Health Insurance Defined | Delta 4 Benefits

Frequently Asked Questions

What is a deductible and how does it work?

Typically, a deductible is the amount of money you must pay each year before your health insurance plan starts to pay for covered medical expenses. After this deductible is met, the insurance company will pay a percentage of the bill, this is called the coinsurance.

What is coinsurance?

Coinsurance is cost-sharing where you are responsible for paying a certain percentage for a covered medical expense and the insurance company will pay the remaining percentage of the covered medical expenses after your deductible is satisfied. For a health insurance plan with 20% coinsurance, once the deductible is met, the insurance company will pay 80% of the covered expenses while you pay the remaining 20% until your out-of-pocket limit is reached for the year. Typically, the out-of-pocket limit is the maximum amount you will pay out of your own pocket for covered medical expenses in a given year.

What are co-pays?

A co-payment or co-pay is a specific amount you pay for each medical service, such as $30 for an office visit, after which the insurance company often pays the remainder of the affiliated charges.

Do I have to meet my deductible before insurance will pay when I see my doctor?

With some health insurance policies the answer is YES, but many health insurance plans do not require this. Companies today offer plans where the deductible may only apply while hospitalized or for more major procedures. Many plans allow you to visit doctors and specialists, and fill prescriptions, with just a co-pay.

What is 'out-of-pocket maximum'?

This is the amount of money one would pay out of their own pocket towards their medical expenses in any given year. An out-of-pocket expense may refer to how much the co-payment, coinsurance, or deductible is added together. Also, when the term annual out-of-pocket maximum is used, that is generally referring to how much the insured would have to pay for the whole year out of their pocket, excluding premiums.

What is a network?

A network is a list of doctors, hospitals and other providers who have contracted, or agreed, with an insurance company to do business with the insurance company. The providers fees have been negotiated, which means that the insurance company will not necessarily pay the doctor or hospital what your actual medical bills are, but will pay a lower amount. If you have a health insurance plan that utilizes a network and you use providers who are not part of the network, the amount of money that you would have to pay for those services will be considerably higher than if you use providers who are in the network.

What's the difference between a Primary Care Physician (PCP) and a specialist?

A Primary Care Physician, or PCP, is the doctor you would go to on a regular basis, like when you’re simply not feeling well. A specialist is a doctor that your PCP might refer you to if the problem you have requires a doctor with more expertise in a certain area.

What is a pre-existing condition?

A pre-existing condition is any health condition you have or have had prior to applying for a policy. Some insurance companies want to know about all of your pre-existing conditions. Others may only look back a limited number of years.

Will a pre-existing condition prevent me from obtaining health insurance?

Maybe. It depends on the condition you have or had, its severity, the cost of medications, and whether the insurance company thinks it will lose money by selling you a policy. Some pre-existing conditions will not exclude you from getting a policy; instead, the insurance company may issue a policy to you, but they might try to offer you the policy with a “rider” which is a clause in your policy that says the insurance company will cover you, but NOT give you coverage for the specific pre-existing condition.

What if I'm currently pregnant?

No individual insurance company will sell you a policy while you are pregnant.

What is an HMO?

A health maintenance organization (HMO) provides a form of health insurance coverage that is provided by hospitals, doctors, and other providers with whom the HMO has a contract. Providers contract with an HMO to receive more patients and in return usually agree to charge less for their services. When you choose to become insured under an HMO plan, you must choose a PCP (who is contracted by the insurance company) and see that doctor for all of your health issues. If you end up needing to see a specialist, you’ll see your PCP first and get a referral to see the specialist.

What is a PPO?

A Preferred Provider Organization is another form of managed care. A PPO negotiates arrangements with doctors, hospitals and other providers who accept lower fees from the insurer for their services. As a result, your cost-sharing will be lower if you use the network of providers.

One characteristic of PPOs is the ability to make self-referrals. PPO plan members can refer themselves to doctors of their choice, including specialists, as long as those providers are also part of your PPO network. With a PPO plan, you are allowed to see providers who are not members of the network, your insurance company will only pay part of those charges, leaving you to pay the balance.

What is the main difference between an HMO and a PPO?

Most HMOs require you to select a specific doctor as your primary care physician, or PCP. This doctor is your first point of contact for most medical conditions, exceptions are made for emergencies. Your choice of specialists and hospitals is usually limited to those already under contract with the HMO, and your primary care physician is the one who generally decides whether or not a referral to a specialist is necessary.

PPOs combine some of the characteristics of HMOs with the flexibility of traditional indemnity plans. PPOs offer a specific set of doctors and hospitals that you may choose from to get discounted rates. These are called “preferred” or “in-network” providers. PPO members are free to see any in-network provider at any time. Members may also see doctors who are not in the network, but the payment for those doctors will be higher.

