Frequently
Asked Questions About Health Insurance
Q. Can’t I just buy
“individual”
health
insurance when I need to have an expensive
procedure?
A. No. If you need to receive costly medical care within
the first 12 months of purchasing a
health insurance policy,
insurance companies do not have to provide coverage for pre-existing conditions (anything you’ve been diagnosed with or treated for in
the previous 10 years) for up to 1 year from the start of the policy. Depending on the
severity of your illness or procedure the insurance company also can decline or
post pone you for
health
insurance
until the procedure has been completed. Some of the better
health insurance
policies actually cover controlled pre-existing conditions such as Hyperlipidimia or Hypertension from day
one. But most other pre-existing
conditions will not be covered. In order to avoid such a waiting period, once
you get health insurance you should always maintain it.
Q. I’m very healthy so why should I pay
expensive monthly
health insurance
premiums when I “probably” won’t ever go to the doctor?
A. Although there may be a “probability,”
based on your past health history, that you are not likely to see a doctor,
incur a serious injury or develop a life-threatening illness, the fact
remains, that you can never be certain. If you don’t obtain
health insurance, you
are “gambling” with your
health. Here
are the gambling statistics:
1. Lack of
health insurance
causes 18,000 unnecessary deaths every year.
2. Adults without
health insurance
have a 25% greater chance of dying from a disease or condition than those
with
health insurance.
Q. If I don’t have
health
insurance and need medical care, won’t the
hospital charge me less money because I am
uninsured?
A. No. What many people do not know is that
hospitals routinely charge
uninsured people up to four times as much for
medical treatment as patients with health insurance coverage. Insurance
companies often negotiate rates for their
policy holders and
hospitals agree to charge those patients a set dollar amount for medical care.
The rate the hospital may charge an
insured
patient often differs from what the hospital will charge an
uninsured patient. The average
uninsured patient will
pay $30,000 for medical treatment related to a mild heart attack while an
insured patient’s
private insurance company will be charged less than $10,000 for the exact same
treatment. This means that the average,
uninsured working man or woman can be stuck
with a bill that is more than double what a managed care company or a government
program pays for medical treatment. In most cases,
uninsured
individuals are aggressively pursued by collection agencies for debts relating
to medical care.
Q. How many Americans do not have
health
insurance?
A. In 2005, the number of uninsured Americans
stood at a record 46.6 million, indicating that 15.9 percent of Americans lack
health
insurance
coverage. The ranks of the uninsured in 2005 included 21.5 million people
who worked full-time. Census Bureau data shows that the number of
uninsured has consistently increased over the last 5 years and more people are
without
health
insurance now, than at any point in history.
Today, more than 38 million Americans rely on Medicaid as a safety net for their
care needs. Since 2000, the ranks of the uninsured have grown by 6.8 million.
Additionally, data collected in 2005, also indicates that the percentage of
Americans with private
health
insurance
declined to 67.7 percent. The percentage was 63.6 percent in 2000. The data
demonstrates that 3 million fewer Americans had employment-based
health insurance coverage
in 2005, then in the year 2000.
Q. If I have
health insurance
do I still have to worry about bankruptcy?
A. Yes. According to a recent Harvard
study, nearly half of the estimated 1.5 million personal bankruptcies filed each
year result from high health expenses—even though 76 percent of the filers are
covered by
health
insurance at the onset of illness. This report
appears in the February 2007 issue of Health Affairs. According to David
Himmelstein, an associate professor of medicine at Harvard Medical School who
led the study, "Almost every American is one step away from potential bankruptcy
from serious illness."
Q. Why are so many Americans with
health
insurance
coverage filing for bankruptcy?
A. The primary reason is that policy
holders really don’t understand their
health
insurance
benefits and their total out of pocket expenses. To stay price competitive and
make a larger profit,
health insurance
companies often eliminate or reduce benefits. Often,
the way the policy is sold, this reduction in benefits may not even be
noticeable. However, it is important to point out that some companies, in
particular, those that service the small business & self-employed
health
insurance
market, have decreased lifetime benefits, limited coverage for organ
transplants, implemented separate hospital deductibles, restricted diagnostic &
out-patient treatments and imposed access fees. Companies have even eliminated
certain benefits entirely, for example, prescription drugs, organ transplants
and maternity coverage.
Let’s look at how some companies have eliminated or reduced benefits for organ
transplant coverage. A policy holder knows that s/he has a plan that offers
coverage for organ transplants, but what s/he may not know is that there is only
a $100,000 maximum benefit for a procedure that normally costs
$250,000-$500,000. Now let’s take a look at how a company can advertise that a
policy has a $5 million maximum lifetime benefit, when in fact, the benefit may
only be $100,000 per illness. A consumer purchases a
health
insurance
policy that offers $5 million maximum of lifetime benefits, however, in the
“fine print” of the brochure, the plan states that it has a $100,000 “per
illness” cap. This means that if the policy holder develops a serious illness
that requires only 1 surgery, his/her $100,000 “per illness” cap may be reached
by the time s/he has her 2nd surgery.
Unfortunately, consumers don’t often read the “fine print” until their insurance
company informs then that they have exhausted their coverage and the policy
holder discovers that the “affordable”
health insurance
plan with $5 million dollars of lifetime coverage won’t pay out $5 million
dollars unless the policy holder develops multiple unrelated & separate life
threatening and debilitating illnesses all with a cost less than $100,000.
Hopefully this should make it easier to understand why so many Americans with
health
insurance
are forced to file for bankruptcy.
Q. Won’t filing for bankruptcy eliminate all my medical debt?
A. A controversial bankruptcy law enacted by Congress in 2006, makes
it tougher for many Americans to wipe out debt by declaring bankruptcy,
regardless of whether their debt resulted from medical bills or from reckless
spending at the mall. Under the old law, people who filed for bankruptcy under
Chapter 7 were allowed to erase their debt and start fresh. The new measure
makes it less likely that debtors particularly those who earn more than their
state’s median income level—will qualify for Chapter 7. Instead, they will have
to file under Chapter 13, which requires paying off some or all debt over a
designated period of time. Filers must then go through a "means test" to
determine how much debt, if any, they can pay. They must also get credit
counseling and take a financial management course at their own expense.
Q. I know I need
health insurance, but can
I really afford it?
A. Unfortunately, it is a fact of life that you may have to give up
certain luxury items, brown bag your lunch or decrease your spending in other
areas to afford health insurance. If you are the type of person that
wouldn’t risk driving your vehicle without car insurance, consider the fact that
there is a statistically greater chance that you will suffer from an illness or
injury than an auto accident. Today, nearly 20 cents out of every dollar spent
in the United States is spent on health care. In 2006, the U.S. health care
spending weighed in at $2.1 trillion and is projected to double to $4.1 trillion
by 2016, according to John Poisal, deputy director of the National Health
Statistics Group, part of the Office of the Actuary in the Centers for Medicare
and Medicaid Services, in a 2007 Health Affairs study. The report also
predicts the annual growth rate for prescription drug spending will soar from
7.4% in 2007 to nearly 10% in 2016.
Q. Where can I buy a
health insurance
policy?
A. Traditionally,
health insurance policies
have been sold by “captive” agents who worked for insurance companies and had a
vested interest in selling you that company’s insurance products. Today, there
are more consumer-friendly options for acquiring
health
insurance
coverage. “Independent” insurance agents, also known as “non-captive” agents or
“brokers” can sell insurance policies from several different companies, allowing
them to be more objective about your personal needs. These individuals may even
be able to provide a complete review of your insurance needs, something you
should do at least once a year to make sure that your policy is up to date with
your current financial situation. Finally, the web has become an excellent
resource for comparison shopping, however, when purchasing insurance, consumers
must keep in mind that, although convenient, the web is no substitute for the
personal attention that you will receive when you deal with a knowledgeable,
ethical and reputable
health
insurance agent or “broker.” It does not cost a
penny more to purchase your insurance through an agent or broker so why buy
blindly?
Q. What is a “captive” agent?”
A. A “captive” agent is an insurance agent that works for one
company and is restricted, by agreement, to only recommend and sell the
insurance products that that particular company offers, even if those products
do not exactly meet the insurance needs of the customer. In essence, the
“captive” agent has more of an allegiance to the insurance company than the
insurance buyer. For example, if you walk into a State Farm office to purchase
health
insurance
that agent can only sell you Assurant Health products. Assurant Health products
are some of the most expensive
health insurance
products on the market today and they contain significant additional out of
pocket expenses. If you expect your
insurance agent to provide you with several plan comparisons from different
carriers, it is in your best interest to work with a knowledgeable, ethical and
reputable “independent” agent or “broker.”
Q. What is a “non-captive” “independent” insurance agent or
“broker?”
A. A “non-captive” “independent” insurance agent or “broker” is a
licensed professional representing the insurance buyer/consumer, rather than the
insurance company. A “non-captive’ “independent” insurance agent or “broker”
usually represents more than one company, therefore, plan comparisons can be
made and plan benefits can be added, based on the buyer’s specific insurance
needs. Most insurance “brokers” also offer multiple lines of insurance products
including
health
insurance, life insurance, accident only
policies, disability insurance, critical illness policies, long term care
insurance, workman’s compensation insurance, business insurance and certain
financial services.
Q. Should I choose to work with a “captive” agent or an insurance
“broker?”
A. Ultimately, that choice is really up to you. If you have
been working with a “captive” agent who has been less than forthcoming about
what your health plan does and does not cover or has not fully informed you
about your plan’s benefits, limitations of coverage and total out-of-pocket
expenses, then it might be in your best interest to speak to a insurance
“broker” to determine how your current plan’s benefits and price compare to
other plans on the market. If you are too busy to comparison shop, it is in your
best interest to work with a knowledgeable, ethical and reputable insurance
“broker.”
Q. How do I find knowledgeable, ethical and reputable insurance
“brokers?”
A. Knowledgeable, ethical and reputable insurance “brokers” often
rely on “word of mouth” advertising. Many insurance “brokers” advertise in the
yellow pages or on the web, but advertisements are no substitute for good
business relationships with existing clients. Reputable “brokers” will
usually have a web site that includes client testimonials. If a “broker” does
not have a list of client testimonials, ask for a list of referrals. In most
states, insurance agents and “brokers” are licensed through the State Department
(or Division) of Insurance. In Illinois, the Division of Insurance falls under
the umbrella of the Illinois Department of Financial and Professional
Regulations (IDFPR). The Office of Consumer Health Insurance can tell you if
your insurance agent is licensed and whether there have been any disciplinary
actions taken against that individual. You can call the Office of Consumer
Health Insurance toll free at (877) 527-9431. The Illinois Division of Insurance
also compiles statistics regarding the type of insurance complaints it receives
and the reason for the complaints. The IDFPR also collects complaint data
against insurance companies. The number to the IDFPR is 312-814-2424.
Q. What if the “broker” I am working with recommends
that I buy a
health
insurance policy from a company that I have
never heard of before?
A. If you are uncertain about your “broker’s” recommendation, take
some time to do your own due diligence before making a purchasing decision.
It is your right to have all of your questions answered and to feel completely
comfortable with your purchasing decision before you sign on the dotted line.
Today, more than ever, consumers have an overwhelmingly number of options when
it comes to purchasing health insurance. If your “broker” works with many
companies, chances are very likely that your “broker” may recommend a plan or a
company that you have not heard of before. Just because a particular company
doesn’t spend tens of millions of dollars on T.V. and radio advertising, like
Blue Cross/Blue Shield, Humana or United Health Care, does not mean that the
company does not have sufficient reserves to pay claims. Before you buy a policy
from ANY insurance company, even if the name is highly recognizable, it is
important to check out the company’s rating with a leading independent rating
service, such as Standard & Poor's A.M. Best, Moody’s or another reputable
rating service. The company’s ratings will tell you whether the company is
likely to be able to pay off claims in the event of a disaster or an abundance
of payouts. If you are working with a reputable insurance “broker,” who has had
several policies issued with that particular company, your “broker” will be able
to tell you what you can expect in terms of claims payments, speed of payout,
and customer service.
Q. How do I know if there have been any complaints issued against a
particular insurance company?
A. In Illinois, the Office of Consumer Health
Insurance offers consumers help if they have questions or concerns about their
health insurance policy or a
health
insurance
company. The office was established by the Illinois Department (now Division) of
Insurance on January 1, 2000, as part of the new Managed Care Reform and Patient
Rights Act. The Office of Consumer
health
insurance can explain your rights as a health
care consumer, answer questions about
health
insurance, help you understand the coverage
provisions of your specific health care plan and assist you when you have a
problem or complaint. To contact the Office of Consumer Health Insurance, call
toll free at (877) 527-9431. The Illinois Division of Insurance also compiles
statistics regarding the type of insurance complaints it receives and the reason
for the complaints. This information is available to consumers @
www.idfpr.com/DOI/Complaints/Complaints.asp.
For general questions, you can email the Division of Insurance at
director@ins.state.il.us.
Q. What if my insurance company can’t answer
my questions about my
health
insurance
benefits or I have concerns about claims that have not been paid?
