Health insurance is one of those things we don’t always think about. In fact, many of us would rather it just worked when we needed it. In a recent Kaiser study, nearly two-thirds of Americans polled did not know when the new health insurance markets opened (October 1st). Given how front and center healthcare has become to American legislators in the last year, and given that the mandates of ACA are already upon us, it’s crucial you make sure you’re getting adequate and cost-effective coverage for you and your family.
The keys to getting the right coverage are:
- Assessing your needs
- Educating yourself on industry terms and norms
- Comparing and contrasting plans
It’s also important to understand that though health insurance isn’t always cheap, it is required. Under the new Affordable Care Act (ACA), every American citizen must have coverage. According to the U.S. Census Bureau, 15.4 percent of citizens in 2012 went without health insurance, so if you’re in that group, you’ll want to carefully – and somewhat quickly – consider your options.
Important Health Insurance Terms
You’ll need to know these terms in order to understand the details of potential coverage.
- Premium: The amount per month you pay for your health insurance.
- Benefits: The services your healthcare provider agrees to cover. Examples of common benefits include preventative care, sick doctor visits, prescriptions, and medical equipment. This doesn’t mean the insurer covers all costs; it may be partially covered by the insurance company.
- Copayment/Copay: The flat fee you pay when you go to a medical facility under certain plans. Copays differ depending on the service needed; the national copay average in 2011 was $23, but the average emergency room copay was $76. Your copay also depends on your insurance type:
- Medicare Part D
- Commercial Third Party
Source: IMS Health
- Coinsurance: Unlike copayments, which require you to pay an agreed upon flat fee, coinsurance requires you to share a percentage of your medical costs with your insurer. Common percentage rates are 80/20 or 70/30, meaning your insurance carrier will pay for 80 or 70 percent of services, and you’ll pay the rest. Coinsurance payments are sometimes associated with out of network services, many of which will end up being specialized, costly treatments.
- Deductible: This is the amount of money you must pay before your insurance provides coverage. For instance, if your deductible is $1500, you have to pay that amount in health costs before the insurer contributes. Not all plans have a deductible, however, and not all services are subject to the deductible. Going in for preventative care or a sick visit, for example, usually requires a copay or coinsurance payment but does not count toward your deductible amount. The explanation of your benefits will list out exactly which health services are subject to the deductible.
- Out-of-Pocket Limit: Even after meeting your deductible, you may still be responsible for copayments and coinsurance up to your out-of-pocket limit. This means the absolute total you’ll have to pay in a year. After this point, insurance covers all costs.
- Health Maintenance Organization (HMO) plan: A plan that both provides healthcare coverage and services, HMOs will often require you to exclusively see providers and hospitals listed as part of the HMO’s network. You’ll get comprehensive benefits within the network but less flexibility if you go outside of the network. And when you do go outside of network, you will likely need a referral from an in-network doctor. Kaiser Permanente, for instance, is one of the nation’s largest HMOs.
- Participating Provider Organization (PPO) plan: An insurance plan that allows you to choose your doctor from those who are “participating” in that insurer’s coverage. This is more flexible than an HMO plan. You’ll be covered for in-network care and may be partially covered for out-of-network care.
Shopping for Health Insurance
As of January 1st, 2014, you’ll be able to shop for private health care or enroll in the health insurance marketplace, which allows you to compare plans. Here are some screenshots of what an in-state comparison of plans looks like on the marketplace today.
You can see that when comparing plans, your age, income and zip are immediately taken into account. Customizable fields allow you to filter your options by premiums, deductibles, out-of-pocket expenses, providers and network types, to name just a few. The programs listed allow you to look at consumer and industry quality ratings, your estimated premiums and all other associated costs. Finally, you can choose to compare a number of programs side by side.
Trying to understand the jargon and get the most for your dollar can be overwhelming, especially with all the recent changes to health insurance. Regardless of your age, there are a few important considerations when shopping for coverage:
- Know the financial strength of your potential insurer. Look up its rating on A.M. Best, Standard and Poor’s, or another credit rating company.
