Dealing with health insurance plans can be very confusing. The information below is provided to help explain some of the basics of public and private benefits.
Health maintenance organization (HMO) plans usually contract with a specific list or panel of doctors from which you must choose. As a member of an HMO, you will have a primary care physician who is responsible for your care. If you wish to receive care from a specialist, you must get a referral from your primary care physician. As long as you see doctors within the HMO network, you will only be required to pay a small co-payment per visit. The co-payment generally ranges from $5 to $25. Most other charges are covered by the plan. There are no deductibles or claims forms as long as the care is received within the plan.
If you want to see a medical provider that is not within the HMO network for a second opinion or for other medical care, you will need written authorization from the HMO medical group. If you do not get authorization for the visit, the HMO will not cover the costs of the visit. The authorization process can sometimes take up to a week, so plan ahead. If your request to receive a particular treatment or to see a specialist outside of the plan is denied by the HMO, it is worthwhile to appeal the decision.
Indemnity plans allow you to choose any doctor or hospital when seeking medical care. These plans typically have a deductible, which you pay before the plan pays for any medical expenses. Once you have paid the deductible, the health plan will pay a percentage of the medical expenses. Many plans pay about 70 percent to 80 percent of the bill. The percentage of a medical bill that the health plan will pay is called co-insurance. The remainder of the bill needs to be paid by you. The amount that you need to pay is called patient liability. Indemnity plans vary greatly and you will need to check the particulars of the plan as it relates to you.
Although many plans require you to pay a co-insurance of 20 percent, you only have to pay this percentage until you reach your annual out-of-pocket maximum. If you have an out-of-pocket maximum of $2,000, for example, the insurance plan will pay all of your eligible claims after you have paid this amount.
Preferred provider organization plans combine some elements of the HMO with elements of the indemnity plan. Like the HMO, PPO plans have contracts with a specific list of medical providers. If you see a doctor that is in the network, the PPO will generally pay 80 percent to 100 percent of the medical bills after you pay the deductible. If you use providers that are outside of the PPO network, the plan will pay a lower percentage of the bill than if you use a provider within the network. When you receive care outside of the network, the plan will require you to pay a certain amount, called a deductible, before it will cover any of the medical expenses you incur outside of the plan.
Although these plans require a co-payment, you only have to pay this percentage until you reach your annual out-of-pocket maximum. If you have an out-of-pocket maximum of $2,000, for example, the insurance plan will pay 100 percent of your eligible claims after you have paid this amount.
A point-of-service plan is the most versatile type of plan, providing three types of coverage -- one that functions like an HMO, another that functions like a PPO and a third that functions like an indemnity plan. As a member of a POS plan, you can use all of these types of coverage, depending on the doctor or type of care you wish to receive. Each level of coverage is called a tier.
Tier 1 functions just like an HMO. If you choose to receive your care through your primary care physician in your HMO, you will only be responsible for a small co-payment and no annual deductible. Your primary care physician can refer you to other specialists within the HMO.
Tier 2 functions like a PPO. You can self-refer to any provider in the PPO network of physicians. The insurance will pay for a certain percentage of the medical charge. You will be responsible for an annual deductible and for co-payments.
Tier 3 functions like an indemnity plan. You can self-refer to a provider of your choice outside the network. The insurance will pay for a lower percentage of the medical charge than in tier 2. You will be responsible for an annual deductible and a higher co-payment that is greater than that of Tier 2.
Many plans require a co-payment. You pay this percentage until you reach your annual out-of-pocket maximum. If you have an out-of-pocket maximum of $2,000, for example, the insurance plan will pay all of your eligible claims after you have paid this amount.
These are plans in which a company or union covers your medical expenses with money set aside to pay health claims. Since this type of coverage is less regulated, there is a great deal of variation among the policies. A member of a self-funded plan should thoroughly review benefits to see what is covered. For most self-insured plans, benefits for pre-existing conditions are severely limited during the first year of coverage.
COBRA, which stands for the Consolidated Omnibus Budget Reconciliation Act, is a federal law that allows individuals working in companies of 20 or more employees to continue their health insurance benefits for up to 18 months after their employment ends for any reason, excluding gross misconduct.
During the time that you're covered by COBRA, you're responsible for paying 102 percent of the total health insurance premium, including the portion that may have been paid by your employer. If you can't afford the monthly payments, you might be eligible for the Medi-Cal Health Insurance Premium Payment Program (Medi-Cal HIPP).
