Illness for non-work related injuries can be financially devastating. Insurance can help protect against disastrous health care expenses and lost wages. If you have a job, your employer may make medical and disability income benefits available to you. You can also purchase these coverages privately or through an insurance agent who is licensed by the State to sell health insurance products.
Types of Health Plans and How They Operate
Medical Expenses Plans— pay expenses incurred for diagnosis and treatment of medical conditions.
Reimbursement and Fixed Allowance Insurance Plans (Department of Insurance Jurisdiction)
Full freedom-of-choice plans allow you to choose any doctor and hospital. You can also choose the amount of the "deductible" you must pay before the plan pays anything. After the deductible is met, a percentage of all your expenses is usually covered. The difference between the percentage the plan pays and the amount charged is the "co-amount" that you must pay. The policy or employer benefit booklet will spell out the terms and conditions of what is covered and what in not covered. Read this contract BEFORE you need to use the plan and ask your agent or employer to explain anything which is unclear to you.
Preferred Provider Organization (PPO) Plans allow you to choose a doctor or hospital from a list of "preferred" providers in order to receive full benefits. If you go to a doctor or hospital who is not on the list, the plan may cover a smaller percentage or none of your costs. Check with the insurance carrier BEFORE you use the plan to make certain your physician or hospital is a contracting provider. Make certain your doctor refers you to other providers who are on the list, or who the carrier agrees to pay at the "preferred" rate.
Individual Plans are a good alternative if you are not able to get coverage through your employer. A pre-existing condition, such as a past illness, must be covered after one year. However, the insurance company will decide on the basis of your health history if they will issue the coverage.
Multiple Employer welfare Arrangements(MEWA) may be insured or partially –insured plans. They are typically marketed to self-employed individuals or small employers through membership in a trade or other association. The California Insurance Code now requires MEWA’s to obtain a "Certificate of Compliance" and to set aside financial reserves to operate. They must comply with the health care reforms effective after July 1993. These plans can only be sold through a licensed life insurance agent.
Disability Income Policies
Replace part of your wages lost because you can not work because of a disabling sickness or injury. Income replacement policies pay weekly or monthly amount when you are unable to perform the duties of your job. The contract defines how much you will be paid, how soon after you are disabled payments begin and when they will cease. There are many different kinds of contracts. Shop carefully through a licensed health insurance agent who is knowledgeable about this type of coverage.
Supplemental Insurance Policies
Some examples of supplemental insurance policies:
These Policies are designed to pay in addition to your regular medical expenses or income replacement policies and should not be used as a substitute for more than comprehensive coverage. They pay limited benefits such as a daily dollar amount if you are hospitalized (Hospital Income Polices) or expenses incurred to treat a specified "dread disease" such as cancer or a stroke. This coverage may duplicate some of what you are paying for in your comprehensive medical expense plan.
Make certain you understand the limitations and exclusions before you buy.
Pre-Paid Contracts (Department of Managed Health Care Jurisdiction)
Health Maintenance Organizations (HMO) Plans were formed with the idea of controlling cost and providing preventative health care before members get sick. HMOs are comprised of hospitals, doctors and other medical personnel who have joined to provide health care to members in return for a pre-paid monthly charge. You can go to the provider as often a as you need for the same monthly cost and an additional small fee per office visit or prescription. Most other medical services are fully covered. You do not have the option of going to a medical provider who is NOT part of the HMO. Enrollment is usually limited to employer groups, but a few HMOs will take individual members.
Self-Insured Single Employer Plans (Department of Labor Jurisdiction)
Some large employers and many labor unions provide group health coverage for their employees or members without buying an insurance policy or HMO plan. (Some plans hire insurance companies to do the paperwork). You are self-insured under the Employment Retirement Income Security Act (ERISA) or if it is "insured by" an insurance company. If the plan is self-insured and the employer or the union does not pay a claim, you may have little recourse because these plans are not regulated by the State. Federal labor law governs these plans, but the federal government does not handle claim complaints.
HEALTH INSURANCE TERMS YOU SHOULD KNOW
Assignment of Benefits—When you assign benefits, you sign a paper allowing your hospital or doctor to collect your health insurance benefits directly from your insurance company.
Otherwise, you pay for the treatment and the company reimburses you.
Claim—Notification to the insurance company from the insured or health provider (if you have assigned benefits) that a payment is due under provision of the insurance policy.
Co-Payment—The portion charges paid by the patient in addition to any deductible for covered services and supplies.
Deductible—A fixed amount which is deducted from eligible expenses before benefits from the insurance company are payable. You may choose a higher deductible to lower your premium.
ERISA—Employee Retirement Income Security Act (of 1974). Administered by the U.S. Department of Labor, ERISA regulates employer-sponsored pension and insurance plans for employees.
Grace Period—a specified period immediately following premium due date, during which payment can be made to continue the policy in force with out interruption.
Guaranteed Issue—The coverage is available regardless of prior medical history. Small
employers (between 3 and 50 employees) cannot be refused coverage because of the medical history of one or more employees. Some individual plans are available on a Guaranteed Issue Basis, although premiums are higher.
Limitations—Conditions or circumstances for which benefits are not payable or are limited. It is important to read the limitations, exclusions and reductions clause in your policy or certificate of insurance to determine which expenses are not covered.
Medically Necessary—Many insurance policies will pay only for treatment that is deemed "medically necessary " to restore a person’s health. For instance, many policies will not cover plastic surgery for cosmetic purposes.
Pre-Existing Conditions—Any illness or health problems you had prior to obtaining insurance. Group health care policies will cover pre-existing conditions after you have been covered for up to 6 months; Individual plans up to 12 months.
Prior Qualifying Coverage—Health plan coverage that was in effect before the effective date of the current or new coverage. Both individual and group plans must credit coverage that was in effect before the start of the current coverage toward the satisfaction of the pre-existing conditions exclusions.
Usual Reasonable and Customary—The charges that a carrier determines normal for a particular medical procedure in a specific geographic area. If charges and higher than what the carrier considers normal, the carrier will not pay the full amount charged and the balance is your responsibility.