Health Insurance and you: Part I

Health insurance. Love it or hate it, you have to admit it's a lot cheaper than getting sick without it. So, how do you get the most out of your health insurance? I will give you some hints. However, this subject will require you to do your homework.

First: like all good teachers, homework gets assigned first. Find out from your employer (if you don't already know) exactly what type of insurance you have and what it covers. Ask for a handbook, if you don't have one, and read it. You may have to go to your Human Resources department for the information. If they don't have a hard copy, ask if they have soft copy. If they don't, ask them to get one for you. READ IT. It will answer many questions you may have. (And you would be amazed at the number of people who have never looked at the information and are then VERY upset that something isn't covered).

A little secret that employers don't tell you: when they contract for health insurance, it's rather like the old Chinese menu joke: you pick from column A and column B and with 6 you get egg roll.

Health Insurance (HI) is like that. Basically, a HI company will give your employer anything it wants to offer to its employees, for a price. However, as usual, the federal and state governments have something to say about it, too. Depending on factors discussed below, there are minimum requirements that the HI company HAS to offer and your employer has to pick (AKA Column A). Then comes the fun part: what pieces can they CHOOSE to pick (AKA Column B)? This can vary depending on several factors: how many employees are there? What does the state require a company of your size to offer? Does your company want to be a "self-funded" group, if allowed by the state, or "fully-insured"?

What's the difference?

Self-funded groups basically work on a "pay as you go" method. They pay the insurance company varying amounts depending on the cost of the claims received that month (along with a processing fee). So, the amount will vary from month to month as to what your employer pays (not what you pay, if you contribute).

Fully-Insured groups pay a set fee every month. It does not matter what was paid out in claims- $0 or $1,000,000 - the company pays the same amount every month. This can be easier for the company to figure cost-wise, but it has some problems.

One reason is this: in many states, self-funded accounts are often allowed to "opt-out" of benefits that the state requires fully-insured groups to offer to their members. This drives up the costs for fully-insured groups (and is often a reason given for groups to change from fully-insured to self-funded; it's a cost containment measure). For example, certain benefits regarding the treatment of children with autism are mandated by my state. Self-funded accounts can decide not to follow the mandate and offer more or less (or none) of the services the mandate requires.

Next, we have the products issue: does your employer want to have only one type of insurance? What kind - managed care (like an HMO, POS plan, etc) or a traditional plan? Do they want to offer several kinds of plans? Do they have to/want to cover spouses, children, domestic partners? All of these things may be options or may be required by your state.

What's the difference between managed care and traditional ?

With managed care, most plans require you select a Primary Care Physician (PCP) who can be a pediatrician (for children), a family practice doctor (all ages the MD wishes to care for), or an internist/internal medicine doctor (typically an adults-only practice). This doctor acts as a general "gatekeeper" who sees you and decides if you need specialty care or not, and refers you to a specialist if you do. Generally, you need to stay "in-network" (IN) for all of your care for the best benefits. Most HMO plans do not allow a member to go "out-of-network" (OON) for care unless there is no IN specialty provider within a certain range of transportation. POS members may go OON but will have to pay more if they do so.

With most "traditional" type plans you can see any physician you choose, no matter what specialty, without a referral from your "regular" doctor (if you have one). If you belong to a PPO or standard traditional plan, you get better benefits if you see an IN provider but no referrals are needed.

IN providers: what are they? Basically, they are physicians (individual or groups) who have signed a contract with your HI provider for set fees. As a patient, you generally pay less if you see an IN provider. You often only have a "co-pay" amount for an IN provider, and, if the insurance company pays less than the provider charges (a common situation), the provider cannot "balance-bill" you for the difference.

OON providers: Obviously, doctors who are not contracted with your HI provider. They are not held to the fees an IN provider has agreed to, and they often can "balance-bill" you - which means after they receive the payment from your insurance company, they may bill you for the remainder of the amount they charged for your care.

Example: Jan has a "copay" of $10 if she goes to see an IN provider for care. When Jan goes to see Dr A, her IN provider, she pays $10 no matter what Dr A charges. However, Jan has been unhappy with Dr A lately; she feels he isn't helping her. She decides to visit Dr B, whom her BFF absolutely loves (and who belongs to BFF's insurance plan). Unfortunately, Dr B is not a participating (PAR) provider with Jan's insurance. Jan's policy states that when she sees a non-participating (NON-PAR) doctor, her insurance will pay 80% of "reasonable and customary" (R&C) charges and she will be responsible for the remaining 20% of R&C, and the difference between the charges and what is paid by insurance (balance-billing). Jan sees Dr B, who charges $300 for the visit. Jan's HI has decided (based on several components, one of which is 'What does Medicare pay for this?") that the R&C for the visit type Dr B billed is $100. HI pays $80, and Jan is responsible for the remaining $20 of the R&C fee, AND the additional $200 if Dr B decides to balance bill her.

Well, enough for tonight. Do your homework and enjoy the next part:

Part II: How to make friends at your Health Insurance Company