A. If you are not happy with the answers that
your insurance company is giving you, have outstanding claims that have not been
paid, or just generally feel like you are getting the run around, the first
person you should call is the insurance agent or “broker” that sold you your
policy. Your agent or “broker,” should be able to work with you and your
insurance company to resolve your insurance issues. If you can not resolve your
issues by working with your agent or “broker,” you can file a consumer complaint
against the insurance company by completing a complaint form on the Division of
Insurance web site. The form can be completed and sent electronically or printed
out and mailed to the Illinois Division of Insurance. Find the form here:
www.idfpr.com/DOI/Complaints/file_complaint.asp.
When you make a complaint against an insurance company or insurance producer
(agent), the Division of Insurance will initiate an investigation, assign your
complaint a file number and notify you of the results of their investigation.
Q. I found out that my agent misrepresented
the type of
health
insurance
benefits I have and now my insurance company is refusing to pay claims that I
thought were covered. What should I do?
A. First, you should talk to your agent to see
if you if there anything that s/he can do to help you resolve your issue with
your insurance company. If your agent is unable or unwilling to help you resolve
your issue with your insurance company, you can contact the Office of Consumer
Health Insurance to ask for assistance. To contact the Office of Consumer
health
insurance, call toll free at (877) 527-9431.
Depending on the situation, the Office of Consumer Health Insurance may direct
you to file a complaint against the insurance producer that sold you your
policy, the insurance company that issued your policy or both. The complaint
form is available on the Division of Insurance’s web site
www.idfpr.com/DOI/Complaints/file_complaint.asp.
The consumer complaint form can be completed either electronically or in hard
copy format. When you make a complaint against an insurance company or insurance
producer (agent), the Division of Insurance will initiate an investigation,
assign your complaint a file number and notify you of the results of their
investigation.
Q. I was contacted by an insurance agent who
informed me that I could only get
health
insurance at a cheaper price, if I joined an
Association. Is this true?
A. In many cases yes. Many quality products are
endorsed and specifically designed to work with a reputable association. Often
times an insurance company will design “private label” products specifically for
the members of a particular association. They do this to appeal the members of
this association and to reap the premiums that would be inherent to enrolling an
association comprised of many members. There is one association you should be
aware of and avoid. It is called the National Association of Self-Employed (NASE),
a division of the MEGA Life and Health Insurance company and the Mid-West
National Life Insurance Company (a.k.a. Health Markets). You may get great
association benefits, like discounts on office supplies, but what you may not
get is adequate
health
insurance. This association targets
unsuspecting business owners by offering low price health plans with added
benefits like discounts on office supplies and other products. Often, this
association’s plans offer very limited benefits, resulting in enormous out of
pocket expenses for the buyer. According to the National Association of
Insurance Commissioners (NAIC), N.A.S.E. has been the subject of 14
investigations by state insurance officials since 1995. Mega Life & Health
(a.k.a. Health Markets) were just slapped with the largest Insurance regulatory
fine in health insurance history, $20,000,000. Read about it here: (http://activerain.com/blogsview/608832/Mega-Life-Health-Midwest)
This fine was due to inappropriate market conduct and misleading sales material.
If you are a business owner, you have, most likely, been inundated with phone
calls from telemarketers and insurance agents claiming to offer the very best
health
insurance plans at the cheapest price. Remember
the caveat, “Buyer beware.” If something sounds too good to be true, it probably
is. Due your own due diligence and read the fine print!
Q. I was approached by someone offering to
sell me a health plan that offered discounts on medical, vision and dental care
and prescription drugs. Is this the same thing as
health insurance?
A. No. A health care discount plan
is NOT
health
insurance
however, some unscrupulous agents and non-agents have been known to misrepresent
discount plans as
health
insurance
plans. To misrepresent a discount plan as an insurance plan or policy is a
violation of state insurance regulations. To see if a drug, vision or health
care DISCOUNT PLAN is registered with the Division of Insurance in Illinois,
refer to the Department of Insurance’s Preferred Provider Administrator List,
available at
www.idfpr.com/DOI/PPA/PPAlist.asp
Q. How do I become an educated and informed insurance consumer?
A. In Illinois, the Illinois Division of Insurance offers some
excellent consumer resources on their web site. You can take an interactive
online quiz to determine how much you know @
www.idfpr.com/DOI/Get_Smart_Week/2005/flashQuiz/web_quiz.html. To
assist you in selecting a reputable insurance company, the Division also has a
list of telephone contacts and web site links which can help you determine if
the company holds a certificate of authority (license) to
do business in Illinois, is financially sound, and has a low rate of consumer
complaints
www.idfpr.com/DOI/General/find_reputable.asp.The
Division of Insurance also offers some good advice on how to watch out for
insurance fraud
www.idfpr.com/DOI/General/Fraud_facts.asp,
so you don’t fall victim to an insurance scam or scheme. Additional consumer
information can be obtained from the National Association of Insurance
Commissioners (NAIC) at
www.naic.org/index.htm
Q. How often should I review my
health
insurance
coverage to see if my policy is meeting my insurance needs?
A. You should review your
health
insurance policy with your agent on a yearly
basis to make sure that your plan still offers you adequate benefits and a price
that that is comfortable for your current financial situation. Most insurance
savvy business owners know that even if you don’t file an insurance claim,
insurance rates still go up. Insurance rates are usually adjusted on your
policy’s anniversary. To keep your insurance rates affordable, you may have to
purchase another plan when rates go up. A good insurance agent or “broker”
should contact you prior to your policy renewal date to notify you of your
premium increase and to make sure that your
health
insurance
policy is still meeting your needs. If the rate increase is too high or if your
agent believes s/he can find you a comparable plan at a lower price, you may
have to apply for a new policy which can go into effect before your rate
increase occurs.
Q. What is the process if I decide to obtain a
health
insurance policy?
A. After contacting a
health
insurance agent, the agent will gather some
preliminary information about your medical history in order to prepare for you
an insurance quote.
The insurance quote should reflect any additional premiums you will be charged
for certain medical or life-style conditions, such as obesity or smoking. The
final quote should reflect the total amount of money you will need to pay over
the term of the insurance policy in exchange for coverage. Insurance policies
are usually in effect for 1 year and are renewable upon your policy anniversary.
If you agreed to pay the premium amount to the insurance company, your agent
will collect payment for a small application fee only. Once you are approved for
said coverage and you accept their offer, the first month’s premium will be
collected on or about your requested effective date. You will receive a copy of
your insurance policy which details the terms and conditions of your coverage
shortly thereafter.
Q. Does the law require all insurance
companies to issue “individual”
health
insurance
policies to anyone who applies?
A. No. Companies that issue “individual”
health
insurance
coverage underwrite the applications prior to the policy being issued.
Underwriting is based on many things including, but not limited to, age, health
status, occupation and certain hobbies. The company may (1) issue the policy as
applied for; (2) issue the policy with stipulated exclusions either for a
limited or unlimited period of time; (3) issue the policy with an added premium;
or (4) decline issuance of the policy. If a policy is issued other than as
applied for, the company must provide a reason for offering exclusions or a
declination, upon request.
Q. I have chronic medical conditions, but I was
recently told by an agent that s/he could “guarantee” me coverage on an
“individual”
health
insurance policy. Is this true?
A. No. If you apply for an “individual”
health
insurance
policy, you will still have to go through an “underwriting” process. If
you have medical conditions, are currently receiving medical treatment or are
extremely obese, you may not receive an offer of coverage from the insurance
company. If the agent told you that you would be “guaranteed” coverage, it is
likely that the plan is nothing more than a discount plan that offers you a
discount on the cost of routine medical services. “Guaranteed” coverage is only
available on “group”
health insurance
policies. You are never “guaranteed” coverage when you apply for an “individual”
health
insurance policy. However, some states have a
health insurance “risk
pool” which guarantees coverage to individuals who have certain pre-existing
medical conditions or who have been declined for traditional
health
insurance
coverage. In the state of Illinois this coverage is available through the
Illinois Comprehensive Health Insurance Plan (I.C.H.I.P). Find out more about
this coverage:
http://www.chip.state.il.us/
Q. What happens if an incident occurs and I have to file a claim for
payment with my insurance company?
A. If an incident occurs that requires medical treatment, depending
on the type of policy you have your insurance company may require that you 1.
Pay the medical expense out of pocket and submit a claim to your company for
reimbursement or 2. Assign your insurance benefits (payment) to the treating
physician or medical facility. In most cases, claims are automatically initiated
by your medical provider and all you have to do is present your insurance I.D.
card at the time of claim. No payment is usually required up front other than a
small co pay if it is an outpatient doctor’s office visit. Once your claim is
processed, you will receive an “explanation of benefits” or E.O.B., from your
insurance company that details the total expenses of your medical treatment and
lists the amount you owe.
Q. How long does an insurance company have to pay my medical claims?
A. Once your claims have been received, the company has a reasonable
time period in which they must either pay or deny a claim. If the claim is not
paid within 30 days after the insurance company receives all of the needed
information about your claim, they must pay interest on the claim at the rate of
9% per annum.
Q. What does a company mean by usual and customary charges?
A. Usual and customary, also called reasonable and customary,
means the fee amount charged by most of the providers in a given geographical
area for a particular service. Insurance companies may subscribe to an
independent service which periodically surveys providers in a given area, or
they may use their own claims experience to establish usual and customary
allowances. Most companies pay claims based upon a percentile of the usual and
customary fee schedule.
Q. My insurance company is delaying payment of my claim because they
are checking for a pre-existing condition and are requesting information about
all the doctors I have seen in the past 10 years. I know the condition was not
pre-existing, and this is just a waste of time. Can they do this?
A. Yes. The company is allowed to look back
ten years to determine if treatment was received for a condition, or if symptoms
were present that would have caused a prudent person to seek treatment for a
condition. Individual
health
insurance
policies are allowed to exclude benefits for pre-existing conditions for the
first two years the policy is in force. Some companies only exclude preexisting
conditions for one year and only look back for one year. This varies from policy
to policy. A quality policy will pay for certain controlled pre-existing
conditions such as Hypertension & Hyperlypidimia from day one providing they are
disclosed at the time of application. If a claim is submitted to the company
within the pre-existing exclusion period, a pre-existing condition investigation
will most likely take place. Note: Any condition that has been excluded by a
rider may be excluded for the life of the policy. Please refer to question
Number 2 for more information. If you believe the company has taken too long to
complete the investigation, you may file a complaint online with the Division of
Insurance
www.idfpr.com/DOI/Complaints/file_complaint.asp.
Be sure to provide copies of any correspondence received from the company, as
well as a copy of the insurance contract. We will contact the company to find
out why the claim is being delayed, and see if anything can be done to expedite
the process.
Q. My insurance company has rescinded my
health
insurance
coverage. What exactly does that mean?
A. Illinois law permits insurance companies to
rescind a
health
insurance policy under certain circumstances.
An insurance policy is issued based on information contained in the application
or enrollment form. When an individual fails to completely and accurately
disclose health information, including weight and height, on the application, it
affects how the policy would have been issued. The company may have issued the
policy with an exclusionary rider, issued the policy for a higher premium, or
declined coverage altogether had they been provided with correct information.
Insurance companies will generally review the
application for accuracy and completeness when they receive the first claim. If
they find an error or omission that is material (one that would have changed
their offer of coverage) the company will take action to rectify the situation.
They may issue an exclusionary rider for the health condition in question and
ask that you accept it as part of the policy. Or, if the error or omission is
significant enough, the company may rescind the policy and return your premiums
to you less any claims paid out. Rescission means that the policy will be null
and void from the beginning. They may also offer you the opportunity to pay the
extra “load” that they would have applied to the policy had they know about the
pre-existing condition thereby keeping your policy in force. It is most
important to fill out your application accurately and completely to avoid having
your policy rescinded or the original offer modified. When you receive your
policy, check your copy of the application in the back of the policy to be sure
that information was accurately recorded if you did not fill out the application
personally.
Q. How do I know if my
health
insurance policy offers me sufficient coverage
and that I am paying a fair price for my monthly premiums?
A. Most people who shop for insurance can not
distinguish the difference between the benefits they “need” and the benefits
they “want.” If you were to purchase a
health insurance
plan with every benefit that you can imagine, you many have great coverage, but
the monthly premiums are bound to put a significant drain on your finances. If
you don’t have disposable income; you won’t be able to afford
health
insurance
coverage for very long. If you are perfectly healthy and don’t take any
medication, it may be in your best interest to select a plan with a higher
deductible and a discount prescription card to keep your monthly premiums lower.
Set some money aside each month just in case an illness or injury occurs and you
to pay your deductible or buy expensive prescription medications.
If the worst happens, you are financially prepared, if it
doesn’t, that money is still yours to keep. Since there are so many plan options
available from different insurance companies, your insurance
agent should be able to provide you with several plan options from different
carriers that meet your insurance needs. Ultimately, it is up to you to
make certain that you understand your insurance coverage. The Illinois Division
of Insurance web site offers many tips to help you ask the right questions so
you understand your
health
insurance
purchase. Visit their site here:
www.idfpr.com/DOI/Main/consumer_info.asp.
Q. What kind of health plan should I select if it is likely that I
will need medical treatment?
A. Firstly, if you have received medical
treatment already for this condition or a doctor has diagnosed you with a
particular condition in which medical treatment is needed the chances are likely
that you will not be approved for
health
insurance on an individual basis anyway.
However, if your family history shows that you may be more susceptible to a
particular illness and or you are getting older, it may make sense to select a
health
insurance plan with a lower deductible.
