Health Insurance

The rising cost of medical care and the resulting pressure on health insurance premiums makes health insurance top priority if you want to have your health expenses covered at a reasonable cost. The current health insurance system is quite complex and constantly changing. The information below may help answer your questions:

What kinds of health insurance are there?

There are essentially two kinds of heath insurance: Fee-for-Service and Managed Care. Although these plans differ, they both cover an array of medical, surgical and hospital expenses. Most cover prescription drugs and some also offer dental coverage. Fee-for-Service These plans generally assume that the medical professional will be paid a fee for each service provided to the patient. Patients are seen by a doctor of their choice and the claim is filed by either the medical provider or the patient. Managed Care More than half of all Americans have some kind of managed-care plan. Various plans work differently and can include: health maintenance organizations (HM0s), preferred provider organizations (PPOs) and point-of-service (POS) plans. These plans provide comprehensive health services to their members and offer financial incentives to patients who use the providers in the plan.

How do I pick a health plan?

If your employer gives you a choice of plans or you need to purchase your own coverage, it is crucial that you understand your health insurance choices and pick the insurance that is best for you and your family. Here are some questions you should ask yourself when choosing a health insurance plan: How affordable is the cost of care? What is the monthly premium I will have to pay? Should I try to insure most of my medical expenses or just the large ones? What deductibles will I have to pay out-of-pocket before insurance starts to reimburse me? After I’ve met my deductible, what percentage of my medical expenses are reimbursed? How much less am I reimbursed if I use doctors outside the insurance company’s network? Does the insurance plan cover the services I am likely to use? Are the doctors, hospitals, laboratories and other medical providers that I use in the insurance company’s network? If I want to use a doctor outside the network, will the plan permit it? How easily can I change primary-care physicians if I want to? Do I need to get permission before I see a medical specialist? What are the procedures for getting care and being reimbursed in an emergency situation, both at home or out of town? If I have a preexisting medical condition, will the plan cover it? If I have a chronic condition such as asthma, cancer, AIDS or alcoholism, how will the plan treat it? Are the prescription medicines that I use covered by the plan? Does the plan reimburse alternative medical therapies such as acupuncture or chiropractic treatment? Does the plan cover the costs of delivering a baby?

What is the quality of the insurance plan I’m looking at?

• How have independent government and non-government organizations rated the plan? For example, the National Committee for Quality Assurance ( http://www.ncqa.org ) issues a Consumer Assessment of Health Plans (CAHPS) report for every medical plan and facility.
  
• What kind of accreditation has the plan received from groups such as NCQA or the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) ( http://www.jcaho.org )?
  
• How many patient complaints were filed against the plan last year and how many were upheld by state regulatory agencies like the state insurance commission or the state medical licensing board?
  
• How many members drop out of the plan each year? State insurance departments keep track of “disenrollment rates.”
  
• Do the doctors, pharmacies and other services in the plans offer convenient times and locations?
  
• Does the plan pay for preventive health care such as diet and exercise advice, immunizations and health screenings?
  
• What do my friends and colleagues say about their experiences with the plan?
  
• What does my doctor say about his or her experience with the plan?

Can I buy an individual policy?

	Yes. If you are unemployed, self-employed, or decide to return to school you may want to buy an individual health insurance policy. Here are a number of options that you may consider: Ask your insurance company if you can convert its group policy to an individual policy. You will pay a higher rate than you did before and your benefits may be limited, but the terms will still probably be better than if you buy your own policy. If you are married, see if your spouse’s employer will add you to its group plan. Try to join a group health plan through a trade association or alumni group or professional association may offer reasonable rates. If you are over age 50, you can join the American Association of Retired Persons (AARP), which offers an extensive plan. Even some credit card companies offer health insurance coverage. As a last resort, you can buy an individual policy. The rates will be high and coverage limited, but it is important that you be protected against financial catastrophe if you or your family are hit with a major illness or injury. If you are self-employed, most of the health insurance premium will be tax-deductible. To find the best policy, contact a health insurance agent or broker who will help you find the contract that gives you the most for your money.

If I change jobs or become unemployed, can I bring my coverage with me?

	If you switch employers, you have the right to carry your group health insurance coverage with you to a new job for up to 18 months under the Consolidated Omnibus Budget Reconciliation Act (COBRA). You must pay the full premium, but at group rates that are far cheaper than the individual rates you would pay for similar coverage. Health insurance under COBRA is available if you are in the following situations: You leave a company and become unemployed or self-employed for up to 18 months. You are a widow or widower or child of an employee who dies while working for the same company for three years or more. You are the divorced spouse or child of an employee who has left the company he or she was employed at for at least three years. You are the child of an employee who left a job and have not yet reached age 23. NOTE: If you need COBRA benefits, you must fill out the appropriate forms from your employer’s benefits department within 60 days of leaving your job. If you do not act within that time, you may be denied coverage.