Glossary

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

assignment of benefits – When you assign benefits, you sign a paper allowing your hospital or doctor to collect your health insurance benefits directly from your insurance company. Otherwise, you pay for the treatment and the company reimburses you.

benefit – reimbursement for covered medical expenses as specified by the plan.

brand-name drug – prescription drug which is marketed with a specific brand name by the company that manufactures it. May cost insured individuals higher co-pay than generic drugs on some health plans. (see “generic”)

carrier – insurance company insuring the health plan.

certificate booklet – the plan agreement. A printed description of the benefits and coverage provisions intended to explain the contractual arrangement between the carrier and the insured group or individual. May also be referred to as a policy booklet or certificate of coverage of insurance.

certificate of benefits (COB) – the plan agreement. A printed description of the benefits and coverage provisions intended to explain the contractual arrangement between the carrier and the insured.

claim – notification to the insurance company from the insured or health provider (if you have assigned benefits) that a payment is due under provision of the insurance policy.

COBRA (Consolidated Omnibus Budget Reconciliation Act) – a federal law in effect since 1986. COBRA permits you and your dependents to continue in your employer’s group health plan after your job ends. If your employer has 20 or more employees, you may be eligible for COBRA continuation coverage when you retire, quit, are fired, or work reduced hours. Continuation coverage also extends to surviving, divorced or separated spouses; dependent children; and children who lose their dependent status under their parent’s plan rules. You may choose to continue in the group health plan for a limited time and pay the full premium (including the share your employer used to pay on your behalf, plus an administration fee). COBRA continuation coverage generally lasts 18 months, or 36 months for dependents in certain circumstances.

co-insurance – the percentage of covered expenses an insured individual shares with the carrier. (i.e. for an 80/20 plan, the health plan member’s co-insurance is 20%). If applicable, co-insurance applies after the insured pays the deductible and is only required up to the plan’s stop loss amount (see “stop loss”)

co-pay/co-payment – the amount an insured individual must pay toward the cost of a particular benefit. For example, a plan might require a $15 co-payment for a doctor’s office visit.

covered expenses – A covered expense is any service and/or product that is covered by the insurance contract as defined in the Certificate of Benefits or Policy Booklet.

credit for prior coverage – any pre-existing condition waiting period met under an employer’s prior (qualifying) coverage will be credited to the current plan, if any interruption of coverage between the new and prior plans meets state guidelines.

deductible – the dollar amount an insured individual must pay for covered expenses during a calendar year before the plan begins paying co-insurance benefits.

dependents – usually the spouse and unmarried children (adopted, step or natural) of an employee.

effective date – the date requested by an employer for insurance coverage to begin.

exclusions – expenses which are not covered under an insurance plan. These are listed in the Certificate Booklet/Policy.

explanation of benefits (EOB) – a carrier’s written response to a claim for benefits.

generic drug – the chemical equivalent to a “brand name drug”. These drugs cost less, and the savings is passed onto health plan members in the form of a lower co-pay.

grace period – a specified period immediately following premium due date, during which payment can be made to continue the policy in force with out interruption.

group insurance – an insurance contract made with an employer or other entity that covers individuals in the group.

health maintenance organizations (HMO) plans – were formed with the idea of controlling cost and providing preventative health care before members get sick. HMOs are comprised of hospitals, doctors and other medical personnel who have joined to provide health care to members in return for a pre-paid monthly charge. You can go to the provider as often as you need for the same monthly cost and an additional small fee per office visit or prescription. Most other medical services are fully covered. You do not have the option of going to a medical provider who is NOT part of the HMO. Enrollment is usually limited to employer groups, but a few HMOs will take individual members.

HIPAA – The Health Insurance Portability and Accountability Act was passed in 1996 to help people buy and keep health insurance, even when they have serious health conditions, the law sets a national floor for health insurance reforms. Since states can and have modified and expanded upon these provisions, the regulations vary from state to state.

HIPAA eligible – Status you attain once you have had 18 months of continuous creditable health coverage. To be HIPAA eligible, you also must have used up any COBRA continuation coverage; you must not be eligible for Medicare or Medicaid; you must not have other health insurance; and you must apply for an individual portability product within 63 days of losing your prior creditable coverage. You are also HIPAA eligible if your health plan was not renewed by an insurer because they discontinued offering and renewing individual health coverage in your area.