- Carefully read the benefits covered and excluded in a policy you’re considering. You’ll also want to spot the policy’s deductible, copays, and out-of-pocket maximum. Make a reasonable estimate of your healthcare costs per year, based on the policy’s provisions.
- Realize that you may not have all the benefits you had before under your parents’ or employer’s policy. Assess what you really need in terms of care before assuming you should take a policy identical to your previous one.
- Check the insurance company’s policy about dropping care to make sure you won’t be fined if you have to drop coverage because you get a job with health benefits.
- Do your research: don’t assume that a quote from one insurance company is what you have to pay. Sites like HealthCare.gov and ConsumerRepots.org’s Health Insurance section will help you further understand the intricacies of a policy and what you should be paying.
You’ll also want to think about whether you’re likely to be traveling. In addition to the pointers above, if you’re buying a health care policy for the first time and plan to visit or live overseas, you’ll need to make sure you find coverage that doesn’t leave you stranded. Many policies only cover emergency situations, so it’s smart to either get travel insurance or find a policy that does cover overseas care, if you plan to be out of the country on a regular basis.
Getting the Most for Your Money
With so many different healthcare policies to choose from, it’s tough to know when you’ve found the perfect combination of coverage and economy. Follow these pointers to keep yourself from overspending:
- Don’t buy a plan just because it has the lowest monthly premium or smallest deductible: What you save on the premium can easily be made up in copays and the out-of-pocket maximum. Tally your healthcare spending from last year and estimate how much you’d spend under the policy you’re considering. Some insurance agencies provide an online calculator.
- Consider skipping prescription coverage: This is not wise if you already need medications or are middle-aged or older, but for young people in good health, this can help cut costs.
- Check out the new health insurance marketplace: This does allow you to compare and contrast premium prices and plan benefits, which is to your advantage.
- Setup an HSA, or Health Savings Account, especially if you have high healthcare costs: This allows you to contribute a portion of your monthly paycheck to a Health Savings Account. Money is pre-tax and can be withdrawn and used for qualified medical expenses.
To get the cheapest policy while still making sure you cover your bases, you’ll need to spend time comparing the benefits and carefully assessing your own health expenditures (or potential expenditures). The good news is that if you do your research, you should be able to find health insurance that’s both affordable and that protects you.
Unfortunately, not every insurance company is honest. Some will con you into buying coverage you don’t need, while others will deny your claims after an illness or accident. In 2008 the National Health Care Anti-Fraud Association estimated that at least 3% of annual U.S. health care spending – $68 billion at the time – was lost to fraud. Knowing your rights, as well as checking into the company before purchasing a policy, can help you avoid getting conned.
When it comes to buying a policy, it’s smart to check the National Association of Insurance Commissioners site to make sure your potential insurer is actually licensed to sell insurance. Some consumers have bought policies only to find that, after being hospitalized, they were taken in by a fake insurance company. You definitely don’t want to get stuck with that bill.
Mini-med policies, once an option for people who only wanted minimal coverage, will no longer exist come the end of 2013 thanks to the mandates of the ACA. These policies had low lifetime limits on benefits and only covered very specific health services, but now that sort of coverage falls below the minimums stipulated by the ACA. However, it’s been noted that some plans offered through the Healthcare.gov marketplace may have adjustment options for low income people, slimming down the cost of premiums and the extent of coverage – which certainly resembles mini-med policies. But it’s important to keep in mind that, for now, the standards of the ACA are intended to restrict minimum coverage options.
Health Insurance at Different Stages of Life
The best health plan will differ depending on your age and current health condition. Under Obamacare, children can stay on their parents’ health insurance plans up to age 26. After reaching that age, you’ll need to find your own plan, whether through an employer or purchasing individually.
