in medical bills before receiving coverage. Having a higher deductible usually means you enjoy lower monthly premiums.
What is a co-payment?
A co-payment is a fixed-dollar amount that you are responsible for paying for a particular medical service. For example, many plans have $20 co-payments for doctor’s visits. This means it only costs you $20 to see a doctor.
What is coinsurance?
Coinsurance is an amount of the cost of a medical service that you are responsible for paying. Unlike a co-payment, which is a fixed-dollar amount, coinsurance is expressed as a percentage. For example, many insurance plans have 20% coinsurance for hospital costs meaning you pay 20% of the total cost of a trip to the hospital.
What’s an out-of-pocket expense?
An out-of-pocket expense is any cost you have to pay yourself when receiving medical care. This includes your deductible, co-payments, and coinsurance. Most health insurance policies have an annual maximum out-of-pocket expense. Once you’ve paid out enough money to meet that maximum, your insurance company will pay the rest of your medical costs.
How does maternity insurance work on individual/family plans?
Maternity is often excluded by insurers who sell insurance to individuals and families, however many states require that complications of pregnancy be covered. There are a few companies in the market that do have options available which combine price, benefits and features in such a way that it makes sense to purchase these special riders.
What is managed care?
Managed care is a form of health insurance that stresses preventive medicine and affordability. In a managed care plan, you typically choose a Primary Care Physician who is responsible for approving specialist and hospital care. Managed care was originally introduced as a way to control healthcare costs. It’s now the most common form of health insurance in the United States. HMOs and PPOs are examples of managed care.
What is a Health Savings Account?
Health Savings Accounts aren’t health insurance plans. Instead, they are a financial tool designed to help make your healthcare more affordable. The money you deposit in an HSA is tax-free. You don’t pay taxes on qualified withdrawals, either. In effect, it’s like getting extra money from the government to pay for healthcare. To open an HSA, you first have to purchase a high deductible health plan.
Why should I buy health insurance?
Having health insurance isn’t just about paying medical bills. It’s about knowing that you’ll always have access to quality care. Health insurance makes seeing the doctor easy and affordable and that means you’re more likely to stay healthy.
If I have a large claim can the insurance company cancel me?
Most insurance companies offer health insurance contracts which have a provision known as “guaranteed renewability.” What this means is that an insurance company cannot cancel your policy provided you continue to make premium payments. The only other way that you could have your policy cancelled is if the insurance company itself were to no longer be in business.
If I have a large claim, will my premiums go up dramatically so that I can no longer afford to pay?
Again, another misconception that people have is that an insurance company will single people out who file large claims. Another protection afforded by most states is a provision which does not allow insurers to single out individuals for renewal increases based on their incurred claims. A company must offer the same renewal increase to all its similarly situated insureds in a specific “pool.”
What happens if I don’t disclose a known pre-existing medical condition?
One of the worst mistakes you can make is non-disclosure of a known medical condition at the time of application. An insurance application is the insurance company’s only opportunity to ask its potential clients about their health history to ascertain how much risk they are assuming for a given client. This process is designed to protect both the insurance company and the other people it insures from assuming risks that will compromise the overall “health” of its insured pool. However, the most important reason to disclose all information requested in an insurance company’s application is that failure to do so can result in the entire policy being terminated all the way back to the beginning of the coverage and refund all premiums minus any claims paid on the insured’s behalf. This process is known as “reform and rescission.” Reform typically means that a minor health issue was concealed and an insured may keep their medical insurance policy with some revised terms.
What does Stop-loss, Coinsurance Maximum, or Maximum Out-of-Pocket mean?
Many people understand that they must meet their deductible and then they will be responsible for a percentage of costs beyond that while the insurance company pays the rest – 80/20, 70/30, 50/50 are very common “co-insurance” percentages. What many people don’t realize is that there is often a point in time where the insurance company assumes 100% of the financial responsibility for claims. Stop-loss, coinsurance maximum and maximum out-of-pocket are terms that refer to that point in time where the insurance company assumes full claim responsibility.
Glossary of Insurance Terms:
Health Insurance Glossary
Additional Insured: Anyone covered under your health plan that is not named as “insured” in your documentation from the insurance company.
Benefit: The dollar amount your insurance carrier will pay when you file a claim for a covered loss.
Benefit Period: The interval during which you will be eligible for benefits. Generally, your benefit period will begin with the first medical service you received for a specific illness and end after you have not been treated for that condition for 60 days.
Carrier: The insurance company you receive your health plan from.
Certificate of Insurance: This is the printed description of your benefits and coverage limits that forms a contract between you and your carrier. It spells out precisely what will be covered, what won’t, and the dollar maximums.