However, your monthly premiums will be significantly higher. Remember, if you
opt to pay a higher monthly insurance premium and you do not need medical
treatment, you do not get any portion of higher monthly premiums that you paid
to the insurance company back. There is no refund for remaining perfectly
healthy.
Q. Why do many insurance agents recommend
health insurance
plans with very low deductibles, like $250 or $500?
A. Simple, plans with lower deductibles cost more. Since insurance
agents are paid a percentage based upon the amount of premiums collected, lower
deductible plans mean a bigger paycheck for the agent. Unfortunately, not every
insurance agent acts in their client’s best interest. Reputable, ethical and
knowledgeable insurance agents and “brokers” usually have a long track record of
doing what is in their client’s best interest, even if it means less of a
commission. A reputable agent will take the time to understand your insurance
needs and explain what your policy does and does not cover.
Q. What is an “individual”
health insurance
policy?
A. An “individual”
health
insurance
policy is a policy that provides insurance coverage for an individual or an
individual and their dependants.
Q. Who purchases “individual”
health insurance
policies?
A. In most cases,” individual”
health insurance
policies are purchased by independent contractors, freelancers, small business
owners, entrepreneurs, and individual employees who work for a company that
doesn’t offer any
health insurance
benefits.
Q. If I apply for “individual”
health
insurance, is coverage also available for my
entire family?
A. Yes. If you are applying for coverage for your family, each
family member should be listed on your application when you apply for coverage.
Q. How much are the premiums for “individual” or
“family”
health
insurance
coverage?
A. Premiums are determined by a variety of factors, such as, the
applicant(s) age at the time of application, the applicant(s) health history, if
the applicant(s) smoke, if the applicant(s) take medications, etc. Premium
amounts are also largely dependant on the type of health plan selected, for
example, plans with lower deductibles and lower out-of-pocket expense cost more.
Plans that offer maternity coverage cost more than plans that do not.
Q. What type of coverage does an “individual”
health
insurance policy provide?
A. “Individual”
health insurance policies
typically provide coverage for major medical expenses, such as doctor’s visits,
hospital stays, surgery, out-patient therapy, diagnostic testing, prescription
medications, organ transplants, durable medical equipment, mental health
counseling, emergency room services, ambulance service and other medical
expenses.
Q. What types of “individual”
health
insurance plans are available?
A. Many different types of
health
insurance can now be purchased directly by
consumers. These plans include, Traditional Major Medical Plans,
Catastrophic Health Plans, H.S.A. (Health Savings Account) qualified H.D.H.P’s
(High Deductible Health Plans) Accident Only Plans, Catastrophic Illness
Policies, Prescription Medication Plans, Dental Plans, Vision Plans and many
others.
Q. Which companies offer “individual”
health
insurance
policies?
A. The majority of
health
insurance
carriers offer some type of “individual”
health insurance plan.
Q. If I purchase an “individual”
health
insurance plan, how are my rates determined?
A. When you apply for
health
insurance, your rates are determined by a
variety of factors:
1. Your age at the time of application
2.
Your overall health at the time of application
3.
Your health history prior to application
4.
Your status as a smoker, non-smoker or ex-smoker
5.
Your weight (e.g. underweight, overweight, obese)
6. The
types of medication(s) you are taking
7.
The medication(s) you have taken in the past
8.
Your current mental health status (e.g. depression or anxiety)
9. Your
prior treatment for mental health or addiction
10. Your
occupation (e.g. attorney, pilot)
11. The city,
state and zip code in which you reside
12. The
health plan and benefits that you select (e.g. low deductible, maternity)
13. Other
factors that may be considered by underwriting
Q. If I purchase an “individual”
health
insurance plan for my family, are my rates
affected by the health condition of one of my family members?
A. No. Your portion of the monthly premium is not affected by the
health history of other family members who may have poor health. However, your
portion of the premium will be calculated separately from your family members.
“Family” premiums are calculated by adding the premium costs for each family
member. For example, if you are a healthy, M/30 year old non-smoker, your
portion of the monthly insurance premium may be $100. However, if you wife is
ten years older F/40, slightly over-weight and a smoker, her portion of the
premium may be significantly higher, $200. If you have two young children
on your policy, M/10 and F/6, who are healthy, their monthly insurance premiums
may be $50 each. The insurance company will then combine all of these premium
amounts to determine your family’s total monthly premium: (M/30 non-smoker =
$100 + F/40 over-weight smoker = $200 + M/10 = $50 + F/6 = $50) The Total
Monthly Family Premium = $300 ($100 + $200 + $50 + $50)
Q. Can I still buy individual
health
insurance if I have a very serious pre-existing
medical condition?
A. In most states you can be turned down for
individual
health
insurance
coverage if you have a very serious medical condition (e.g., HIV or cancer).
Fortunately, even though they are not required to do so, most states have
developed some way to provide uninsurable people with access to individual
health
insurance
coverage. Thirty-three states provide coverage to medically uninsurable people
through high-risk pools. Twelve states use other means of providing uninsurable
people with access to individual coverage (e.g., requiring that all individual
health insurance companies issue individual
health
insurance
policies regardless of health status, coverage through a designated
health
insurance
company of last resort, etc.). There are five states that still have no means of
providing individual
health insurance
access to people with catastrophic medical conditions.
To find out what your state's options are for
medically uninsurable individuals, check out the Health Care Coverage
Options Database provide by the National Association of Health Underwriters
(NAHU)www.nahu.org/consumer/healthcare/topic.cfm?catID=23
Q. What kinds of coverage is available for the medically uninsurable
individuals?
A. Different states have adopted different means of providing access
to individual market coverage for people who have a catastrophic medical
condition. A brief outline of the resources available is outlined in the
following section: and they are all described in this section:
1.
Guarantee Issue Requirements
A few states require all individual market
health insurance carriers
to offer products to all people at any time, regardless of their health status,
but most do not and instead offer the general public another alternative such as
a high-risk pool. However, all states have to have at least one means of
providing guaranteed-issue coverage to individuals exercising their federally
mandated group-to-individual rights. It can be through the traditional private
market, through a high-risk pool, or through another means. This section covers
all of these state-specific provisions. Please use the link to locate the
requirements of your particular state.
www.nahu.org/consumer/healthcare/topic.cfm?catID=117
2.
High-Risk Health Insurance Pools
The most common way states provide people with serious medical conditions with
access to private individual
health insurance
coverage is through the creation of a high-risk health insurance pool. Consumers
in these pools have access to comprehensive private coverage plans, but pay
slightly more than the average individual market premium due to their health
conditions. This section provides an overview of each state high-risk pool,
including eligibility requirements, rate restrictions, preexisting condition
requirements, covered services, cost information and contact information. Please
use the link to locate the requirements of your particular state.
www.nahu.org/consumer/healthcare/topic.cfm?catID=120
3.
High-Risk Reinsurance Pool
Another option for providing access to private individual market coverage to
people with serious medical conditions is a high-risk reinsurance pool. A
reinsurance pool has many characteristics that are similar to a high-risk pool,
but the individual purchaser does not buy their policy directly through the
pool. Instead they buy their policies from individual insurance carriers, who
then cede the high-risk policies to the pool for risk spreading. Please
use the link to locate the requirements of your particular state.
www.nahu.org/consumer/healthcare/topic.cfm?catID=127
Q. Do “individual”
health insurance policies
include any additional benefits?
A. Yes. Some “individual”
health
insurance
policies include optional benefits (optional riders) that can be added onto your
health
insurance policy for additional protection.
The following is a list of “optional riders” that your
health
insurance company may allow you to add onto
your
health
insurance policy for an additional premium
amount:
1. Life Insurance (amount determined at time of application)
2. Accidental Death and Dismemberment
3. 24 hour accident coverage (on or off the job)
4. Maternity
Q. What are the advantages of purchasing an
“individual”
health
insurance policy?
A. There are three major advantages to purchasing an
“individual”
health
insurance plan is “Price, Portability and
Guaranteed Renewability.”
1. Price – In most cases,
price is a major issue in determining what
health insurance plan to
purchase. “Individual” coverage is usually significantly lower than “group”
coverage.
2. Portability – When
you purchase an “individual”
health insurance
plan, your plan is completely portable, in that you can take it with you if
you change jobs or residences.
3. Guaranteed Renewability
– As long as you keep paying you monthly premiums, your
health
insurance plan is renewable on the anniversary
date of your policy. Once your policy has been approved, your coverage
will continue no matter how sick you get or how many claims you file.
Note: Although your insurance company can not increase your insurance
premiums because you file a claim for benefits, they can raise your rates
incrementally during the lifetime of your policy. Most insurance companies will
adjust your insurance rates higher, on the one year anniversary of your policy.
Other companies will make a rate adjustment on your 6 month and one year policy
anniversary. Insurance companies usually increase premiums a certain percentage
each year. On average, “individual” policy holders experience a 10-30%
premium increase each year.
Q. How are initial “individual” premium rates determined if the
insurance company is unable to obtain important medical information from my
doctor?
A. In the vast majority of states, when you
apply for individual
health
insurance
coverage, you are asked to provide health information about yourself and any
family members to be covered. When determining rates, insurance companies use
the medical information on these applications. Sometimes they will request
additional information from an applicant's physician or ask the applicants for
clarification. If the insurance company is unable to obtain information
necessary to accurately determine the risk of a particular applicant, it will
underwrite more conservatively, meaning that the assumption relative to the
missing information will be negative rather than positive.
Example: A person has a history of high blood pressure, but it is controlled
with medication and he is not overweight. If the company is unable to determine
if that individual smokes or if he has normal cholesterol, the company will
assume that the missing information is negative and rate accordingly.
Q. How are rate increases (premium increases)
calculated for “individual”
health
insurance policy holders?
A. There are complex formulas that insurance actuaries (number crunchers)
use to calculate rate increases. Insurance companies take many factors
into consideration:
1. The number of policy holders
in a given demographic area (zip code)
2. The amount of claims filed by
policy holders
3. The type of claims filed by
policy holders
4. The amount that the insurance
company paid out in plan benefits
5. Other factors determined by
the actuaries
Q. Does every “individual” policy holder in my zip code receive the same
percentage of a rate increase?
A. Yes. Once the company has determined your health status, you will
be assigned a rate class by the company and put into a pool of other insured
individuals with similar health status. Your premium will be the rate charged to
that entire class of customers. Subsequent annual renewal premium rates will be
determined not by your individual claims, but instead by the claims experience
of the entire rating class pool. It is against the law for an insurance company
to single out an “individual” policy holder for a significantly higher rate
increase, because that policy holder filed a substantial amount of claims with
the insurance company.
Q. How do I apply for an “individual”
health
insurance
policy?
A. You can apply for an “individual”
health
insurance
policy directly through an insurance company or through an insurance
agent.
If you apply for an “individual”
health insurance policy
directly through an insurance company, you choices will be limited to that
health insurance plans available through that company. Although the web is a
great place to comparison shop, it is in a consumer’s best interest to contact a
knowledgeable, ethical and reputable insurance agent or “broker” before making a
purchasing decision.
Q. If I have an “individual”
health
insurance policy, can my insurance company
raise my rates if I file a claim?
A. No. If you have an “individual”
health
insurance
policy and file a claim for benefits with your insurance company, the insurance
company can not arbitrarily increase your insurance premiums just because you
filed a claim.
Q. What is the maximum rate increase I can receive
if I have an “individual”
health
insurance policy?
A. Currently, there are no restrictions on how much an insurance company
can raise your health insurance rates upon your renewal date. The average
premium increase you can expect per year is 10-30%, however, it is not uncommon
for rates to double or even triple.
Q. I had knee surgery last year. The insurance company will issue me
a policy, but refuses to cover anything that happens to my knee. They have asked
me to sign an exclusion rider that states there will be no coverage for anything
that happens to my knee. Can the company do this?
A. Yes. Insurance companies may attach an exclusion rider to the
policy that specifies that benefits will not be provided for any loss that
results from the condition specified in the rider. In this example, the rider
may exclude any claim for injury, disease or disorder to your knee.
Q. Do exclusion riders continue for the life of the policy?
A. In most instances, the exclusion rider is
attached for the life of the policy. In some instances, the rider will state
that it may be reviewed at some time in the future (usually one to two years).
Depending on the severity of your medical condition
and the likelihood that your condition will someday reoccur, some “exclusionary
riders” may be placed on a policy for an indefinite duration.
Q. Is a “rider” automatically removed by the insurance company after
a certain period?
A. No. If your “rider states that it can be
reviewed sometime in the future (usually two years), it is up to you as the
policyholder to request the review. The rider will not be automatically reviewed
or removed by the company.
Q. How will I know if my “pre-existing” condition will receive a
“rider?”
A. If you have a knowledgeable
health insurance
agent who is familiar with the underwriting process, s/he should be able to tell
you whether or not your “pre-existing” condition will receive a “rider.”
Q. Do all insurance carriers “rider” the same “pre-existing”
conditions?
A. No. Some insurance carriers are more liberal than others
in their underwriting process. Just because a “rider” was placed on your
“pre-existing” condition by one insurance carrier, doesn’t necessarily mean that
you will always receive a “rider” every time you apply for “individual”
health
insurance
coverage.
Q. If I have “pre-existing” medical condition, can my employer
“exclude” me from participating in a “group” health plan or charge me more for
my coverage?