OBRA, which stands for the Omnibus Budget Reconciliation Act, allows you to extend COBRA coverage for an additional 11 months but only if you obtained COBRA because of a Social Security approved disability. During the time you are covered by OBRA, you are responsible for paying 150 percent of the health insurance premium. If you are still disabled when OBRA coverage expires, you may be eligible for Medicare, which provides health coverage for disabilities, approved by Social Security, for 29 months.
Cal-COBRA is a state law that requires employers with more than two and less than 20 employees to allow employees the right to continue health insurance benefits for 18 months after their employment ends for any reason, excluding gross misconduct. You're responsible for paying 110 percent of the total health insurance premium for the first 18 months. If you have a Social Security approved disability, you can extend coverage for an additional 11 months and pay 150 percent of the total premium.
If you have a pre-existing condition and encounter trouble obtaining health insurance, you might find a group plan through a professional association such as the American Bar Association. Keep in mind that indemnity plans and PPO plans often have a period of up to six months before they will cover you for a pre-existing condition if you haven't had previous medical coverage. HMOs are required by law to cover your pre-existing condition immediately.
The Health Insurance Plan of California (HIPC) is a state-sponsored cooperative that offers coverage for people who work independently or who work for small businesses. This plan pools a large number of individuals and offers many options that ordinarily would be available only to large businesses. As an HIPC member, you may be eligible to choose from many HMO and POS plans. For more information, call (800) 255-4472.
The Major Risk Medical Insurance Program (MRMIP) is a state program that provides medical insurance for people who are unable to obtain medical insurance on the open market. You may be eligible if you have a pre-existing condition and have been denied coverage by private insurance companies and you're not eligible for Medicare. The program offers a wide range of plans and prescription drug coverage. For more information, call (800) 289-6574 or visit http://www.mrmib.ca.gov/.
Medi-Cal is medical coverage provided for people who meet the same disability standards as Social Security recipients, and is based on financial guidelines. Medi-Cal will pay health care bills incurred up to three months prior to the application date. Here are three examples how you may become eligible for this program:
To apply for "Aged and Disabled or "Medically Needy" Medi-Cal, you will need to contact the County Medical Office in your area, which is listed under the county Department of Human or Social Services. You are allowed up to $2,000 in assets, exempt from assets are a home if you live in it and a car valued at no greater than $4,500, unless used for medical appointments.
One of the disadvantages of Medi-Cal is that not all doctors accept new Medi-Cal patients. There may also be certain limitations on treatments and prescription drugs that are covered. If you have private insurance at the time that you become disabled, you may be able to enroll in the Medi-Cal/HIPP program (see below), which will help you pay for the continuation of your private insurance while you are on Medi-Cal.
Medi-Cal Health Insurance Premium Payment Program (Medi-Cal HIPP) will pay the premiums for your private health insurance plan. To participate in the program, you must be eligible and enrolled in Medi-Cal, but not in any of the Medi-Cal HMO programs or Major Risk Medical Insurance Program. You must be insured under a private health insurance plan that does not exclude your serious medical condition. If you are eligible, Medi-Cal/HIPP will allow you to keep your private health insurance while you are on Medi-Cal. Unlike Medi-Cal, Medi-Cal/HIPP will not make retroactive payments. To apply for Medi-Cal/HIPP, please call the Medi-Cal/HIPP office at (800) 952-5294.
Medicare provides health coverage for people who qualify for Social Security. Most people become eligible when they reach the age of 65 or if they have been disabled for 29 months. Medicare covers hospitalization, skilled nursing, home health and hospice care, but requires certain deductibles, premiums and co-payments. If you are receiving outpatient care, Medicare will cover 80 percent of allowable outpatient medical services after a $100 deductible. You are responsible for 20 percent of the charge, regardless of the cost. Note that Medicare does not cover outpatient prescription drugs unless they are administered in a doctor's office or an outpatient clinic. Because of this, many patients choose to enroll in Medicare HMOs or to buy relatively inexpensive private health insurance supplements to reduce their out-of-pocket costs. If you cannot afford to buy private health insurance, you might be able to supplement your Medicare with Medi-Cal.
The Health Insurance Counseling and Advocacy Program (HICAP) provides information to seniors and other people on Medicare. HICAP counselors can help you understand Medicare, compare private Medicare supplemental plans, review Medicare HMOs, develop a system to organize your doctor and hospital bills, file Medicare and private insurance claims, and prepare Medicare appeals or challenge claim denials. All HICAP services are provided free of charge. To speak to a HICAP counselor, please call (800) 434-0222.
This information is designed for educational purposes only and is not intended to replace the advice of your doctor or other health care provider. We encourage you to discuss with your doctor any questions and concerns that you may have.