Health Insurance 101. A brief overview of health insurance 10/15/09

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1 Health Insurance 101 A brief overview of health insurance 10/15/09

2 Health Care vs. Health Insurance Health Care is Provision of Medical Services by Private Physicians and Hospitals (private pay or insurance) Community Clinics (sliding scale ability to pay or free medical care) Public Hospitals & Clinics (free medical care or sliding scale ability to pay) Health Insurance is Promise to Pay for Coverage of Specific Medical Services Assumption of Risk Commodity What the market will bear

3 Insurance Options for Individuals 1. Group plans >Employer or student 2. Private Individual Health Insurance HMO and PPO Plans Short-Term Health Plans Health Savings Accounts 3. Conversion or COBRA Plans 4. Major Risk Medical Insurance Program 5. Public Health Care Programs

4 Group vs. Individual Plans Group plans are provided by employers for employees, universities for students, or associations for their members Risk is spread across all members of the group, allowing the sponsor to afford to provide more benefits at a lower cost Individuals purchasing a plan have the cost based on their risk alone (individual underwriting).

5 Common Types of Plans HMO Health Maintenance Organization Wide range of covered benefits for a fixed prepaid amount Usually costs less but less choice in providers Gatekeeper - decides which services you can get and which other doctors you can see PPO Preferred Provider Organization More doctors and providers to choose from than in HMO Tend to pay more if see doctor who is not on the preferred list HSA Health Savings Accounts Special plans in which money can be deposited into a taxdeferred health savings account from which you can withdraw money on a pre-tax basis for qualified medical care and expenses.

6 Who Pays for Health Insurance? Employers Government Individuals Sponsored group plans Individually-purchased plans

7 Cost-sharing Many plans involve some form of cost-sharing. Types of cost-sharing: 1. Premium - a monthly fee you pay to have health insurance 2. Deductible - amount you pay for services before your insurance starts to pay 3. Co-payment/Co-insurance - Fee you pay each time you receive services (% or $ amounts)

8 Health Insurance for Individuals How to Find the Right Plan Questions to Ask: Do you have any pre-existing health conditions? What is your residency status? What are your health care needs or plans? e.g., are you pregnant; do you have a spouse or children? Are you starting a job soon? Will you have health benefits? / When will benefits begin? Are you still covered under your parent s plan? If yes, when do you lose eligibility? What is your income level?

9 How to Get Started Know your medical history Do you qualify for individual health insurance? If you are declined coverage, what are your other insurance options? COBRA/Conversation plan Major Risk Medical Insurance Program (MRMIP) Association plans (like alumni plans) If you are low-income, you may qualify for a county medically indigent program (not insurance) If you are low-income, pregnant or disabled, you may qualify for Medi-Cal

10 Key Health Insurance Terms HMO (Health Maintenance Organization) Plan: A plan in which you choose a primary care physician (PCP) who coordinates your care with providers in the plan network PPO (Preferred Provider Organization) Plan: A plan in which you have direct access to providers in the plan network, as well as other providers at higher cost Network or Participating Providers: Providers (facilities and individuals) that accept a negotiated or contracted rate as full payment for services no balance billing Underwriting: Review of medical history to assess the RISK of accepting an applicant for coverage or a policy

11 Key Health Insurance Terms Premium: Fee you pay to be enrolled in an insurance plan, usually monthly Deductible: Amount you must pay for services out-of-pocket first, before the insurer will pay for those services Co-insurance: Percentage of the cost you pay for covered services Co-payment: Set dollar amount you pay for covered services Policy / Period: Contract for insurance benefits or covered services ( promise to pay ) for set time period, e.g., yearly Out-of-Pocket Maximum: Limit to dollar amount you have to pay out of your own pocket for covered health care services during set time period, e.g., yearly Lifetime Maximum: Limit to amount of total claims payments an insurer will make for you the entire time you are covered by the plan Any amounts above the lifetime maximum are your responsibility

12 Be an Informed Consumer! Health Care IS a commodity: be an informed consumer: 1. Compare plans and prices. Contacts for assistance include Licensed insurance agent or broker Insurance company sales person Internet broker 2. Get multiple quotes before applying 3. Know what you are purchasing: MONEY premium, deductible, coinsurance, copayments, out-of-pocket maximum, lifetime maximum SERVICES what s covered and what s not how are services reimbursed (what s your financial responsibility?) EXCLUSIONS e.g., maternity, brand name prescription drugs LIMITATIONS e.g., inpatient and outpatient mental health services

13 Three Tips about Health Insurance 1. Know how your insurance plan works 2. Know your benefits 3. Know contact information for your insurance plan (member services, customer service)