A. No. There are certain discrimination prohibitions in HIPPA law
that ensure that individuals are not excluded from coverage, denied benefits, or
charged more for coverage offered by a plan or issuer, based on health
status-related factors.
Q. If I am refused a policy or it is not issued as applied for, how
can I find out why?
A. You must make a written request to the insurance company. They
are required to inform you of the reason(s) for their decision. Or if your agent
has an established relationship with an insurance company’s underwriters he or
she may be able to find out for you. If the reason is based on medical
information, the insurance company may request the name and address of the
doctor to whom you would like the information sent. The doctor then would
explain the medical reason for the adverse outcome.
Q. What is a “pre-existing” condition?
A. The law defines a “pre-existing” condition as one for which
medical advice, diagnosis, care, or treatment was recommended or received prior
to an individual’s enrollment date (which is the earlier for the first day of
health coverage or the first day of any waiting period for coverage).
Q. If I apply for “individual” health coverage, will my
“pre-existing” condition(s) be covered?
A. Maybe. Some conditions, if present at the time you apply for
health
insurance
may be automatically covered. The better companies will cover certain controlled
pre-existing conditions such as Hypertension & Hyperlypidimia from day one
providing this is disclosed at the time of application. Whether or not your
“pre-existing” condition(s) are covered under your “individual” health plan vary
depending on the type of health plan you apply for and the insurance company you
purchase it from.
Q. How will I know if my “pre-existing” condition(s) are covered on
my “individual”
health
insurance
plan?
A. When you apply for “individual”
health
insurance, you automatically go through a
process called “underwriting.” During the underwriting process, an individual
who works for the insurance company, known as an underwriter, reviews your
health history to determine your “insurability.” If you are relatively healthy,
the insurance company may not be overly concerned about your “pre-existing”
condition(s). However, if it’s likely that your “pre-existing” condition may
need medical treatment in the future, the underwriter will either rate your
premium slightly higher or exclude your “pre-existing” condition.
Q. Do individual policies pay for prescription medications?
A. You need to read your policy carefully. Some policies do not pay
for any prescription medications; some pay for only those medications
administered while confined in a medical facility; some pay a percentage of the
actual charge; and some policies provide a drug card which enables you to
purchase prescriptions for a specified co-payment amount, such as $15.00. Other
policies include a discount prescription card only.
Q. Can I return my policy if I am not satisfied with it?
A. When a policy is issued to you, you will have a "free look"
period of at least 10 days to review the policy and make certain that it meets
your expectations. If you are not satisfied with the policy, you may return it
within the 10-day period and request a full refund of the premium. To avoid any
delay or confusion, return the policy directly to the company by certified mail
within the "free look" period.
Q. Can my insurance company require me to get approval prior to
receiving medical services?
A. Often individual
health
insurance
policies will require pre-certification prior to a scheduled hospital stay or
within a short period of time following an emergency admission. There may be
other requirements or restrictions in your policy. Be sure you understand the
requirements of your policy.
Q. What is a “Deductible?”
A. A “deductible” is the amount of covered expenses you must pay
before the insurance company will pay for any of the covered medical expenses.
Check carefully to be sure you understand exactly how the deductible works
before buying a policy. There are a number of ways deductibles may be
administered by the company. Some policies apply the “deductible” to covered
expenses on a per person, per calendar year basis. If the policy is a family
policy, there is normally a maximum number of deductibles per family per year,
and sometimes a single deductible for a common family accident. Some policies
apply the deductible per medical condition or cause. This type of deductible can
cause a single individual to pay several separate deductibles in a calendar
year. Policies with this type of deductible may not have a maximum number of
deductibles to satisfy in a calendar year. These policies normally have a lower
premium than those with a calendar year deductible. Some policies apply
the deductible for each hospital confinement separated by a specified number of
days (usually 60 days).
Q. What is Co-insurance?
A. Co-insurance is the percentage of expenses
that you “split” with the insurance company after you pay your plan deductible.
Most
health
insurance plans are designed to have the policy
holder pay some percentage of his/her medical costs up to a certain dollar
amount of medical bills. This amount is known as the “stop loss.” Once the “stop
loss” is reached, the insurance company will provide coverage at 100%, unless
your plan states that you are also responsible for additional deductibles and
fees. Most plans are identified by their “co-insurance” percentage. For example,
100% (rarely seen), 90/10, 80/20, 7030 or 50/50. The first number, identified in
the split (80/20) is the percentage your insurance company pays after
your deductible is met for that calendar year. The second number identified in
the split (80/20) is the percentage you pay after your deductible is
satisfied. The maximum dollar amount that you will pay, depends on your “stop
loss” dollar number. For example, on an 80/20 of $5,000 (stop loss), your
co-insurance percentage is 20% of $5,000 which equates to ($1,000). On a 90/10
of $20,000 (stop loss), your co-insurance percentage is 10% of $20,000 this
equates to $2,000.
Q. Does every
health insurance
plan have a “stop loss?”
A. No. Some plans require you to pay a “co-insurance” for all your medical
expenses. If you have an 80/20 plan with no “stop loss” and your medical bills
for example, total $500,000. Your co-insurance amount will be 20% of the total
charges (20% of $500,000) or $100,000.
Q. How do I know if the
health
insurance plan has a “stop loss?”
A. The “stop loss” should be outlined in the
plan brochure that you received from the agent. If you have already have a
health insurance
policy in force, your insurance policy is required to provide an outline of
coverage and benefits usually on page 3 of your policy.
Q. How do I determine the maximum
out-of-pocket expenses I have to pay each year on my
health insurance
plan?
A.
Health
insurance
policies have a provision called an out-of-pocket maximum that limits the amount
you must pay in a given benefit period, usually a calendar year. For example, if
you purchased an 80/20 of $10,000 with a $1,000 deductible and you incur $51,000
in covered charges, your maximum out-of-pocket expenses are as follows:
Cost: $51,000 (total covered medical
bills incurred)
You pay: $1,000 (your plan deductible)
Balance: $50,000
You pay: $2,000 (20% of the charges up to $10,000)
Insurance pays: $8,000 (80% of the charges up to $10,000)
New Balance (after co-insurance is “split” between you and your insurance)
$40,000
Insurance pays: $40,000 (100% of the remaining charges)
Your total out-of-pocket maximum = deductible ($1,000) + co-insurance ($2,000)
Your maximum out-of-pocket expenses per calendar year = $3,000
Note: Not everything accrues toward
the out-of-pocket maximum. For example, costs for excluded items, co-pays and
any amount that is over the “usual and customary” determination, do not accrue
toward your out-of-pocket maximum. Additionally, some health insurance policies
require you to pay a separate hospital deductible for each hospital admission
and emergency room visit and many plans require that you pay a separate yearly
deductible for prescription medications. Other plans require you to pay separate
co-pays or access fees for specific medical services, such as, out-patient
physical therapy, speech therapy, out patient surgery, chemotherapy and
dialysis. In some cases, these deductibles, co-pays and access fees may be
unlimited, in that, there is no “cap” of what you will be required to pay
out-of-pocket if these treatments become medically necessary.
Q. If I purchase an “individual”
health insurance
policy, what is the lifetime maximum the insurance company will pay if I become
seriously ill?
A. That really depends on the type of “individual” health plan that
you select. Most “individual”
health
insurance
plans have a $1 million, $2 million, or $5 million lifetime maximum. HMO’s,
usually, have an unlimited lifetime maximum. Note: Some plans now impose a
“per illness” cap, often times only $100,000 per illness. If an illness exceeds
$100,000 then coverage for that illness is exhausted, regardless of the total
lifetime maximum amount of the policy. Consult your agent for more info. about
“per illness” caps.
Q. Is maternity coverage automatically included if
I purchase an “individual”
health
insurance policy?
A. No. Very few “individual” major medical plans
offer normal pregnancy benefits as an optional coverage. Coverage for
complications of pregnancy is a required benefit for all individual major
medical plans currently issued in the state of Illinois for example. Although
normal maternity benefits may be offered as an option, the benefits are usually
on a graduated scale based on the length of time the policy has been in force.
Sometimes individual
health
insurance
policies have a sliding scale for the percentage for this benefit. It may pay
nothing the first 12 months of the policy, 50% between 13 and 24 months, 65%
from 25 to 36 months, and 80% after 37 months. Before accepting a policy, be
sure you are clear as to how the benefit applies to you.
Q. If I have an “individual”
health
insurance
plan that does not include “maternity” coverage, how can I possibly afford to
pay for my pregnancy and delivery on my own?
A. Many hospitals and OB/GYNs offer affordable pre-payment plans for
pregnancies and deliveries. Some plans will allow you to pay a set monthly
amount during your pregnancy and a larger fee right before your delivery date.
These fees customarily will cover all prenatal care and a normal vaginal
delivery. However, some medical services, such as pre-natal ultrasounds,
amniocentesis and genetic testing may not be included. These medical services,
will, most likely, have to be paid out-of-pocket. If you don’t have a
health
insurance
plan that provides coverage for “maternity” you should speak to your doctor as
soon as you discover that you are pregnant. You and your doctor can determine
what care you will need and what costs involved. If you are a low income
expectant mother without “maternity” coverage, you may qualify for the
State of Illinois FAMILYCARE program (formerly KIDCARE).
FAMILYCARE insures expectant mothers who meet income requirements. For
information call the FAMILYCARE hotline toll-free at 800-ALLKIDS (255-5437). Or
you can visit them on the web @
www.familycareillinois.com
Please note: These programs should be used as a last resort. Currently as of
2008 the Medicaid program, of which these programs are a part is $1.5 Billion
Dollars behind in payment of claims to medical providers: (http://activerain.com/blogsview/664279/Medicaid-Expansion-Programs-Buckle)
Many medical providers are choosing to no longer accept these Medicaid Expansion
programs so proceed with caution! If at all possible, always choose a fully
funded major medical health insurance policy instead.
Q. If I don’t have
health
insurance
coverage during my pregnancy, can I immediately insure myself and my infant as
soon as s/he is born?
A. No. There is a two week waiting period before you can qualify for
“individual”
health
insurance
coverage. Usually, you can apply for coverage, right after your two week, post
partum check-up. You can apply for coverage for your infant after your child’s
six week check-up. Whether or not you and your infant are “insurable” depends on
your health status at the time of application.
Q. Can I purchase an “individual”
health
insurance plan that provides “maternity”
coverage if I am already “pregnant?”
A. No. You can not purchase an “individual” major
medical
health insurance plan if
you are already pregnant. You may, however, qualify for coverage under the State
of Illinois FAMILYCARE program (formerly KIDCARE) FAMILYCARE insures expectant
mothers who meet income requirements. For information call the FAMILYCARE
hotline toll-free at 800-ALLKIDS (255-5437). Or you can visit them on the web @
www.familycareillinois.com
As aforementioned, proceed with caution.
Q. If I have an “individual”
health insurance
policy that doesn’t have “maternity” coverage and I give birth, is my infant
automatically covered as soon as s/he is born?
A. No, you have a 31 day window from the time your infant is born to
add your child on to your
health
insurance
policy without proof of insurability. If you do not add your new baby on to your
health insurance plan within the 31 day window and your baby has a birth defect,
a life-threatening illness or a medical condition, the insurance company can
“decline” to add your child onto your “individual”
health
insurance
policy.
Q. If I have an “individual”
health insurance
policy that does not include “maternity” coverage and I have to have an
emergency C-section, will my C-section surgery be covered by my
health
insurance
plan?
A. Yes, an emergency C-section is considered a “complication of pregnancy”
and is normally covered under most
health insurance
plans, even if you have not added “maternity” coverage to your policy unless
your existing policy has an exclusion rider due to the fact that you have had a
C-section prior to the issuance of your existing policy.
Q. How can I find
health
insurance for my children if I don't have
family coverage?
A. Some insurance companies will issue
policies to children without their parents being included on the policy. If your
children are not insured for financial reasons, they may qualify for coverage
under the State of Illinois ALLKIDS program (formerly KIDCARE) ALLKIDS insures
the children of parents who meet income requirements. For information call the
ALLKIDS hotline toll-free at 866-ALL-KIDS (255-5437). Or you can find them the
web @
www.allkidscovered.com As
aforementioned, proceed with caution with this program due to the giant unpaid
debt that is already owed to physicians who have not been paid by this Medicaid
Expansion program: (http://activerain.com/blogsview/664279/Medicaid-Expansion-Programs-Buckle)
Q. How is “individual”
health insurance
different from “group” insurance?
A. Individual
health insurance
is very different than group health insurance, which is the type of insurance
that is offered through an employer. Since laws mandating what types of services
must be included in individual
health insurance
policies are often different than those dictating what must be included in group
policies, benefits are generally less extensive than what most people would
receive through coverage they have through work. Individual consumers may be
surprised to learn that some benefits that may be considered “standard' in a
group policy, like maternity coverage or substance-abuse treatment, may not be
included in an individual
health insurance
plan. Sometimes individual
health insurance
consumers have the option to pay extra for coverage of additional services like
maternity coverage. This extra coverage is referred to as an optional rider.
Cost is often the primary factor for individual
health
insurance
consumers, which is another reason why the benefits included in individual
health
insurance
policies are often simpler. In addition, deductibles (the amount you have to pay
before insurance benefits begin) and cost-sharing (the fees you pay directly to
medical providers at the time of service) are also generally higher.