20s to 30s
If you’re relatively young and in good health, you may want to look into high deductible plans (HDHP). These are ideal for people who need an individual plan, don’t make many doctor visits, and aren’t looking to start a family in the near future. An HDHP covers you for catastrophic events; in essence, you’ll pay for much of your health care except in the case of a major injury or illness that requires hospitalization.
If you’re not sure about your employment situation, or whether you’re likely to move in the near future, you can also consider a short term health plan. These don’t require underwriting and are a good option for recent college graduates, people between jobs, or people waiting for a new job’s healthcare to begin.
Even if you don’t buy an HDHP or a short term plan, young people can often get lower premiums by buying slightly higher deductible plans and looking into HMOs. As mentioned, HMOs give you slightly less flexibility and require you to get a referral to go to a specialist, but if you don’t have significant health issues, that may be just fine.
On the other hand, if you’re young but interested in starting a family, you’ll want to make sure you have a more comprehensive benefits package. Though all health insurance plans must include the ACA’s 10 Essential Benefits, one of which is maternity and newborn care, you should make sure you’re getting a policy that covers any complications following birth. You will also need a family policy and care for your child down the road.
40s and Over
In middle age and later stages of life, there are several important considerations when buying insurance.
If you’re looking to buy a policy that lasts for a while, carefully assess your current health and health risks. Does your family have a history of cardiovascular disease, diabetes, or arthritis? According to the CDC, 80 percent of older adults have one chronic health condition, while 50 percent have two. You may be healthy for years to come, but getting the right coverage now means not having to worry about skyrocketing medical costs in the future.
The Agency for Healthcare Research and Quality’s 2010 breakdown of nationwide health service expenses by age group shows just how prevalent medical attention becomes over time:
|Age||Under 5||5-17||18-44||45-64||65 and over|
|Total Expenses (in millions)||33,556||82,229||272,754||467,597||407,282|
As you can see, medical expenses face significant hikes between ages 5-17, 18-44 and 45-64, and while there is a slight dip from 65 on, all expenses over the age of 44 are starkly higher.
When looking at healthcare plans, you may want to consider:
- Prescription Coverage: Many adults need one or more medications
- Optical Coverage: If you have poor vision, adding this to your plan may be helpful later on. Cataract surgery is one of the most common optical needs of older adults, and very much a condition on the rise.
- Lower Copay or Coinsurance Rates: While you shouldn’t spend all of your money on a high premium, getting a balanced plan that allows you to visit the doctor without spending an arm and a leg is wise.
- Consider Medicare: If you’re over 65, under 65 but disabled, or have End-Stage Renal disease, you may be eligible for lower premiums through Medicare. The program will work in conjunction with Obamacare as of 2014.
For low-income individuals of any age, it’s also a good idea to check into Medicaid. Though the eligibility criteria won’t allow everyone with a low income to get coverage, if you qualify you’ll pay significantly less, if anything, for your monthly premium.
Denial of Coverage: How to Win the Battle
You can do everything right when buying insurance, but you may still find yourself in a tough situation when filing a claim. If the worst happens, and your carrier denies coverage, you should be prepared to argue your case. Occasionally a paperwork mistake is the cause of an insurer denying coverage, and in that situation, an email or phone call should correct the error.
Many people neglect reading all the details of their health insurance policy since those documents can be both wordy and lengthy, but the first step in avoiding claim disputes is to know what coverage you have. Under the ACA, health insurance companies are required to provide clear and detailed explanations of the benefits provided in each policy. Some companies will exclude services that you’d assume would be covered, such as alternative medicine and chiropractic care, so pay attention to what’s left out of the policy before you buy it.
