HEALTH INSURANCE BASICS
It's a fact of life — you need health insurance — and the time to get it is before
you have an accident, suffer a serious illness, or discover you're pregnant.
Insurance doesn't cover health care for medical problems or conditions that
start before the moment you have your policy. Finding adequate coverage might
seem overwhelming, but knowing the basics can help make your search less
boss doesn’t have to provide health insurance
The first reality of health insurance is you do not have a right
to it. There are no state or federal laws requiring private employers to offer
health benefits to their workers.
“For a number of valid reasons employers are not mandated to
offer or provide health insurance for their employees,” explains Peter Bigelow,
CLU, employee benefits specialist with The Foresight Group. “It is common
knowledge; however, that most employers though not mandated to do so offer
insurance to their employees for a variety of reasons related to
competition and smart business practice.”
If you have benefits through your employer, and you quit or
lose your job, don't assume you will be able to pick up the identical coverage
for the same price.
Similarly, don't expect your former employer to extend your
benefits beyond your last day at work. There is no "grace period"
during which you're still covered.
If you do lose your employer-sponsored benefits, there is a federal plan
called COBRA (Consolidated Omnibus Reconciliation Act) that could provide you with
a short-term safety net.
Another federal law that offers some protection to workers experiencing a
short-term lapse in their coverage is HIPAA (Health Insurance Portability and
Individual health insurance can be costly
If you need to purchase individual health insurance, it can be expensive.
Unlike group plans, in which the costs and risks associated with health care
are spread among many people; individual health policies are "medically
underwritten" to take into account your personal health history.
Any "pre-existing" condition such as heart disease, diabetes, and
even pregnancy, can nix your chances of acceptance or boost your premiums. Some
states require individual health insurers to offer everyone a plan, a mandate known
as "guaranteed issue."
Expect to pay more and more
Once you have a health plan, don’t expect your premiums to remain the same.
Health insurance companies often seek permission to raise premiums.
Additionally, some states allow health insurers to "file and use"
rate increases, which means the insurers only have to submit their increases in
writing and then they may immediately begin charging customers more money.
Unless insurance regulators determine the rates are excessive, the insurers are
allowed to keep charging the higher premiums.
North Carolina Insurance Commissioner Jim Long says even if you have group
health insurance, there’s a good chance your rates will climb. “Even though you have not presented any claims, others that
are insured by the same type policy have presented claims. Rates are directly
affected by the claims experience of the group insured under a given plan or
policy,” Long explains.
Help when you can't afford an
If you're a college student and you need coverage — perhaps
you're being dropped from your parents' plan — your school might offer
reasonable health insurance.
No matter what your age, there are several federally sponsored programs to
help you if can't afford the premiums for individual health insurance,
providing you meet their eligibility guidelines:
- Medicare, a health insurance program for people age 65
or older, certain younger people with disabilities, and people with end-stage
- Medicaid, a program for the
poorest individuals and low-income families with children.
- The Children's Health
Insurance Program (CHIP), a plan that provides health care to children
whose parents make too much to qualify for Medicaid, but earn too little
to afford individual health insurance.
Many states offer health care plans for children of
parents, who don’t have health insurance through work and cannot afford
individual plans. Some states have expanded the plans to cover the parents as
New York Governor George Pataki, like many of his fellow
governors, is urging low-income parents to sign up for these programs. “This
landmark health insurance program for working adults with lower incomes will
help ensure that hundreds of thousands of families get the high-quality health
care they need to build a happy and healthy future,” Pataki says.
Making sense of alphabet soup
Before you visit a country where the population speaks a foreign language,
it helps to know a few key words and phrases. The same holds true when you're
trying to decipher the lingo of health insurance. Whether you're buying
individual or group health insurance, know there are several health plan
varieties, including traditional indemnity fee-for-service plans (FFS), health
maintenance organizations (HMOs), point of service plans (POS), and preferred
provider organizations (PPO). Each plan has its own features to consider before
making your choice.
FFS, also called traditional
FFS coverage offers flexibility in exchange for higher out-of-pocket
expenses, more paperwork, and higher premiums.
- You may choose your own
doctors and hospitals.
- You may visit any specialist
without getting permission from a primary care physician.
- There's typically a
deductible (anywhere from $500 to $1,500) before the insurance company
starts paying claims, and then doctors are reimbursed about 80 percent of
the bill while you pick up the remaining 20 percent.
- You might have to pay up
front for medical services, and then submit the bill for reimbursement.
- FFS plans pay only for
"reasonable and customary" medical expenses. If your doctor
charges more than the average for your area, you will have to pay the
HMOs are the least expensive, but also the least flexible of all the health
insurance plans. They are geared more toward members of a group seeking health
- They offer their customers
low co-payments, minimal paperwork, and coverage for many preventive-care
and health-improvement programs.
- You must choose a
primary care physician, also known as a PCP.
- HMOs require you to see only
network doctors, or they won't pay.
- You must get a
referral from your PCP to see a specialist.
POS plans are more flexible than HMOs, but they also require you to select a
primary care physician (PCP).
- Depending on your insurance
company's rules, you may choose to visit a doctor outside the network and
still receive coverage — but the amount covered will be substantially less
than if you went to a physician within your network.
- These plans tend to offer more
preventive care and well-being services, such as workshops on smoking
cessation and discounts to health clubs.
- You must choose a PCP.
- While you may choose to see
a physician outside the network, if you don't receive permission from your
PCP, you're likely to wind up submitting the bills yourself and receiving
only a nominal reimbursement — if any.
PPOs give policyholders a financial incentive — reasonable co-payments (also
called co-pays) — to stay within the group's network of practitioners.
- The standard co-payment is
$10 for a routine office visit during regular hours.
- You may go to any specialist
without permission, as long as the doctor participates in the network.
- If you see an out-of-network
doctor, you might have to pay the entire bill yourself, and then submit it
- You might have to pay a
deductible if you choose to go outside the network, or pay the difference
between what network doctors and out-of-network doctors charge.
How to find an individual health plan
Your first step in getting health coverage is to contact an
insurance agent in your area, or an insurance company. An agent should be
familiar with the insurance companies that do business in your state, especially
those able to provide the coverage you need.
You might do business with either a "captive" agent who works for
one insurance company, or an independent agent or broker who sells policies for
a variety of companies. A list of agents can be found in your phone book or by
contacting your state department of insurance.
You should discuss with your agent your own particular health insurance
needs. Think carefully about what coverage you must have. Do you need health insurance
for your whole family, or just yourself? Do you want to choose your providers?
If you're over 65, do you need insurance to fill the gaps in Medicare? Do you
need — and can you afford — long-term disability and/or long term care
When you've found the right coverage, you need to fill out an application or
give information to your agent to complete the necessary forms. Be honest. It's
important to disclose your medical history thoroughly and accurately. Report
all of your health problems to your agent. If any of your health information is
misstated or incomplete, the company might refuse to pay your claims and could
cancel your policy.