Individual
health insurance
companies are much more limited than group insurance companies in their ability
to spread risk, so the laws concerning individual
health
insurance are different in most states. This
means that applicants for individual insurance will need to complete a brief
medical questionnaire when applying for benefits and, unlike a group insurance
policy, in most states a company can decide not to cover people with very
serious medical conditions (e.g., HIV or cancer), deeming them “uninsurable.”
Q. What is a Health Savings Account (H.S.A.)?
A. Health Savings Accounts (H.S.A.'s) are a new way for consumers to pay
for medical expenses. As of January 1, 2004, almost anyone with a qualified High
Deductible Health Plan (H.D.H.P.) can also have a Health Savings Account.
H.S.A.’s can save you money on your medical care now as well as provide a good
way to save for future medical expenses. H.S.A. funds can pay for expenses
before you meet your deductible as well as helps pay for services not covered by
your health plan, COBRA coverage during periods of unemployment, medical
expenses after retirement and long-term care expenses, to name just a few. H.S.A.
funds can be used to pay for expenses that insurance companies would not
normally cover such as Radiokeratonomy (Lasik eye surgery) Orthodontia, &
Alternative Medicine to name just a few. If you use your H.S.A. funds to pay for
these expenses they will be a 100% tax deduction. Your high-deductible health
plan can be one you get through your employer or a policy you buy on your own.
Even if you get your high-deductible health plan or even your H.S.A. account
through your employer, you own your account. You decide how much to contribute,
how much of the account to use for medical expenses, and which medical expenses
to pay from your account. You also choose whether to pay for medical expenses
from the account or save it for future use. Even if you change jobs, your Health
Savings Account is still yours.
You can also keep the account even if you move to another state, and you can
continue to keep it as you grow older. Regardless of where you get your
health
insurance
plan, whether on your own or through your employer, your Health Savings Account
funds are yours. Unlike some other types of accounts, you don't lose H.S.A.
funds at the end of the year. Unspent balances remain in your account earning
interest until you spend them on medical care. You may even roll your unused
H.S.A funds into no load mutual funds potentially earning an even higher rate of
interest. This will be a strong incentive for you to spend wisely on your
medical care, just like you do on other items you purchase. You'll want to shop
around for the best value for your health care dollars. To learn all about
H.S.A.’s please click:
http://www.sbisvcs.com/HSA%20%26%20HDHP.html
Q. What is a “group”
health insurance
policy?
A. A “group” “group”
health
insurance policy is an insurance policy
purchased by an individual that is “eligible” to participate in their employer’s
sponsored
health insurance plan.
Q. Who purchases a “group”
health
insurance policy?
A. In most cases, a “group”
health
insurance policy is purchased by an
employer/company that would like to offer
health
insurance
coverage as a benefit to employees.
Q. If I apply for “group”
health
insurance, is coverage also available for my
entire family?
A. Maybe. Ultimately it is up to your
employer to determine whether your company’s “group”
health insurance plan
will allow you to enroll your dependants.
Q. What are the premiums for “group” or “family”
health
insurance
coverage?
A. Premiums for “group”
health
insurance are usually determined by a variety
of factors, such as, the age of the applicant(s) at the time of application, the
health status of the individuals/family members (if applicable) applying for
“group” coverage, how individuals in the “group” smoke, the number of
individuals that are on maintenance medications, etc. Premium amounts are also
largely dependant on the type of health plan selected; for example, plans with
lower deductibles, doctor co-pays and full prescription plans will be more
costly than plans with a higher deductible, no doctor co-pays and a prescription
discount card. Additionally, “group” health plans that offer maternity
coverage cost more than plans that don’t.
Q. What type of coverage does a “group”
health
insurance
policy provide?
A. “Group”
health insurance
policies typically provide coverage for major medical expenses, such as doctor’s
visits, hospital stays, surgery, out-patient therapy, diagnostic testing,
prescription medications, organ transplants, durable medical equipment, mental
health counseling, emergency room services, ambulance service and other medical
expenses.
Q. What types of “group”
health
insurance plans are available?
A. Many different types of
health
insurance plans can now be purchased by
employers. Often, employers will give employees a choice of several health
plans, so they can choose a plan that meets their insurance needs and budget.
These plans include, Traditional Major Medical Plans, Health Savings Accounts or
HSA’s, Accident Plans, Catastrophic Illness Policies, Prescription Medication
Plans, Dental Plans, Vision Plans and many others.
Q. Which companies offer “group”
health
insurance
policies?
A. The majority of
health
insurance
carriers offer some type of “group” health insurance plan.
Q. When I participate in a “group”
health
insurance plan, how are “group” rates
determined?
A. Carriers often base rates on group size, group’s case
characteristics, such as, age, gender, industry, demographic area, plan design
and risk characteristics. The rating process for a group is usually a
two-step process:
1. First, a premium rate is
determined based on the group case characteristics and plan design factors (copays,
deductibles, out of pocket maximums, etc.) but without regard to other risk
characteristics.
2. Second, the rate may be
adjusted by a "risk load" to reflect risk characteristics of the group. Risk
characteristics include health status-related factors, the duration of coverage,
and any other characteristics related to the health status or experience of a
small employer group or of any member of a small employer group. The risk load
adjustment must apply uniformly to all members of the group. Initially, when an
employer is first issued a policy, the risk load may be as high as 67 percent.
Q. How much will my rates increase if I participate
in a “group”
health
insurance plan?
A. No more than 15% per 12-month period. The risk load may be
increased at renewal by no more than 15 percent per 12-month period (pro-rata
for periods less than 12 months). This 15 percent maximum applies to the risk
load portion only. Increases due to other factors such as changes in plan design
or changes in case characteristics may be in addition to any increase in the
risk load. This does not take into consideration any changes in plan design or
changes in case characteristics.
Q. If I purchase a “group”
health
insurance plan for my family, are my rates
affected by the health condition(s) of one of my family members?
A. If your employer is starting a new “group”
health
insurance plan and you add a dependant onto
your “group”
health
insurance plan that has a serious medical
condition, the insurance carrier can apply a risk load adjustment that results
in a premium increase for everyone in the group. This adjustment could be as
high as 67 percent if several individuals in the group have serious medical
conditions.
Q. Does a “group”
health insurance
policy offer any additional benefits?
A. Yes. Some “group”
health
insurance
policies include optional benefits (optional riders) that can be added onto your
health
insurance
policy for additional protection. The following is a list of “optional
riders” that your
health insurance company
may allow you to add onto your
health
insurance policy for an additional premium
amount:
1. Life Insurance (amount determined at time of application)
2. Accidental Death and Dismemberment
3. 24 hour accident coverage (on or off the job)
4. Maternity
Q. If I purchase a “group”
health insurance policy,
what is the lifetime maximum the insurance company will pay if I become
seriously ill?
A. That really depends on the health plan your
employer has selected for your “group.” Most “group”
health insurance
plans have a set, lifetime maximum amount that they will pay if you become
seriously ill. In most cases, this lifetime maximum amount is $1 million,
$2 million, $5 million. HMO’s usually offer an unlimited lifetime maximum.
Note: Many plans now impose a “per illness” cap, usually $1 million dollar
per illness. If an illness exceeds $1 million coverage for that illness is
exhausted, regardless of the total lifetime maximum amount of the policy.
Consult your Benefits Administrator or Insurance Agent for more information
about “per illness” caps, before you decide on a policy.
Q. Is maternity coverage automatically
included on a “group”
health
insurance policy?
A. No. Most “group” major medical plans
offer normal pregnancy benefits as an optional coverage. Coverage for
complications of pregnancy is a required benefit for all major medical
health insurance
plans currently issued in Illinois.
Q. If I have a “group” health plan doesn’t include “maternity” coverage,
how can I possibly afford to pay for my pregnancy and delivery on my own?
A. Many hospitals and OB/GYNs offer affordable
pre-payment plans for pregnancies and deliveries. Some plans will allow
you to pay a set monthly amount during your pregnancy and a larger fee right
before your delivery date. These fees customarily will cover all prenatal
care and a normal vaginal delivery. However, some medical services, such as
pre-natal ultrasounds, amniocentesis and genetic testing may not be included.
These medical services, will, most likely, have to be paid out-of-pocket.
If you don’t have a health insurance plan that provides coverage for “maternity”
you should speak to your doctor as soon as you discover that you are pregnant.
You and your doctor can determine what care you will need and what costs
involved. If you are a low income expectant mother without “maternity” coverage,
you may qualify for the State of Illinois FAMILYCARE program (formerly KIDCARE).
FAMILYCARE insures expectant mothers who meet income requirements. For
information call the FAMILYCARE hotline toll-free at 866 ALL KIDS (255 5437) or
you can find them on the web @
www.familycareillinois.com
As aforementioned, proceed with caution with this program due to the giant
unpaid debt that is already owed to physicians who have not been paid by this
Medicaid Expansion program: (http://activerain.com/blogsview/664279/Medicaid-Expansion-Programs-Buckle)
Q. If I don’t have “group”
health insurance
coverage during my pregnancy, can I immediately insure myself and my infant as
soon as s/he is born?
A. No. If you are not currently participating
in your employer’s “group”
health
insurance plan and you become pregnant, you
will have to wait until the next open enrollment period to apply for “group”
health
insurance
coverage. If you sign up for “group” coverage prior to giving birth, your infant
will automatically be covered as soon as s/he is born. Insurance companies
usually require that you contact them within 31 days from the date of delivery
to add your child on to your policy as a dependant. Contact your company’s
Benefits Administrator or Insurance Agent if you have any questions regarding
your “group”
health insurance
insurance benefits.
Q. Can I participate in my employer’s “group”
health insurance plan
that provides “maternity” coverage if I am already “pregnant?”
A. Yes. You can enroll in your employer’s “group”
health
insurance plan as soon as you become eligible.
If you are a new employee, you are usually eligible for “group”
health
insurance in 30, 60 or 90 days. If you are a
current employee and you are already participating in your employer’s “group”
health
insurance plan, you will be automatically
covered for any expenses related to your pregnancy.
Q. If I have a “group”
health insurance
policy that doesn’t have “maternity” coverage and I give birth, is my infant
automatically covered as soon as s/he is born?
A. Yes. You have 31 day window from the time
your infant is born to add your child on to your “group”
health insurance policy
as a dependant. If you do not add your new baby on to your plan
health
insurance within the 31 day window you may have
to wait to the next open enrollment period to add your child onto your policy.
Q. If I have a “group”
health insurance policy
that does not include “maternity” coverage and I have to have an emergency
C-section, will my C-section surgery be covered by my
health
insurance plan?
A. Yes, an emergency C-section is considered a
“complication of pregnancy” and is normally covered under most
health insurance plans,
even if you have not added “maternity” coverage to your policy.
Q. If I am on a “group”
health insurance plan and
do not need “maternity” coverage, can I decline that benefit to decrease my
monthly insurance premium?
A. No. You can not decline “maternity” coverage to lower your
monthly insurance premium, even if you do not need “maternity” coverage.
Q. If I purchase a “group”
health
insurance plan for my employees, are MY rates
affected by the health conditions of my employees?
A. Yes. The rates of your “group” are primarily
determined by the age of the individuals in the “group” and the health status of
those individuals. If there are several individuals in the “group” with serious
medical conditions, the rates for every individual in the “group” will be much
higher than if everyone in the “group” was perfectly healthy. The purpose of
“group”
health
insurance is to share the risk between several
individuals, some healthy, some sick. Unfortunately, if you have a “group” with
a mix of both, healthy individuals pay the same amount as sick individuals.
Q. If I am a small business owner with just a
few employees can I start a “group”
health
insurance plan?
A. Yes. You must have a minimum of two
employees to start a “group”
health
insurance policy.
Q. My spouse and I are the only ones working
for our small business. Can we qualify for “group”
health insurance
coverage?
A. Yes. You must have a minimum of two employees to start a “group.”
You and your spouse will have to enroll in the “group” plan separately, in order
to qualify as a “group.”
Q. If I decide to participate in my employer’s
“group”
health
insurance plan, how are my rates determined?
A. Your rates are primarily determined by the
age of the individuals in the “group” and the health status of those
individuals. If your group has a mix of healthy and sick individuals and you are
perfectly healthy, your rates may be slightly higher than the rates you would
pay if you were to purchase your own “individual”
health insurance policy.
In Illinois, insurance companies have the right to raise “group” rates by 67% if
the “group” has a higher mix of sick individuals. This type of rate increase or
premium increase is then averaged among all participating “group” members.
Q. If my employer purchases a “group”
health insurance plan for
employees, do I have to participate in the “group”
health
insurance plan?
A. No. Participation in “group”
health insurance
is strictly voluntary. You have the choice to participate or “decline” your
employer’s
health insurance
coverage; it is totally your decision, not your employers. However, insurance
companies often impose mandatory participation requirements (usually 100%
participation for groups of 10 or less) unless you have an eligible waiver which
is either proof of spousal coverage through a separate employer’s group plan or
coverage provided by the Federal government.
Q. Why would I “decline”
health insurance
coverage if my employer is paying for it?
