HEALTH INSURANCE 101

HEALTH INSURANCE BASICS

HEALTH INSURANCE: A legal contract between an individual or a group of individuals and an insurance company under which, in exchage for premium payments, the insurance company agrees to pay for mdeical expenses and/or disability income loss incurred under the terms of the contract.

TYPES OF HEALTH INSURANCE: There are many types of health care insurance available today. The most common types are as follows:

Traditional health insurance: 1) Group and individual; 2) Indemnity - Fee for Service

Managed care health program: 1) HMO - Health Maintenance Organizations; 2) PPO - Preferred Provider Organizations; 3) POS - Point of Service Plans; 4) Blue Cross & Blue Shield.

Government medical insurance benefits: 1) Medicare; 2) Medicaid; 3) Medicare Supplements.

Long-term care insurance:

Disabilty insurance: 1) Social Security; 2) Workmen's Compensation; 3) Individual Income Replacement; 4) Employer Sponsored Disabilty Income; 5) Overhead Expense; 6) Buyout.

HEALTH PLAN CHOICES: Plans differ, both in how much one has to pay and how easy it is to get the services they need. Health insurance plans usually are described as either indemnity (fee-for-service) or managed care. Indemnity and managed plans differ in their basic approach. The major differeces concern choiced of providers, out-of-pocket costs for covered services, and how bills are paid. Usually indemnity plans offer more choice of doctors, hospitals, and other health care providers than managed care plans. Indemnity plans pay their share of hte costs of a service only after they receive a bill.

Managed care plans: have agreements with certain doctors, hospitals, and health care providers to give a range of services to pln members at reduced cost. In general, one will have less paperwork and lower oit-of-pocket costs if they select a managed care-type plan and a broader choice of health care providers if they selectr an indemnity-type plan.

With an indemnity plan, one can use any medical provider (such as doctor and hopital). They send the bill to the insurance company, which pays part of it, Usually, one has a deductible to pay each year before the insurer starts paying. Once they meet the deductible, most indemnity plans pay a percentage of what they consider the "usual and customary" charge for covered services. The insurer generally pays 80 percent of the usual and customary cost and they pay the other 20 percent, which is known as coinsurance.

Hospital-surgical policies, sometines called basic health insruance, provides benefits when one has a covered condition that requires hospitalization. These benefits typically include room and board and other hospital services, surgery, phyusicians' non-surgical services that are performed in a hospital, expenses for diagnostic X-rays and laboratory tests, and room and board in sn extended care facility.

Catastrophic coverage pays hospital and medical expenses above a certain deductible; this can provide additional protection if one holds either a hospital-surgical policy or a major medical policy with a lower-than-adequate lifetime limit. These policies typically contain a very high deductible ($15,000 or more) and a maximum lifetime high enough to cover the costs of catastrophic illness.

Specific or dread disease policies rpovide benefits only if one gets the specific disease or group of disease named in the policy. For example, a policy might cover only medical care for cancer.

Hospital indemnity insurance pays one a specific amount of cash benefits for each day that one is hospitalizedm generally up to a designated number of days. These cash benefits are paid directly to them, can bve used ofr any purpose, and may be useful in meeting out-of-pocket expenses not covered by other insurances.

Private insurers: There are three main sources of private health insurance in the United States; 1) the commercial (for profit) insurance companies who specializes in group coverage insurance; 2) managed care providers; and 3) the many not-for-porfit Blue Cross and Blue Shield service benefit plans.

Self-insured plans: Another health insurance source is the ever-increasing number of companies, voluntary and professional organoizations, that are establishing their own "self-insured" plans. In some other cases, they provide the funding for thir plans but contract with insruance companies that agree to adminster the plans.

Government sponsored : The chief sources of government coverage include Medicare, Mediaid, coverage for veterans abd their dependentsm and coverage for federal and state employees.

Medicare is the federal program of hospital and medical insurance primarily for people age 65 and over who are not covered by an employer's plan. Medicare, however doesn't cover all medical expenses. That's where Medicare Supplements come in.

Long-term care policies cover he medical care, nursingm and other assistance one might need if they have a chronic illness or diability that leaves them unable to care for themselves for an extended period of time. These services generally are not covered by other health insurance. One may receive long-term care in a nursing home or in their own home

Disabilty i nsurance provides one with an income if illness or injry prevents he or she from being able to work for an extended period of time. It is an important but often overlook form of insurance.

GROUP INSURANCE: Typically offered through employers, although unions, professional associations, and other organizations also offer it.

If one losses their job...: If they have had health coverage as an employee benefit and they leave their job, volunatrily or otherwise, one of their first concerns will be maintqaing protection against the costs of health care.

Pre-existing condition may be covered : Identified medical conditions that an insured had prior to the health insurance going into effect. The health Insurance Portability and Accountability Act (HIPAA) helps assure continued health insurance coverage for employees and their dependents. Starting July 1, 1997, insurers could impose oml;y a 12-month waiting period for any pre-existing condition treated or diagnosed in the previous six months. One's prior health insruance coverage will be credited toward the preexisting condition exclusion period as long as he or she has mainteained continuous coverage without a break of more than 62 days.

COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985) is a law that requires an employer with twenty or more employees to allow an employee and his or her dependents to stay covered under the employer's group health plan for a specific period of time after losing a job, having work hours reduced, or after a spouce's death or a divorce.However, an individual may have to pay the total of the premium the individual's share and the employer's share. It is called "continuation of coverage".