Claim: This refers to any request to your insurance company for benefits.
COBRA: This acronym refers to the Consolidated Omnibus Budget Reconciliation Act of 1985. The law requires group medical plans covering twenty employees or more to offer participants the option to receive continued healthcare benefits for up to eighteen months after the cancellation of their group plan.
Coinsurance: The amount you will be required to pay for a particular medical expense. Coinsurance is measured as a percentage of the total medical bill.
Co-payment: This is a cost-sharing arrangement in which you will be responsible for a specific charge for a specific medical service ($20.00 per office visit, or $10.00 per generic prescription).
Covered Expenses: The various medical procedures that your insurer has agreed to provide you coverage for.
Deductible: The amount you’ll be required to pay for healthcare expenses before your insurance plan will begin to reimburse you.
Exclusion: A specific circumstance or condition that is not covered by your policy.
Effective Date: This refers to the date on which your insurance coverage will actually begin to cover you.
Fee-for-Service: This is a payment system for healthcare where your provider is paid for each service after it is performed. You receive reimbursement after you file a claim.
HMO: Health Maintenance Organization. HMO’s are popular health benefit programs in which you’ll pay monthly premiums in return for managed coverage for your checkups, hospital stays, doctors’ visits, surgery, emergency care, preventive care, lab tests, and X-rays. If you join an HMO, you will have to select what’s called a “Primary Care Physician” who will be responsible for coordinating your healthcare and making any referrals to specialists that you require. You’ll also have to use doctors, hospitals and clinics who are members of your HMO plan’s network.
In-network: Healthcare facilities or providers who are members of your health plan.
Lifetime Limit: This refers to the cap (or maximum level) on benefits available through a policy.
LOS: This is an acronym for the term “length of stay”. It’s used by insurance carriers, case managers, and other healthcare professionals to describe the length of time any individual spends in a hospital or an in-patient care facility.
Maximum Out-of-Pocket Expenses: The most you will have to pay during one year — in the form of deductibles and coinsurance fees.
Managed Care: This term refers to an increasingly broad assortment of health plans that manage healthcare costs and usage. There are three major types of managed health plans: HMOs (Health Maintenance Organizations), PPOs (Preferred Provider Organizations) and POS (Point-Of-Service plans).
Medicaid: This is a joint state/federal health insurance program that is administered by the state. It provides health coverage for low-income individuals, especially pregnant women, children and the disabled.
Medicare: This is a federally-sponsored healthcare program that offers coverage for medical and hospital care primarily to those over the age of 65.
Network: This refers to the groups of doctors, hospitals and other medical professionals who have been contracted to provide discounted healthcare services to your insurance carrier’s customers.
Out-of-Network: This term typically refers to any doctors, hospitals or other healthcare providers considered to be non-participants by your insurance plan (HMO, POS, or PPO). Depending on your plan’s guidelines, services provided by out-of-plan providers may not be covered, or only covered in part.
POS: Point-of-Service Plan. A POS is a managed healthcare plan that combines the features of a Health Maintenance Organization and a Preferred Provider Organization. These plans allow you to decide whether or not you’ll use an in-network provider or an out-of-network provider.
Pre-existing Conditions: This refers to any healthcare issues you had prior to your insurance plan’s effective date. Many policies will refuse to cover pre-existing conditions, while others do so only for a short time.
PPO: Preferred Provider Organization. PPOs are networks of healthcare providers who have negotiated discount contracts with health insurance carriers. Your healthcare provider decisions will be up to you, but there are generally financial incentives for you to select providers within your PPO network.
Preventative Care: Health services that focus solely on preventative care measures such as physical exams, immunizations, diagnostic tests and mammograms.
Premium: The dollar amount you’ll pay on a monthly basis in exchange for your insurance coverage.
Primary Care Physician: Most HMOs and POS plans will require you to select one family physician, pediatrician or internist to monitor your health, treat most of your health problems, and refer you to specialists when necessary.
Provider: This term refers to any individual (nurse, physician, or specialist) or institution (clinic, hospital, or laboratory) that provides you with care.
Rider: This refers to any policy attachment that makes additions or changes to your original insurance plan.
Short Term Health Insurance: This type of healthcare plan is purchased to provide you with benefits during coverage gaps between jobs, after a move, or while you’re traveling overseas.
Small Business Health Insurance: This is a type of healthcare coverage that is available to businesses employing between two and fifty employees. It offers discounted premiums to employees and tax advantages to small business owners; also in most cases, the coverage cannot be denied.
Travel Health Insurance: This insurance is purchased to provide you with coverage when you’re traveling abroad.
Waiting Period: This refers to a pre-specified time period during which you will not be covered by your insurance (for a particular healthcare issue).