A. There are many reasons that you may choose
to decline your employer’s “group”
health
insurance
coverage. For example, if you are currently covered under your spouse’s
health insurance plan,
you may not need to spend any extra money on a supplemental
health
insurance policy. If you are covered by two
different
health
insurance
policies (double coverage), one
health
insurance policy will act as a “primary” policy
and the other a “secondary” policy. Since it is against the law to receive
reimbursement for the same medical expenses from two different insurance
carriers, having double coverage provides no clear advantage. If you are
unsatisfied with the benefits of the health plans that your employer offers, for
example HMO, high deductible, no doctor co-pays, etc., you may also choose to
decline coverage. If you are “eligible” for “group”
health insurance
coverage and you decline coverage, you will be asked to sign an “insurance
waiver.” A waiver is simply a form that states that you are aware that you are
eligible for “group”
health insurance
benefits and you are voluntary declining coverage. If you choose to decline
coverage through your employer, and you do not have coverage through a spouse,
it is advisable that you purchase your own “individual”
health
insurance plan from a qualified insurance agent
or “broker.”
Q. If my employer/company offers a “group” health plan, won’t my
employer pay a large portion of my
health
insurance
premiums?
A. Not necessarily. If your employer offers employees “group”
health
insurance
benefits, your employer must pay a portion of each employee’s
health
insurance
premiums. This percentage is totally up to the discretion of the employer.
Rarely does an employer/company pay 100% of its employee’s
health insurance
premiums. Most employers pay 50-80% of the employee’s premiums. However, some
employers, usually smaller employers, pay 10-40%. The remaining percentage that
the employer does not pay is then paid by each participating employee. Employees
opting for family coverage will pay more than employees seeking individual
coverage.
Q. If my employer offers “group”
health insurance
coverage; will I be automatically enrolled in the health plan?
A. No, each “eligible” employee has to meet certain enrollment
criteria and will have to complete the necessary paperwork for enrollment.
Rarely, will your
health insurance
benefits start on your first day on the job. Many employers require a new
employee to wait 30, 60 or 90 days before the employee is eligible for
health
insurance
coverage. Most employers have a pre-determined month where they conduct “open
enrollment” for the “group” health plan. During “open enrollment,” employees can
drop their coverage, enroll in the plan, change their coverage or add additional
benefits.
Q. Who is covered on a “group”
health insurance
policy?
A. Group
health insurance
provides health insurance benefits to all “eligible” employees working for one
company.
Q. How do I know if I am “eligible” for “group”
health
insurance
coverage through my employer?
A. If you are “eligible” to participate in your employer’s “group”
health
insurance
plan, your employer is required to let you know that you are “eligible” for
coverage. In most cases, “group” enrollment forms will be given to you by your
company’s Benefits Administrator several months prior to the date you are
“eligible” to participate in the plan. Usually, there is a 30, 60 or 90
day waiting period before you can enroll. In smaller companies, the owner of the
company or the office manager acts as the Benefits Administrator. Usually, to be
“eligible” to participate in your employer’s
health insurance
plan, you must be classified as a full-time or part-time employee. Typically
employees that work 32-40 hours per week are considered full-time and employees
that work a maximum of 20 hours are considered part-time.
Q. What if I don’t usually work the required amount of hours to be
classified as a part-time or full-time employee?
A. Unfortunately, you may not meet the “eligibility” requirements
established by your employer to qualify for “group”
health
insurance
benefits.
Q. Does my employer have to offer coverage for “maternity, organ
transplants and prescription drugs” to all “eligible” employees on a “group”
health plan?
A. No. Your employer can pick and choose the benefits of your
“group”
health insurance
plan. In Illinois, like most states, employers do not have to offer employees
any
health
insurance
benefits. If your employer does offer employees a “group”
health
insurance
plan, the plan does not have to include coverage for “maternity, organ
transplants or prescription drugs.”
Q. If the premiums for my employer sponsored
health
insurance
are too high, can I purchase my own “individual”
health insurance
policy?
A. Not necessarily. Because of mandatory participation requirements it may
be necessary for you to remain insured by your employer’s group plan in order
for the group plan to remain solvent. In these cases your employer may wish to
contribute more to your portion of the group premium to keep the group solvent.
Q. What is “insurability” and how does it
differ between “individual” and “group”
health
insurance
policies?
A. When an applicant applies for “individual”
health
insurance, the insurance company examines many
factors relating to the applicant’s medical history to determine the applicant’s
“insurability.” “Insurability” simply means that the applicant is healthy enough
to be offered insurance. When an employee applies for “group”
health
insurance, the employee has “guaranteed
insurability.” This means that all “eligible” employees are “guaranteed”
insurance coverage regardless of their health history. “Group” health plans and
issuers may not exclude an individual’s preexisting medical condition from
coverage for more than 12 months (18 months for late enrollees) after an
individual’s enrollment date. If you provide proof of creditable coverage from a
previous employer’s group plan showing at least 12 months of continuous coverage
with no lapse between carriers of more than 63 days then the new group
health
insurance policy must cover your pre-existing
conditions from day one.
Q. On a “group”
health insurance
plan, what is the lifetime maximum benefit the
insurance company will pay if I become seriously ill?
A. That really depends on the type of “group”
health
insurance
plan that your employer has selected. Most “group” health insurance plans have a
$1 million, $2 million or $5 million lifetime maximum. HMO’s, usually, have an
unlimited lifetime maximum. Note: Some plans now impose a “per
illness” cap, usually $100,000 per illness. If an illness exceeds $100,000
coverage for that illness is exhausted, regardless of the total lifetime maximum
amount of the policy. Some plans also cover only $1 Million per year regardless
of the life time maximum. Consult your agent for more information about “per
illness” caps.
Q. If I participate in my employers “group”
health
insurance, will I receive immediate
coverage for a “pre-existing” condition(s)?
A. Maybe. It is becoming quite common for “group”
health
insurance
plans to place restrictions on coverage for “pre-existing” conditions. These
restrictions are usually in the form of a waiting period, also know as an
“exclusion” period. An “exclusion” period is a length of time the policy holder
must wait before s/he can receive coverage for a “pre-existing” condition. The
start of the “waiting period” begins when the policy is issued and usually ends
on 1 year anniversary date of the policy. For late enrollees, the
“exclusionary” period can be as long as 18 months.
If you provide proof of creditable coverage from a previous employer’s group
plan showing at least 12 months of continuous coverage with no lapse between
carriers of more than 63 days then the new group
health
insurance policy must cover your pre-existing
conditions from day one.
Q. When I apply for “group”
health insurance, how
do I know if there will be a waiting or “exclusion” period for my “pre-existing”
condition(s)?
A. Your company’s
health
insurance
benefits coordinator can tell you if there is an “exclusion” period before your
“pre-existing” condition(s) are eligible for coverage.
Under HIPAA law, a new employer’s plan must give
individuals credit for the length of time they had prior continuous
health
insurance
coverage (Creditable Coverage), without a break in coverage of 63 days or more,
thereby reducing or eliminating the 12-month exclusion period (18 months for
late enrollees). So, in most cases, the
“waiting period” is waived if you have existing
health
insurance
coverage in force. In the event that you let your
health
insurance
policy lapse and more than 63 days passes, you will usually have to wait the
same amount of days that you had a lapse in coverage before your “pre-existing”
condition(s) are covered.
Q. How is “Creditable Coverage” defined?
A. Creditable coverage is prior health insurance coverage under
another group health plan, an individual
health
insurance
policy, COBRA, Medicaid, Medicare, CHAMPUS, the Indian Health Service, a state
health benefits risk pool, FEHBP, the Peace Corps Act, or a public health plan.
Q. What is a “Certificate of Creditable Coverage?”
A. A certificate of creditable coverage is a
form that must be provided automatically and free of charge by the health plan
or issuer when an individual loses
health
insurance
coverage under the plan and becomes entitled to elect COBRA continuation
coverage or exhausts COBRA continuation coverage. A certificate must also be
provided free of charge upon request while you have
health
insurance
coverage or anytime within 24 months after your coverage ends.
Certificates of creditable coverage should contain information about the length
of time you or your dependents had coverage as well as the length of any waiting
period for coverage that applied to you or your dependents. Certificates of
creditable coverage should also include an educational statement that describes
an individual’s HIPAA portability rights.
Q. What do I do if I do not receive a “Certificate of Creditable
Coverage” or the certificate I received is incorrect?
A. If a certificate is not received, or the
information on the certificate is incorrect, you should contact your
health insurance
coordinator or plan issuer. You also have a right to show prior creditable
coverage with other evidence — like pay stubs, explanation of benefits, letters
from a doctor — if you cannot get a certificate.
Q. If I am covered by my spouse’s “group”
health insurance plan and
we divorce, can I continue my health insurance coverage?
A. Individuals who lose their coverage in certain situations,
including on separation, divorce, death, termination of employment and reduction
in hours have “special enrollment rights,” under HIPPA law. These rights also
apply if your employer decides to cease health insurance premium contributions
and/or decides to terminate “group” coverage. Additional rights are provided to
employees, their spouses and new dependents upon marriage, birth, adoption or
placement for adoption.
Q. What is HIPPA?
A. The
Health
Insurance
Portability and Accountability Act (HIPAA) offers protections for millions of
American workers that improve portability and continuity of
health
insurance
coverage.
Q. What is COBRA?
A. Congress passed the landmark Consolidated Omnibus Budget
Reconciliation Act (COBRA) health benefit provisions in 1986. The law amends the
Employee Retirement Income Security Act, the Internal Revenue Code and the
Public Health Service Act to provide continuation of group health coverage that
otherwise might be terminated.
Q. What does COBRA do?
A. COBRA provides certain former employees, retirees, spouses,
former spouses, and dependent children the right to temporary continuation of
health
insurance
coverage at group rates. This coverage, however, is only available when
coverage is lost due to certain specific events. Group
health insurance
coverage for COBRA participants is usually more expensive than
health
insurance
coverage for active employees, since usually the employer pays a part of the
premium for active employees while COBRA participants generally pay the entire
premium themselves.
Q. Who is entitled to COBRA benefits?
A. There are three elements to qualifying for COBRA benefits.
COBRA establishes specific criteria for plans, qualified beneficiaries, and
qualifying events:
1. Plan Coverage - Group
health
insurance
plans for employers with 20 or more employees on more than 50 percent of its
typical business days in the previous calendar year are subject to COBRA. Both
full and part-time employees are counted to determine whether a plan is subject
to COBRA. Each part-time employee counts as a fraction of an employee, with the
fraction equal to the number of hours that the part-time employee worked divided
by the hours an employee must work to be considered full time.
2. Qualified Beneficiaries - A
qualified beneficiary generally is an individual covered by a group
health
insurance plan on the day before a qualifying
event who is an employee, the employee's spouse, or an employee's dependent
child. In certain cases, a retired employee, the retired employee's
spouse, and the retired employee's dependent children may be qualified
beneficiaries. In addition, any child born to or placed for adoption with a
covered employee during the period of COBRA coverage is considered a qualified
beneficiary. Agents, independent contractors, and directors who participate in
the group health plan may also be qualified beneficiaries.
3. Qualifying Events -
Qualifying events are certain events that would cause an individual to lose
health
insurance
coverage. The type of qualifying event will determine who the qualified
beneficiaries are and the amount of time that a plan must offer the
health
insurance
coverage to them under COBRA. A plan, at its discretion, may provide longer
periods of continuation coverage.
Q. What would be considered a “Qualifying Event” under COBRA?
A. Under COBRA, qualifying events apply to Employees, Spouses and
Dependent Children. The following explains a “Qualifying Even” in greater
detail:
1. Qualifying Events for
Employees: a voluntary or involuntary termination of employment for reasons
other than gross misconduct or a reduction in the number of hours of employment.
2. Qualifying Events for
Spouses: A voluntary or involuntary termination of the covered employee's
employment for any reason other than gross misconduct. A reduction in the hours
worked by the covered employee, a covered employee's becoming entitled to
Medicare, a divorce or legal separation of the covered employee or the death of
the covered employee.
3. Qualifying Events
for Dependent Children: A loss of dependent child status under the plan
rules. A voluntary or involuntary termination of the covered employee's
employment for any reason other than gross misconduct.
A
reduction in the hours worked by the covered employee. A covered
employee's becoming entitled to Medicare. The divorce or legal separation of
the covered employee. The death of the covered employee.
Q. How does a person become eligible for COBRA continuation
coverage?
A. To be eligible for COBRA coverage, you must have been enrolled in
your employer's health plan when you worked and the health plan must continue to
be in effect for active employees. COBRA continuation coverage is available upon
the occurrence of a qualifying event that would, except for the COBRA
continuation coverage, cause an individual to lose his or her health care
coverage.
Q. What “group” health plans are subject to COBRA?
A. The law generally covers health plans maintained by
private-sector employers with 20 or more employees, employee organizations, or
state or local governments.
Q. What process must individuals follow to elect COBRA continuation
coverage?
A. Employers must notify plan administrators of a qualifying event
within 30 days after an employee's death, termination, reduced hours of
employment or entitlement to Medicare. A qualified beneficiary must notify the
plan administrator of a qualifying event within 60 days after divorce or legal
separation or a child's ceasing to be covered as a dependent under plan rules.
Plan participants and beneficiaries generally must be sent an election notice
not later than 14 days after the plan administrator receives notice that a
qualifying event has occurred. The individual then has 60 days to decide whether
to elect COBRA continuation coverage. The person has 45 days after electing
coverage to pay the initial premium.
Q. How long after a qualifying event do I have to elect COBRA
coverage?