HSA – A Health Savings Account (HSA) is a special account owned by an individual used to pay for current and future medical expenses. HSAs are used in conjunction with a “High Deductible health Plan” (HDHP): Insurance that does not cover first dollar medical expenses (except for preventive care). Can be an HMO, PPO or Indemnity plan, as long as it meets the requirements.

indemnity plans – give you complete freedom to choose deductibles and co-insurance. You may go to any doctor that you choose. You must pay the full deductible before the insurance plan pays any amount. After this deductible is met, the insurance plan then pays a certain percentage of the expense. You are responsible for the total difference between the percentages the insurance company pays and the amount charged.

in-network – describes a provider or health care facility which is part of a health plan’s network. When applicable, insured individuals usually pay less when using an in-network provider.

lifetime maximum benefit – the maximum amount a health plan will pay in benefits to an insured individual.

limitations – conditions or circumstances for which benefits are not payable or are limited. It is important to read the limitations, exclusions and reductions clause in your policy or certificate of insurance to determine which expenses are not covered.

managed care – the coordination of health care services in the attempt to produce high quality health care for the lowest possible cost. Examples are the use of primary care physicians as gatekeepers in HMO plans and pre-certification of care.

medically necessary – many insurance policies will pay only for treatment that is deemed “medically necessary” to restore a person’s health. For instance, many policies will not cover plastic surgery for cosmetic purposes.

medicare – a Federal program which provides medial insurance for people over 65 and for those who are permanently disabled. Contact your local Social Security Office for a copy of the current Medicare handbook.

network – a group of doctors, hospitals and other providers contracted to provide services to insured individuals for less than their usual fees. Provider networks can cover large geographic markets and/or a wide range of health care services. If a health plan uses a preferred provider network, insured individuals typically pay less for using a network provider.

out-of-network – describes a provider or health care facility which is not part of a health plan’s network. Insured individuals usually pay more when using an out-of-network provider, if the plan uses a network.

out-of-pocket maximum – the total of an insured individual’s co-insurance payments and co-payments.

point-of-service (POS) – health plan which allows the enrollee to choose HMO, PPO or indemnity coverage at the point of service (time the services are received).

pre-certification – an insurance company requirement that an insured obtain pre-approval before being admitted to a hospital or receiving certain kinds of treatment.

pre-existing condition (group health plans) – Any condition (either physical or mental) for which medical advice, diagnosis, care, or treatment was recommended or received within a defined period (usually six months) immediately preceding enrollment in a health plan. Pregnancy cannot be counted as a pre-existing condition. Genetic information about your likelihood of developing a disease or condition, cannot be considered a pre-existing condition. Newborns, newly adopted children, and children placed for adoption covered within 30 days cannot be subject to pre-existing condition exclusions.

pre-existing condition (individual health plans) – Any condition for which you received a diagnosis, medical advice, or treatment prior to obtaining the individual policy. In some states, individual health insurers have broad discretion to define what constitutes a pre-existing condition, even including an undiagnosed condition you may unknowingly have had when you applied for the policy. Pregnancy can be subject to a pre-existing condition exclusion in most states. However, complications of pregnancy arising after coverage begins cannot be considered a pre-existing condition. Genetic information cannot trigger a pre-existing condition exclusion period in individual health insurance in most states.

preferred provider organization (PPO) – Plans allow you to choose a doctor or hospital from a list of “preferred” providers in order to receive full benefits. If you go to a doctor or hospital who is not on the list, the plan may cover a smaller percentage or none of your costs. Check with the insurance carrier BEFORE you use the plan to make certain your physician or hospital is a contracting provider. Make certain your doctor refers you to other providers who are on the list, or who the carrier agrees to pay at the “preferred” rate.

primary care physician (PCP) – The doctor whom you have chosen to provide basic healthcare services. This is the doctor which would perform wellness visits and such. You will typically see your primary physician for any illness, he will then refer elsewhere if he/she feels another doctor or facility can provide better treatment for the issue.

prior qualifying coverage – health plan coverage that was in effect before the effective date of the current or new coverage. Both individual and group plans must credit coverage that was in effect before the start of the current coverage toward the satisfaction of the pre-existing conditions exclusions.

provider – any person or entity providing health care services, including hospitals, physicians, home health agencies and nursing homes. Usually licensed by the state.

referral – required in many managed care plans, transfer to specialty physician or specialty care by a primary care physician.

rider – a modification to a Certificate of Insurance policy regarding clauses and provisions of a policy. A rider usually adds or excludes coverage.

usual reasonable & customary – the charges that a carrier determines normal for a particular medical procedure in a specific geographic area. If charges are higher than what the carrier considers normal, the carrier will not pay the full amount charged and the balance is the insured’s responsibility.