Health Insurance Plans – A Guide
Health Insurance – Learn more here about types of plans, benefits and costs, deductibles, co-insurance and co-pay. Understand how health insurance works and get the best deal for you and your family.
When taking out a health insurance policy there are two important things to realise.
Firstly, that for most of the procedures that will be covered under your health insurance plan it is necessary to have what the insurance companies refer to as prior authorisation.
This means that the insurance company must agree to the procedure taking place before it is done in order to cover the cost of it.
The second important provision in all health insurance plans is that there will be wording to the effect that all procedures done under the terms of the policy must be deemed what is known as medically necessary.
What may not be so clear is that it is the insurance company that will deem whether medical procedures are medically necessary or not, not your physician or other healthcare practitioner or yourself, before they will agree to cover the cost of it.
This in effect means that your insurance company must decide prior to any medical procedure being carried out that they deem it to be necessary before they will agree to cover the cost of it.
Health Insurance – Five things to know
Benefits and costs
Deductibles, Co-Insurance and Co-Pay
In-Network and Out-Network
Health Insurance – Benefits and Costs
When taking out any health insurance plan, it is really important to know exactly what is covered and what is not.
This is true of any insurance policy, but health insurance policies detail to an exacting degree exactly what is and is not covered.
A lot of this may not be apparent prior to taking out the policy, but should be studied carefully once the policy has been enacted.
If possible try and obtain a specimen policy from an insurance company to give you an idea of what the coverage is and isn’t.
Costs involved in a health insurance policy or plan fall into a number of categories.
There is the annual premium for the individual and possibly for their family as well. There is the cost of a deductible, which again may be both for an individual and also collectively for their family as well.
There is likely to be some type of co-insurance on the policy, meaning the individual will be liable for a fixed percentage of all treatments and costs that are covered under the terms of the policy, once the deductible has been met.
This can sometimes amount to the individual having to carry up to 40% of all costs incurred.
There is a huge amount of detail in the act, but essentially it’s intent was to provide some type of insurance coverage for a significant number of Americans who had none at all.
This meant that potentially everyone would be able to have some type of health coverage or health insurance plan, and that people would not be discriminated against if they had what are known as pre-existing conditions.
Health Insurance – Deductibles
Deductibles are a common feature of every insurance policy, although they are sometimes referred to as an excess. The idea behind a deductible is that you as a policyholder retain a small amount of every claim you make under the policy.
This in part is to discourage frivolous claims, and in part to make sure the insurance company doesn’t have to expedite claims that are too small and will cost it a significant amount of money to process.
The level of deductible is normally adjusted or adjustable, so that the policyholder can reduce their level of premium if they are willing to agree to a higher deductible.
In health insurance firms, deductibles are significantly higher, proportionately, than they are in other types of insurance.
In addition there will be different levels of deductible that apply to in network costs and out of network costs, there are likely to be different deductibles with regard to prescription drugs, normally between generic and brand name description drugs.
It is also worth noting that other costs may have to be payable under the policy before the deductible is fully exhausted and a claim can be made.
Some healthcare policies will apply a sort of deductible credit annually, which means that if you do not use up your deductible in any given year you can be given some type of credit towards it in the following year.
Health Insurance – Co-Insurance and Co-Pay
The terms co pay and coinsurance are widely used in healthcare insurance policies.
Co pay is normally a relatively small, fixed cost payment that will be for an amount that you will pay for things such as regular visits to a physician or healthcare professional with the insurance company paying any subsequent amount due.
Coinsurance is a common feature of many health insurance plans but not all. What it does is expect the policyholder to pay a sliding scale percentage of the payment of all medical costs due under certain benefit of the policy, with the insurance company covering the rest of the cost.
The sliding scale should be set out in the terms and conditions of the policy, giving an indication that there may well be significant costs payable by the policyholder whatever their benefits and levels of deductible.
It is worth noting, that if you use a hospital or other type of provider that is out of network, then your costs may be significantly more, proportionately, than those of the insurance company.
This is because the hospital or provider would charge you their normal rates and you would pay a proportion of that, whereas the insurance company would probably be able to leverage a lower cost.
Health Insurance – In-Network/Out-Network
Every health insurance plan will have different levels of benefit and deductible costs that relate to what they call In network and Out of network, although they might use slightly different terminology.
These are hugely important areas to understand. The insurance company that underwrites your health insurance policy will have agreements regarding costs with a number of hospitals, physicians and other healthcare practitioners.