A. Qualified beneficiaries must be given an election period during
which each qualified beneficiary may choose whether to elect COBRA
coverage. Each qualified beneficiary may independently elect COBRA coverage. A
covered employee or the covered employee's spouse may elect COBRA coverage on
behalf of all other qualified beneficiaries. A parent or legal guardian
may elect on behalf of a minor child. Qualified beneficiaries must be given at
least 60 days for the election. This period is measured from the later of the
coverage loss date or the date the COBRA election notice is provided by the
employer or plan administrator. The election notice must be provided in person
or by first class mail within 14 days after the plan administrator receives
notice that a qualifying event has occurred.
Q. How do I file a COBRA claim for benefits?
A. Health plan rules must explain how to obtain benefits and must
include written procedures for processing claims. Claims procedures must be
described in the Summary Plan Description. You should submit a claim for
benefits in accordance with the plan's rules for filing claims. If the claim is
denied, you must be given notice of the denial in writing generally within 90
days after the claim is filed. The notice should state the reasons for the
denial, any additional information needed to support the claim, and procedures
for appealing the denial. You will have at least 60 days to appeal a denial and
you must receive a decision on the appeal generally within 60 days after that.
Contact the plan administrator for more information on filing a claim for
benefits. Complete plan rules are available from employers or benefits
offices. There can be charges up to 25 cents a page for copies of plan rules.
Q. Can individuals qualify for longer periods of COBRA continuation
coverage?
A. Yes. Disability can extend the 18 month period of continuation
coverage for a qualifying event that is a termination of employment or reduction
of hours. To qualify for additional months of COBRA continuation coverage, the
qualified beneficiary must have a ruling from the Social Security Administration
that he or she became disabled within the first 60 days of COBRA continuation
coverage and send the plan a copy of the Social Security ruling letter within 60
days of receipt, but prior to expiration of the 18-month period of coverage. If
these requirements are met, the entire family qualifies for an additional 11
months of COBRA continuation coverage. Plans can charge 150% of the premium cost
for the extended period of coverage.
Q. Is a divorced spouse entitled to COBRA
coverage from their former spouses’ group
health
insurance plan?
A. Under COBRA, participants, covered spouses
and dependent children may continue their
health insurance
coverage for a limited time when they would otherwise lose coverage due to a
particular event, such as divorce (or legal separation). A covered employee’s
spouse who would lose coverage due to a divorce may elect continuation coverage
under the plan for a maximum of 36 months. A qualified beneficiary must notify
the plan administrator of a qualifying event within 60 days after divorce or
legal separation. After being notified of a divorce, the plan administrator must
give notice, generally within 14 days, to the qualified beneficiary of the right
to elect COBRA continuation coverage. Divorced spouses may call their plan
administrator or the EBSA Toll-Free number, 1.866.444.EBSA (3272) if they have
questions about COBRA continuation coverage or their rights under ERISA.
Q. If I waive COBRA coverage during the election period, can I still
get coverage at a later date?
A. If a qualified beneficiary waives COBRA coverage during the
election period, s/he may revoke the waiver of coverage before the end of the
election period. A beneficiary may then elect COBRA coverage. Then, the plan
need only provide continuation coverage beginning on the date the waiver is
revoked.
Q. Under COBRA, what benefits must be covered?
A. Qualified beneficiaries must be offered coverage identical to
that available to similarly situated beneficiaries who are not receiving COBRA
coverage under the plan (generally, the same coverage that the qualified
beneficiary had immediately before qualifying for continuation coverage). A
change in the benefits under the plan for the active employees will also apply
to qualified beneficiaries. Qualified beneficiaries must be allowed to make the
same choices given to non-COBRA beneficiaries under the plan, such as during
periods of open enrollment by the plan.
Q. When does COBRA coverage begin?
A. COBRA coverage begins on the date that health care coverage would
otherwise have been lost by reason of a qualifying event.
Q. How long does COBRA coverage last?
A. COBRA establishes required periods of
coverage for continuation
health
insurance
benefits. A plan, however, may provide longer periods of coverage beyond
those required by COBRA. COBRA beneficiaries generally are eligible for group
health insurance
coverage during a maximum of 18 months for qualifying events due to employment
termination or reduction of hours of work. Certain qualifying events, or a
second qualifying event during the initial period of coverage, may permit a
beneficiary to receive a maximum of 36 months of coverage. Coverage begins on
the date that coverage would otherwise have been lost by reason of a qualifying
event and will end at the end of the maximum period. It may end earlier if
COBRA premiums are not paid on a timely basis or the employer ceases to maintain
any group
health insurance
plan. After the COBRA election, coverage is obtained with another employer group
health plan that does not contain any exclusion or limitation with respect to
any pre-existing condition of such beneficiary. However, if other group health
coverage is obtained prior to the COBRA election, COBRA coverage may not be
discontinued, even if the other coverage continues after the COBRA election.
After the COBRA election, a beneficiary becomes entitled to Medicare
benefits. However, if Medicare is obtained prior to COBRA election, COBRA
coverage may not be discontinued, even if the other coverage continues after the
COBRA election. Although COBRA specifies certain periods of time that continued
health coverage
must be offered to qualified beneficiaries, COBRA does not prohibit plans from
offering continuation health coverage that goes beyond the COBRA periods.
Some plans allow participants and beneficiaries to convert group
health
insurance
coverage to an individual policy. If this option is generally available from the
plan, a qualified beneficiary who pays for COBRA coverage must be given the
option of converting to an individual policy at the end of the COBRA
continuation coverage period. The option must be given to enroll in a conversion
health insurance
plan within 180 days before COBRA coverage ends. The premium for a conversion
policy may be more expensive than the premium of a group
health
insurance plan, and the conversion policy may
provide a lower level of coverage. The conversion option, however, is not
available if the beneficiary ends COBRA coverage before reaching the end of the
maximum period of COBRA coverage.
Q. Who pays for COBRA coverage?
A. Beneficiaries may be required to pay for COBRA coverage. The
premium cannot exceed 102 percent of the cost to the plan for similarly situated
individuals who have not incurred a qualifying event, including both the portion
paid by employees and any portion paid by the employer before the qualifying
event, plus 2 percent for administrative costs. For qualified beneficiaries
receiving the 11 month disability extension of coverage, the premium for those
additional months may be increased to 150 percent of the plan's total cost of
coverage. COBRA premiums may be increased if the costs to the plan increase but
generally must be fixed in advance of each 12-month premium cycle. The plan must
allow you to pay premiums on a monthly basis if you ask to do so, and the plan
may allow you to make payments at other intervals (weekly or quarterly). The
initial premium payment must be made within 45 days after the date of the COBRA
election by the qualified beneficiary. Payment generally must cover the
period of coverage from the date of COBRA election retroactive to the date of
the loss of coverage due to the qualifying event.
Premiums for successive periods of coverage are due on the date stated in the
plan with a minimum
30-day grace period for payments. Payment is considered to be made on the date
it is sent to the plan. If premiums are not paid by the first day of the period
of coverage, the plan has the option to cancel coverage until payment is
received and then reinstate coverage retroactively to the beginning of the
period of coverage. If the amount of the payment made to the plan is made in
error but is not significantly less than the amount due, the plan is required to
notify you of the deficiency and grant a reasonable period (for this purpose, 30
days is considered reasonable) to pay the difference. The plan is not obligated
to send monthly premium notices. COBRA beneficiaries remain subject to the rules
of the plan and therefore must satisfy all costs related to co-payments and
deductibles, and are subject to catastrophic and other benefit limits.
Q. If I elect COBRA, how much do I pay?
A. When you were an active employee, your
employer may have paid all or part of your group
health insurance
premiums. Under COBRA, as a former employee no longer receiving benefits, you
will usually pay the entire premium amount, that is, the portion of the premium
that you paid as an active employee and the amount of the contribution made by
your employer. In addition, there may be a 2 percent administrative fee.
COBRA rates may seem high because you will be paying “group”
health
insurance premium rates. Depending on the
health history of your “group,” your “group”
health insurance premiums
may be much higher than the rates you would pay if you purchased an “individual”
health
insurance policy. Since it is likely that there
will be a lapse of a month or more between the date of layoff and the time you
make the COBRA election decision, you may have to pay
health
insurance
premiums retroactively-from the time of separation from the company. The first
premium, for instance, will cover the entire time since your last day of
employment with your former employer. You should also be aware that it is your
responsibility to pay for COBRA coverage even if you do not receive a monthly
statement.
Q. Will my employer subsidize COBRA Coverage?
A. Some employers may subsidize COBRA coverage, although they are
not required to do so.
Q. Can I receive COBRA benefits while on FMLA leave?
A. The Family and Medical Leave Act, effective August 5, 1993,
requires an employer to maintain coverage under any group health plan for an
employee on FMLA leave under the same conditions coverage would have been
provided if the employee had continued working. Coverage provided under
the FMLA is not COBRA coverage, and FMLA leave is not a qualifying event under
COBRA. A COBRA qualifying event may occur, however, when an employer's
obligation to maintain health benefits under FMLA ceases, such as when an
employee notifies an employer of his or her intent not to return to work.
Further information
on FMLA is available from the nearest office of the Wage and Hour Division,
listed in most telephone directories under U.S. Government, U.S. Department of
Labor, Employment Standards Administration.
Q. What is the Federal Government's role in COBRA?
A. COBRA continuation coverage laws are
administered by several agencies. The Departments of Labor and Treasury have
jurisdiction over private-sector health group
health insurance
plans. The Department of Health and Human Services administers the continuation
coverage law as it affects public-sector health plans.
Q. I am a federal employee. Can I
receive benefits under COBRA?
A. Federal employees are covered by a law similar to COBRA. Those
employees should contact the personnel office serving their agency for more
information on temporary extensions of
health
insurance
benefits.
Q. Am I eligible for COBRA if my company
closed or went bankrupt and there is no
health
insurance plan?
A. If there is no longer a
health insurance plan,
there is no COBRA coverage available. If, however, there is another plan offered
by the company, you may be covered under that plan. Union members who are
covered by a collective bargaining agreement that provides for a medical plan
also may be entitled to continued coverage.
Q. How do I find out about COBRA coverage and how do I elect to take
it?
A. Employers or health plan administrators
must provide an initial general notice if you are entitled to COBRA
benefits. You probably received the initial notice about COBRA coverage when you
were hired. When you are no longer eligible for health coverage, your employer
has to provide you with a specific notice regarding your rights to COBRA
continuation benefits. Employers must notify their plan administrators within 30
days after an employee's termination or after a reduction in hours that causes
and employee to lose
health
insurance
benefits. The plan administrator must provide notice to individual employees of
their right to elect COBRA coverage within 14 days after the administrator has
received notice from the employer. You must respond to this notice and elect
COBRA coverage by the 60th day after the written notice is sent or the day
health care coverage ceased, whichever is later. Otherwise, you will lose all
rights to COBRA benefits. Spouses and dependent children covered under your
health plan have an independent right to elect COBRA coverage upon your
termination or reduction in hours. If, for instance, you have a family member
with an illness at the time you are laid off, that person alone can elect
coverage.
Q. What is short term health insurance coverage?
A. Short-term
health insurance, are
low-cost plans designed to provide temporary health insurance coverage for a
limited number of months. The length of time you can keep the policy will depend
on the carrier. Typically, coverage can be purchased in one month increments for
up to 12 months. Short term
health insurance
policies do not cover “pre-existing” conditions.
Q. Who purchases short term
health insurance
coverage?
A. In most cases, individuals who purchase
short term
health
insurance are those that find themselves
temporally without
health insurance
coverage. In many cases, COBRA coverage is an option, but the premiums are too
high. Short-term
health insurance offers
an affordable coverage option for individuals who have been recently laid off,
recent college grads, part-time or seasonal workers, freelancers and other
temporary workers.
Q. Is short term
health
insurance
coverage available for my entire family?
A. Yes. Short-term
health insurance
coverage is available to both individuals and families.
Q. How much are premiums for short-term
health insurance?
A. Short-term
health insurance
premiums are priced very low because there is a coverage laundry list of
limitations and exclusions which include all “pre-existing” medical conditions.
Q. What type of coverage does a short-term policy provide?
A. Typically a short term policy works like an "indemnity" plan,
which generally gives you the freedom to go to any doctor or specialist you
like. However, most plans do require pre-certification. Plans usually have a 1,
2 or 5 million dollar maximum benefit which will cover any illness, as long as
it is not “pre-existing.” The majority of plans cover hospital care, emergency
services, diagnostic tests, rehabilitation services, follow-up doctor visits,
and even limited mental health care. Coverage does not typically include routine
preventative care.
Q. How do I apply for short-term
health insurance?
A. There are many sites that will allow you to
complete an online application for short-term
health insurance. Usually
the application takes less than 5 minutes to complete and you are able to pay
your first monthly premium by credit card. If you need help deciding on a
short-term health plan, or have questions about your coverage options, it is
best to speak with an insurance agent or “broker” before making a purchasing
decision.
Q. What is catastrophic
health insurance?
A. "Catastrophic" or "major medical"
health
insurance plans cover catastrophic illness.
These plans pay for major hospital and medical expenses.
Q. Who purchases catastrophic
health insurance
plans?
A. In most cases, individuals who purchase
“catastrophic”
health
insurance are those that do not have
health
insurance
coverage through their employer. On the average, people who buy catastrophic
health insurance plans
are either in their 20's, or between the ages of 50 to 65. Young adults tend to
buy the coverage if they are self-employed or don't get coverage through work.