Where can I get more information regarding health insurance?

If you have specific questions regarding your insurance coverage, contact your health plan directly or speak to the benefits administrator where you work. For information on Medicare, call the agency at 800-638-6833 or log on to http://www.medicare.gov . Consumer information on the various health insurance plans that exist today is available from two leading insurance trade associations. They are: America’s Health Insurance Plans 601 Pennsylvania Avenue, NW South Building Suite 500 Washington, DC 20004 http://www.ahip.org Life and Health Foundation for Education 2175 K Street, NW – Suite 250 Washington, DC 20037 http://www.life-line.org

Should I buy long-term care insurance?

	The average cost for one year in a nursing home is $40,000, but can be close to $100,000 in some big cities. Round-the-clock care at home can be just as expensive. Medicare does not pay these bills beyond a short period of time after a hospital stay. Health insurance rarely pays any of the cost. Unless you have so little money that you will qualify for Medicaid, or so much money that you can pay the bills out of your own pocket, you should consider long-term care insurance. Four key reasons to buy long-term care insurance Preserve your assets for your family instead of spending the money on long-term care. The odds are one-in-three that a man over 65 will need long-term care; for a woman over 65, the odds are one in two. New rules make it hard to qualify for Medicaid. Premiums may be partially tax-deductible. Typical policy features The best policies pay for care in a nursing home, assisted living facility or at home. Benefits are typically expressed in daily amounts, with a lifetime maximum. Some policies pay half as much per day for at-home care as for nursing home care. Others pay the same amount, or have a "pool of benefits" that can be tapped as needed. Elgibility triggers Make sure you know when benefits kick in. The policy should state the various conditions that must be met. The inability to perform two or three specific "activities of daily living" without help. These include bathing, dressing, eating, toileting and "transferring" or being able to move from place to place or between bed and chair. Cognitive impairment. Most policies cover stroke, Alzheimer’s and Parkinson's disease, but other forms of mental incapacity may be excluded. Medical necessity, or certification by a doctor that long-term care is necessary. Prior hospitalization. Some older policies require a hospital stay of at least three days before benefits can be paid. This requirement is very restrictive and should be avoided. A benefit period that may range from two years to lifetime. You can keep premiums down by electing coverage for three to four years -- longer than the average nursing home stay -- instead of lifetime. A waiting or "elimination" period. Premiums will be lower if you pay for an initial period of care yourself instead of electing first-day coverage. Inflation protection is an important feature, especially if you are under 65 when you buy benefits that you may not use for 20 years or more. The best inflation provision compounds benefits at 5% a year. Guaranteed renewable policies must be renewed by the insurance company, although premiums can go up if they are increased for an entire class of policyholders. Waiver of premium, so that no further premiums are due once you start to receive benefits. Third-party notification, so that a relative, friend or professional adviser will be notified if the policyholder forgets to pay a premium. Optional features Restoration of benefits. This feature ensures that maximum benefits are put back in place if you receive benefits for a time, then recover, and go for a specified period (typically six months) without benefits. Nonforfeiture benefits return a portion of premiums or keep a lesser amount of insurance in force if you let the policy lapse. This provision, required by some states, adds to the cost of the policy. For more information on long-term care insurance, you can access the Life and Health Foundation for Education at http://www.life-line.org or the Health Insurance Association of America at http://www.hiaa.org.

How can I save on long-term care insurance?

	Find out if long-term care benefits are available through a group policy from your employer or as benefits from an existing life insurance policy. Then consider supplementing those benefits with a private long-term care policy. Consider buying a policy before age 60 or 65, because premiums increase sharply between ages 60 and 70. Buying much earlier is even more cost-effective, and also guarantees your insurability. Evaluate your other financial resources, then consider buying a policy that will pay most but not all of the average nursing home costs in your area. Paying part of the cost out of your own pocket will reduce the premium. Buy a policy with a waiting period of two-to-three months before benefits are paid. Again, paying the initial payment out-of-pocket will keep costs down. Check with several companies and agents, comparing both benefits and costs. In addition to checking current costs, find out how often each company has raised premiums in the past. But don’t rely on price alone. MOST IMPORTANT: Because you may not collect for decades to come, be sure to buy from a company that has been around for some time and is financially stable. You may want to look up a company you're considering in a guide such as A.M. Best Company, Standard and Poor's, Duff and Phelps Credit Rating Company and Moody’s Investors Service.