They will have negotiated special rates with these providers and as such they will be deemed to be In network. Hospitals, physicians and other healthcare providers that have not agreed special rates with the insurance company will be deemed Out of network.
Your insurance company will encourage you to use hospitals and physicians that are in their network and the cost and level of deductibles will be significantly cheaper because of this.
In reality, this means that you will be limited to which hospital you can use, and which physician or other healthcare practitioner you can see.
This limit may be clinical or geographical. Before taking out a health care plan, make sure that you understand which hospitals and physicians you can see if you need medical attention and that you are happy with that availability.
Health Insurance Plans – Complaints
Given the level of control that the insurance company has over whether or not you receive the medical attention and treatment that you need, it is important at the outset to understand what complaints procedure there may be.
This allows you to challenge a decision that an insurance company makes that may deny you treatment or limit length of treatment or limit usage of any prescription drugs.
The health insurance company themselves will have a complaints procedure that will be laid out in detail in your policy.
This will be an in-house corporate process, that will have guidelines as to the length of time they will set as a framework within which complaints have to be resolved.
This may well be something like a 30 day time frame, with the option of another 30 days extension if they deem it necessary.
This time length is unlikely to be legally binding, and will depend to an extent on the professionalism and goodwill of the insurance company.
In addition many insurance companies offer an expedited process if the medical treatment procedure is deemed urgent, with a willingness to review any decisions within a specific time frame, often a matter of two or three days.
In addition, depending on where you live, there may well be local or national consumer protection laws that give you rights to challenge and receive reviews regarding urgent medical care decisions within a specific time frame.
It is important to check out this process and understand it prior to any time when you may actually need to use it.
Health Insurance Policy Exclusions
Every health insurance policy will have a long long list of exclusions. There will be a standard set of exclusions that they apply to every health insurance policy that the company issues, and then there may be specific conditions that are applicable to your policy as well.
The insurance company may exclude certain medical conditions or impose terms either at the outset of the policy, or if the condition appears during a specific time period as set out in the terms and conditions of the policy.
The standard set of exclusions under the health insurance policy will range from issues such as cosmetic surgery through to animal to human organ donor costs.
In between there are a wide range of things that the insurance company will not cover, including many health promotion activities such as anti-smoking cessation programs.
It is a good idea to familiarise yourself with these exclusions at the beginning of your policy so you are aware of them prior to making any claim.
There will also be very specific terms and conditions relating to the cost, time length usage and availability of prescription drugs, both in a general sense and in relation to specific illnesses or diseases.
Again it is a good idea to monitor these prior to needing to make a claim.
Most standard health insurance plans will exclude dental and eye insurance cover, which will be offered as a separate policy, or sometimes as an additional section that can be added on to your main healthcare policy.
Again it is important to read through the exclusions as to what is and is not covered and the time scale involved.
It is common in many dental health insurance policies for there to be a standard six-month waiting period before any regular work such as a filling can be done, and a twelve month waiting period before any major work such as fitting a crown can be done and covered under the benefits of the policy.
Even if these exclusions apply, sometimes emergency pain relief work will be covered, although not always.
There is a high level of specificity in all health insurance plans, especially in dental and eye insurance plans, down to minute detail, as to what is and is not covered.
Other Types of Health Insurance Plans
There are wide variants of health insurance plans available that can include areas such as critical illness insurance, travel insurance and various health saving plans, often linked to various types of life insurance policies.
There are insurance plans that can be extended to include some type of care in a long-term facility, and there are other types of insurance plans that will specifically exclude any type of care home or nursing home for any length of time.
Health Insurance Plans – Summary
When considering which health insurance plan to buy, apart from cost and benefits, there are four or five major factors to consider. These will heavily influence how good your plan will be or not.
These are the issues of in / out networks, deductibles, co pay, co-insurance and exclusions.
The cost of a health insurance plan will be determined by what is known as medical underwriting.
This takes into account a number of personal and environmental factors that the insurance company will use to assess your level of risk.
This will then determine how much they decide to charge you as an annual premium.
Also the level of benefits they will offer to you and any exclusions they may deem appropriate to your policy.
For most people, health insurance is a necessity not a luxury. It is different to other types of insurance both in substance and in perception.
All insurance policies are legal contracts that will specify precisely what is and is not covered in terms of cost and benefits.
With a health insurance plan, the level of detail is mind-boggling, and can be incredibly frustrating because it can affect life and death decisions.