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Shopping Buyers Guide (Complete)

Health insurance or health benefits are purchased to protect you and your family financially against the costs of an unexpected illness or injury. The principle of “health insurance” is simple: people pay premiums to cover the possibility of needing medical attention and protect themselves financially. People who use fewer medical services help pay for the coverage for those who have medical needs: illness, suffering an accident or having a chronic health condition.

Health insurance is a way for people and insurance companies to “share the risk” of medical costs. People – whether healthy or sick - pay premiums into a pool of money, administered by an insurance company, so that there is money to pay for services when someone in the pool of insured people needs medical attention.

Insurance pays out benefits to those customers who make claims when they see a provider, need treatment or tests. If the insurance company collects more premium than they make in payments and other administrative costs, then they make a profit. If they pay out more in claims than they have collected, they show a loss.

Individual vs. Group Health Insurance or Health Benefits Coverage

If you are self-employed, unemployed or work for a company that does not offer employee health benefits, buying “individual health insurance” may be your best option for coverage.If you work for an employer who offers a group health plan, many of your choices have already been made by your Human Resources staff, or others in the company. You may have one option, or a choice of several plans that your employer has selected.One advantage of “employer group plans” (if one is available to you) is that the premium cost is shared by your employer. Small employer group plans in Colorado are “guaranteed issue,” meaning that if you are a member of the group, you cannot be denied insurance and it cannot be cancelled due to your health condition.

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Insurance combines the risks of many individuals, so it becomes more likely that high demand from one customer will be offset by low demand from another.

 

 

 

Some employers choose to offer coverage for health benefits through “self-funded” plans, which are plans that provide specific health coverage, but are not state-regulated insurance. This means the premiums collected from employees are pooled and the employer or the plan administrator reimburses people for covered health benefits from the pool of money. Know whether your health plan is “insurance” or an employer “self-funded plan” (often called an ERISA plan.) If you have concerns or complaints about a “self-funded” plan, the Colorado’s Division of Insurance does not have jurisdiction. Employer “self-funded” plans are regulated under the federal Department of Labor and must adhere to a set of rules and laws for that type of health coverage.

When buying “individual” health insurance – whether for yourself or for you and your family, the health insurance carrier is allowed to assess the personal risks, medical history, and health conditions of the prospective members to determine whether to offer health coverage to you and your family, whether to offer coverage with some restrictions, or if a higher or lower rate should be charged based on your health status. The carrier may deny you coverage on an individual policy or provide some coverage, but list exceptions for a condition or illness for which you have been previously treated or diagnosed.

There are many different types of individual health insurance policies in the marketplace. Be sure you understand your options and what you are buying so the coverage you want, and expect, is there should you need it.

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If you have health coverage through your workplace, find out whether your health plan is state-regulated insurance or if it is an ERISA (employer self-funded) plan.

 



Guidelines and laws for individual health insurance differ from group health insurance.

If you work for an employer who offers one or more “group” health plans to employees, or have access to a group health plan through another avenue, the answers to the questions below may not apply.

There are additional laws governing group health plans in Colorado, including “guaranteed issue” – meaning a member of a group cannot be denied health coverage under the group plan, regardless of health status. Individual health insurance is not guaranteed issue, and health insurance carriers may set the premium, or deny/exclude coverage based on an individual’s health and medical history.

Coming up: Although current Colorado law does not prevent insurance carriers from denying or excluding coverage based on individual health status, this will change in the future. Expect changes when certain federal laws related to national health care reform take effect. Starting in 2014, insurers cannot deny coverage due to a person’s pre-existing condition. Individuals and small businesses will be able to purchase insurance through State-based Exchanges, competitive marketplaces for private health insurance.

Questions consumers should ask when shopping for Individual Health Insurance:

When selecting an individual policy, these items should be included clearly – in writing – for any individual health insurance policy which you are considering:

The name of the company writing the policy (not just the marketing name that is used in advertising);
A list of items and services that the policy will pay for;
A list of items and services that the policy will not pay for (known as exclusions and limitations);
Any situations where the policy may not pay for all of your medical care (exceptions, reductions and limitations);
Any special rules, such as referrals or pre-approval for procedures, that may affect whether the policy pays;
If you must use certain medical providers, doctors or facilities;
How long you may have to wait before the policy covers recent health problems (pre-existing condition exclusion period);
How the policy may be renewed;
How the policy may be canceled or terminated (by you or by the company);
What specific steps you may take if you are denied a benefit or coverage to which you believe you are entitled under the policy.

For more detail to understand each these points, and why they are important to you as a consumer, read below. (Note: There’s a glossary at the end of this page, in case any of the insurance terms are not familiar to you.)

The name of the company writing the policy (not just the marketing name that is used in advertising);

You may have received marketing materials or seen advertisements with a familiar-sounding name, but be sure you know who is the insurer on the policy. Check to be sure the company is licensed and registered as an insurance company in Colorado. You can check this on the Division of Insurance website.

Know what is covered by your policy. (Examples: visits to the doctor’s office, regular checkups, visits related to illness or a specific condition, lab work and tests, emergency care.)
What exclusions are there on the policy? What is not covered? Which pre-existing conditions are not covered under this policy?
Will there be an exclusionary rider for your pre-existing medical condition?
Will this policy cover your pre-existing medical condition after you have been covered for a certain period of time?