On the other end of the spectrum, older adults purchase a catastrophic
health
insurance plan when they are concerned with
financial losses in the event of a heart attack, cancer or other serious
illness.
Q. Is “catastrophic”
health insurance coverage
available for my entire family?
A. Yes. Catastrophic
health insurance
coverage is available to both individuals and families.
Q. How much are the premiums for
“catastrophic”
health
insurance?
A. “Catastrophic
health insurance plans
have very low premiums because the insured usually pays most of their medical
expenses out-of-pocket. Coverage usually excludes many “pre-existing” medical
conditions.
Q. What type of coverage does a “catastrophic”
health
insurance policy provide?
A. Typically a “catastrophic”
health insurance
policy offers a $1 million, $2 million or $5 million dollar maximum lifetime
benefit. This benefit will cover any illness, as long as it is not
“pre-existing.” The majority of plans cover hospital care, emergency
services, diagnostic tests, rehabilitation services, follow-up doctor
visits, and even limited mental health care. Coverage does not include
routine preventative care. Coverage may or may not include prescription
medication. Most catastrophic health insurance plans do not cover pregnancy,
and other plans do not cover maternity care for a full year after your
effective date.
Q. How do I apply for “catastrophic”
health insurance?
A. You can purchase “catastrophic”
health insurance
coverage through a health insurance agent or “broker.” There are many”
catastrophic”
health insurance plans
available on the market today. It is best to speak with an insurance agent or
“broker” to determine what ‘catastrophic”
health
insurance plan is right for you, before making
a purchasing decision.
Q. What is “Critical Illness” insurance?
A. “Critical Illness” insurance is an exclusive benefit policy that
offers financial protection in the event of a specific illness or operation.
A “Critical Illness” policy pays a lump sum cash benefit to you, while you are
still alive. Therefore, it differs from traditional Life Insurance policy that
protects your dependents after your death. The lump sum cash benefit paid out
due to a claim can be used for any purpose. You can use the money to pay off
debts, such as a mortgage, use it to adapt your home or car to accommodate a
wheelchair or to fulfill a life-long dream. When you purchase a “Critical
Illness” policy, you select the amount of insurance (lump sum) and the length of
time (term) that you are covered. Premiums are related to your age and health at
the start of the policy, and are normally paid monthly. Premiums can be
guaranteed not to increase during the term of the policy.
Q. Who purchases “Critical Illness” insurance?
A. Critical Illness plans are usually purchased by individuals ages
20-65 who want the peace of mind. These individuals are concerned about the loss
of income during an illness and would like to establish a financial “safety
net.” Unlike the majority of individuals, who think “it wont happen to me,”
these individuals know that if they don’t plan ahead, they will unable to handle
the enormous financial burdens that many people suffer due to a critical
illness. The majority of “Critical Illness” policy holders have known a friend
or relative that has suffered a major life-threatening illness. These
individuals understand that recuperation from a critical illness may take many
months or years, and can involve significant expenses like home health care,
housekeeping services, hiring someone to help you run your business, etc.
Q. Is “Critical Illness” coverage available for my entire family?
A. Yes. However, each individual family member must purchase his/her
own “Critical Illness” policy. Additionally, certain age restrictions may apply.
Typically, ‘Critical Illness” policies can be purchased by individuals ages
20-65.
Q. How much are premiums for “Critical Illness” insurance?
A. The monthly premiums for “Critical Illness” plans vary based on
the lump sum benefit that is selected, how many illnesses/surgeries the plan
covers and the term of the plan. “Critical Illness” policies, typically
offer very affordable monthly premiums.
Q. What type of coverage does a “Critical Illness” policy provide?
A. “Critical Illness” policies typically provide coverage for the
following:
1. Heart Surgery
2. Cancer
3. Renal Failure
4. Stroke
5. Multiple Sclerosis
6. Major organ transplants like
kidney, lung, pancreas or bone marrow.
Q. How do I apply for “Critical Illness” insurance?
A. You can purchase “Critical Illness” insurance through a health
insurance agent or “broker.” There are many” Critical Illness” plans available
on the market today. It is best to speak with insurance agent or “broker”
to determine what ‘Critical Illness” plan is right for you, before making a
purchasing decision.
Q. What is an “Accident Only” policy?
A. An “Accident Only”
provides you coverage in the even that you experience an accident. These
policies pay you benefits directly and will even pay you if you have a
separate health insurance policy. Most “Accident Only” policies will provide
you with 24/7 protection and many plans also will reimburse you for work
related injuries, even if you have workman’s compensation insurance.
Policies are renewable and portable, so you can take them with you if you
move or change jobs.
Q. Who purchases an “Accident Only” policy?
A. “Accident Only” policies are usually
purchased by individuals who have a high deductible
health insurance
plan. “Accident Only” policies often provide enough of a cash reimbursement to
meet your deductible and cover any additional medical expenses that may not be
covered by your
health insurance
plan. Individuals in occupations that have a higher risk of injury, for example,
construction, purchase “Accident Only” policies for added protection.
Individuals participating in extreme sports or high risk hobbies often purchase
an “Accident Only” policy for extra protection. Statistically, 39.2 million
Americans are treated each year in hospital emergency rooms as the result of an
accidental injury. Of the 39.2 million individuals that are treated,
approximately 2.7 million are hospitalized or need some form of follow-up care.
Accidents cost Americans over $607.7 billion each year and nine out of ten
debilitating injuries occur when workers are off the job.
Q. Are “Accident Only” policies available for my entire family?
A. Yes. “Accident Only” policies can be purchased to cover an
“individual” or a “family.” Families who have children who are “accident prone”
or have children engaged in sports activities, often purchase “Accident Only”
policies for added protection.
Q. What are premiums for an “Accident Only” policy?
A. The premiums for an “Accident Only” policy will vary depending on
the type and amount of coverage you select. For the most part, “Accident Only”
policies are relatively inexpensive to purchase. The premiums are
typically less than $40 monthly and this premium covers the entire family up to
$5,000 per accident per occurrence.
Q. What type of coverage does an “Accident Only” policy provide?
A. In most cases, an “Accident Only” policy provides you 24/7
protection for accidents and injuries that occur anywhere, whether you are at
home, at work, on vacation or just riding your bike. Typically your policy will
pay you a cash benefit (lump sum) when you seek treatment for medical services.
Medical services are usually defined as the costs for necessary medical
treatment by a physician or dentist, hospital room and board, use of an
ambulance, dental work to sound natural teeth, medicines and diagnostic tests
and rental of durable medical equipment, such as crutches. In most cases, you
are free to use any doctor or hospital. Your policy will normally pay you
directly, unless you assign your benefits to your health care provider. Benefits
can range from $2,500, $5,000, or $10,000 for each family member after you pay a
$100 deductible per occurrence.
Q. Do “Accident Only” policies include any additional benefits?
A. Yes. Many “Accident Only” plans offer Accidental Death and
Dismemberment coverage, usually $5,000 of coverage for each family member, on
the $2,500, or $5,000 plan and of $10,000 coverage on the $10,000 plan.
Additionally, some plans offer world-wide medical air transportation service and
medical lifeguard emergency rescue. This specific benefit often has no
deductible. Up to $4,000 is usually available for medical transportation via
helicopter, plane or boat.
Q. How do I apply for an “Accident Only” policy?
A. You can purchase an “Accident Only” policy through a health
insurance agent or “broker.” There are many “Accident Only” policies available
on the market today. It is best to speak with insurance agent or “broker” to
determine what ‘Critical Illness” plan is right for you, before making a
purchasing decision.
Q. What is a “Disability” insurance policy?
A. A “Disability”
insurance policy is the industry name for a plan that provides you with
periodic benefit payments when you unable to work because of sickness or
injury.
Q. Who purchases a “Disability” insurance policy?
A. “Disability” insurance policies are often purchased by working
professionals who heavily rely on their income to meet financial obligations.
These individuals are a mix of white-collar professionals, small business owners
and skilled labor. Any individual should consider disability insurance a
necessity, even if a spouse is working. It is almost impossible to manage
financially when faced with a debilitating accident or illness and often
families never recoup financially from a long period of lost income. This is
especially true for workers with little savings, workers who support a spouse
and children or workers with a working spouse that does not make enough income
to support the entire household. Unfortunately, unlike home owners and
automobile insurance, “Disability” insurance is not a required purchase and the
majority of American’s believe that a debilitating accident or illness could
never happen to them. Other Individuals believe they may have disability
coverage through their employer, when, in fact, they do not. Others who do have
coverage through their employer may be shocked to discover that the protection
is very minimal. If you have “Disability” coverage through your employer, it is
important that you know and understand your plan benefits in case you have to
rely on them someday.
Q. Are there “Disability” insurance policies that cover my entire
family?
A. To qualify for “Disability” coverage, you must be a working adult, usually
between the ages of 18-60. Although your spouse may be able to purchase his/her
own “Disability” insurance policy, “Disability” plans are designed to replace
income and therefore are not appropriate for children.
Q. What types of “Disability” insurance policies are available?
A. There are several different types of “Disability” policies
available; each having their own unique characteristics and pricing. The
following are the most common:
1. Guaranteed Renewable: These
policies contain certain provisions that guarantee that policies will be renewed
by the insurance company for the benefit period for which the policy has been
issued. For example, a policy issued with a benefit period of “to age 65” will
be renewed at least to age 65, provided that the policy holder pays the
premiums. Although the rates for these policies may increase, an individual can
not be singled out if s/he files a claim for disability. Additionally, the terms
of the policy can not be changed by the insurance company. Only the policy
holder has the right to cancel the policy.
2. Non-Cancelable: The renew
provisions for this type of policy are very similar to the guaranteed-renewable
policy, except that the premium for the non-cancelable policy cannot be changed
by the insurance company during the renewal period, which is typically “to age
65.” Since premiums are never adjusted during the term, premiums will be much
higher for this type of coverage.
3. Optionally Renewable: These
policies which were made available quite a few years ago are rarely seen
anymore. Theses policies, while low in cost, can be terminated by the insurance
company. For obvious reasons, these policies make the policy holder highly
vulnerable.
4. Group Long-Term and
Short-Term Disability Plans: These plans are frequently found in
employer-employee work settings. In many cases, premiums are either paid in full
or in part by the employer. The short-term plans usually have shorter
elimination periods (such as 7, 15 or 30 days) and provide benefits for 13 or 26
weeks. The long-term plans typically have a longer elimination period (30 days
or longer) and a benefit period which ranges from 2 years all the way up “to age
65.” Few optional benefits are seen with these plans and these plans are
usually voluntary.
5. Voluntary Job-Site Disability
Plans: The majority of these plans are offered through an employer, but are paid
for by the employee. Typically, enrollment in these plans follows a short
presentation on the job site. The benefit period for these plans are typically
shorter in duration than other disability plans, therefore, they are much lower
in cost.
Q. How much are the premiums for a “Disability” insurance policy?
A. More than any other type of insurance, disability-income
insurance has a variety of factors which influence the final premium amount.
Each of the following factors will have a bearing on how much you will pay for
“Disability” insurance:
-
Age:
Older applicants will pay higher premiums. The minimum age to apply for
disability insurance is 18 and the maximum age is usually 60.
-
Sex:
Unlike life insurance, rates for females are higher per unit of coverage
than for male applicant
-
Smoker vs.
Non-Smoker: Those who smoke can expect to pay as much as 25 percent
more for the same protection as a non-smoker.
-
Benefit Amount:
Disability policies are typically issues with a specific monthly benefit
amount, for example, $3000 a month. Unless specifically stated in the policy
language, these policies do not coordinate with Social Security benefits
(they pay in addition to the Social Security benefit). Higher premiums will
be paid for higher monthly benefit amounts, however, the most insurance
companies will not issue policies that pay a benefit amount that is greater
than 60 percent of an individual’s gross income.
-
Benefit Period:
Policies can be written to accommodate various benefit periods.
Typically, most companies offer a 2, 3, 5 and 10 year benefit period.
However, longer benefit periods, “to the age of 65, 66, 67,” are also
available. These plans are designed to coincide with full Social Security
benefits. Some older plans offered lifetime benefits, but these plans are
rarely available today. Plans that offer a longer benefit period cost
significantly more in premiums.
-
Elimination
Period: This period, often referred to as a “waiting period” refers to
the amount of time that must pass before benefits are paid. In most cases,
these periods are 3060 or 90 days. However, “waiting periods” of 180 and 365
days are also available. The cost per unit of coverage (premiums) will
decrease as the “waiting period” increases.
Q. What type of coverage does a “Disability” insurance policy
provide?
A. A “Disability” policy provides a cash monthly benefit that can be
used to replace your lost income. How long you must wait to receive your benefit
and how much of a monthly benefit you are entitled to, largely depends on your
type of policy you purchase.
Q. Do “Disability” insurance policies include any additional
benefits?
A. Normally, Disability insurance policies do not include any
additional benefits.
Q. How do I apply for a “Disability” insurance policy?
A. You can purchase a “Disability” policy through a health insurance
agent or “broker.” There are many “Disability” policies available on the
market today. It is best to speak with insurance agent or “broker” to determine
what ‘Disability” plan is right for you, before making a purchasing decision.
©
Copyright 2000 S.B.I.S. Inc.