The ACA also gives patients other important rights:
- Coverage that can’t be dropped in the case of an accident or unexpected condition
- A chance to appeal any coverage denied by the insurer
- The ability to choose your own primary care doctor and ob/gyn
- Emergency care services, wherever you are, without huge out-of-pocket costs or prior authorization
- A rebate if your insurance carrier spends less than 80% of your premiums on care
- No lifetime limits on benefits
In addition, there are new guidelines for how quickly an insurance company must tell you if they’re denying coverage:
- The company must notify you within 15 days of your claim for future treatment
- The company must notify you within 30 days of your claim for services already provided
- If you have an urgent case, the insurer must respond within 72 hours
At this point, if your claim is denied, you can submit the paperwork for an internal appeal. The appeal process requires the insurance company to review your case and either pay for costs or explain to you why your coverage was denied. You must submit your appeal within six months of the denial of coverage. After you submit an internal appeal, the insurer is required to respond within 30 days if the appeal was for future treatment and within 60 days if the appeal was for prior care.
You also have the right to an external review of your case. You can file for an external review through your insurance company, which is required to provide this service through partnership with the state or the federal government. Once the external review is done, the decision is final, and both you and the insurer must abide by that.
If you or your doctor feels your condition or illness requires urgent medical care, this is the best option, since it’s quicker and more objective than an internal insurance review. The external review decision must be delivered within 4 days of your urgent request or within 60 days of your standard request.
It’s also possible to contact independent organizations for help. Good resources include the Patient Advocate Foundation, Claims.org and IndependentHealth.com, all of which can help you build a sturdy case and conduct the independent review. You can also find help through the National Association of Independent Review Organizations, which connects patients to third party associations to review medical cases.
To have the best chance of getting your treatment covered, you’ll want to assemble evidence that either demonstrates the extent of your condition or how your coverage is meant to work. Certain documents will help you win your case:
- Your letter of denial from the insurance company
- A detailed copy of your explanation of benefits, under your current plan
- The insurance company’s guidelines for what it considers a “medically necessary treatment”
- A letter from your doctor that recommends the course of treatment or service that the insurer has denied
- Medical studies or scientific research showing the efficacy of the treatment, service, or medication you’re requesting
- Statements from other, reputable medical professionals bolstering your doctor’s opinion
- Emails or notes from conversations relating to your appeal, along with the names and dates of the people involved
Despite the fact that this can be a difficult and time-consuming process, if you’re organized and have supporting evidence, you have a decent chance of getting coverage or reimbursement. In order to jumpstart your efforts, we recommend using Pubmed.gov for research and document collection. As mentioned, medical studies and the opinions of medical professionals could determine whether or not you win coverage, and Pubmed’s wealth of searchable research is a great place to start building your case.
According to the U.S. Government Accountability Office, which did a nationwide study of health insurance claims and appeals in 2009 and 2010, almost half of internal appeals filed end with a reversal of the original decision. Data is shown from several representative states:
|State||Type of insurer reporting||Date year||Number of internal appeals||Percentage of internal appeals where initial determination was reversed|
|Source: GAO analysis of data reported by insurers to states|
|Indemnity managed care organizations||2009||1,797||59|
|Maryland||HMOs, nonprofit health service plans, and commercial insurers||2009||4,844||50|
|Nonprofit indemnity insurers||2009||8,946||48|
Recap: Points to Remember
As you’re looking for a new healthcare policy and navigating the sometimes treacherous waters of insurance, make sure to keep a few things in mind:
- You have options. Don’t go with the first policy you look at, and compare more than just premium prices: think about deductibles and copays, too.
- Read a policy carefully before buying. Make sure you fully understand exclusions, costs, and benefit limits.
- Your healthcare needs will change with age. Plan for the future, but don’t buy more coverage than you need if you’re young and healthy.
- Special situations require special coverage. If you’re going overseas, planning a family, or have unique health risks, make sure you’re covered.
- If you do have to file a claim or make an appeal for denial of coverage, don’t lose hope. Request a third party review and gather convincing medical evidence.
With a little education and effort, you can get an affordable policy that provides for all of your major healthcare needs. Arm yourself with knowledge and then start shopping!