Your policy should list all items and services that it pays for; and also list all items and services that the individual policy will not pay for (known as exclusions and limitations) and any situations where the policy may not pay for all of your medical care (exceptions, reductions and limitations);

For example, the individual policy may exclude coverage for optional surgery such as cosmetic surgery and enhancements, any disease or condition that was diagnosed or treated before the policy was purchased, experimental procedures or alternative health treatments, hearing and vision aids (such as eyeglasses and contacts), and dental treatment. Be sure you understand any limitations or exclusions that are specified in the policy.

Many individual policies do not cover in-home care or private nursing. There may be restrictions about hospital stays: some items considered “comfort items” -- but not necessary for recovery -- may be excluded, such as paying for a phone in the hospital room, television rental while hospitalized, or accommodations for a family member to stay with the patient.

Learning problems and behavioral problems may not be covered. Psychiatric treatment and treatment for mental health issues may be excluded or limited to a maximum amount per year or a maximum amount in an individual’s lifetime.

Coming up: Under Federal healthcare reform (the Affordable Health Care Act), insurers can no longer set lifetime limits on benefits. Starting in 2014, carriers cannot deny coverage due to a person’s pre-existing condition.

Are there any special rules, such as referrals or pre-approval for procedures, that may affect whether the policy pays or how much it pays?
Your policy may require written notice before you get lab tests, see a specialist or have a medical procedure done outside the health insurance carrier’s network.

 

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A health insurance carrier may ask questions about your health status and medical history.

 

How long you may have to wait before the policy covers recent health problems (pre-existing condition exclusion period)

If you have been diagnosed or treated for medical conditions prior to the effective date of your policy, your health insurance carrier may exclude those conditions from coverage if your policy has a pre-existing condition exclusion. If you require treatment, medication, or other services related to the pre-existing condition, it may not be covered, or may not be covered for a specific amount of time. In Colorado, if you are covered by a “group plan,” pre-existing conditions cannot be completely excluded from coverage past the pre-existing exclusion period in the group plan.

 

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Your health policy may specify that you need to get approval before seeing a specialist or scheduling certain procedures. Be sure you understand your responsibility in this process and allow enough time for referrals and approvals when required.

  

 

 

 

 

 

 

 

How the policy may be renewed, canceled or terminated.

When you are shopping for a new policy, be sure you understand renewal, cancellation and termination provisions. Many types of individual insurance policies are guaranteed renewable as long as you continue to pay the premium. However, you should always find out if you need to do anything each year to renew the policy, or if it will be renewed automatically. If you decide to cancel your policy (for example, if you get other coverage, or find a different policy that you prefer), how much notice must you give to the carrier, and how and when that notice must be delivered to the carrier.

The policy should also state: if the carrier can cancel your policy, how much notice must be given to you, and how this notice will be delivered to you.

What specific steps you may take if you are denied a benefit or coverage to which you believe you are entitled under the policy.

All policies must outline what a consumer can do if they are denied coverage for a service or medical product they believe is covered. Colorado law includes information on what do to when your health carrier says “no” and the specific steps for appealing denied claims. These steps may be adjusted in the coming year to match new federal guidelines.

Coming up: Under the changes being implemented through national health care reform, expect to see some changes to the procedures used to review denial of benefits to consumers. When the changes are fully implemented, the procedures and steps for grievances, utilization review and determination of benefits will be more consistent throughout the United States. Currently, each state sets their own procedures or steps for review and appeal of pre-authorization and grievances against insurance carriers.

 

What is the premium amount you will pay for coverage?

 

How often do you have to pay?

The premium is the amount you pay so that you have coverage for health care. The policyholder pays an amount to the health insurance carrier. Although it is often a monthly premium, the policyholder and carrier may also agree to other payment options, such as paying for several months or a year’s coverage in advance.

 

What is the deductible amount?

The deductible refers to the amount of money that the insured or covered person would need to pay before any benefits from the health insurance policy can be used. If your deductible is $1,000, then you will be responsible for the first $1,000 in covered expenses: prescriptions, lab costs, doctor visits, procedures, etc. When you have paid $1,000 or more out of your own “pocket,” then the policy begins to pay its share of the covered expenses.

 

Are there options for different deductibles and premium amounts?

Yes, you can look at different choices in deductible and premium amounts. Generally, the higher the deductible amount, the lower the premium. If you have a high deductible, for example, $15,000 in a year’s time, then you must pay that amount out in medical expenses yourself, before the policy will contribute to paying for your health care.

If you do not anticipate significant medical expenses, then you may choose to pay a lower monthly premium in exchange for the high deductible. However, since no one can predict when they will get sick or have an accident that requires medical treatment, if you select a high deductible plan, you should also have the resources to pay that deductible amount when necessary.

Remember, if you are sick or injured, you may not be able to work – be sure the deductible amount you have selected is manageable for you under the worst of circumstances.

Cover of When Your Health Insurer Says No brochure

 

When Your Health Insurance Carrier Says No pdf file

 

 

 

 

 

 

 

 

 

What period of time does the deductible cover?

For example, some are calendar year, some are plan year, some are July 1 to June 30, some deductibles are 12 months from the policy’s effective date. Some health insurance policies have a deductible amount per occurrence.

This should be clearly stated in the policy you select.

Is this deductible for each covered person on your policy or for the entire family?

Policies can specify deductible amounts for each person covered, and may have the option of a “family” deductible that can be satisfied by the total amount of covered medical expenses paid by a family. Be sure you know what your deductible amounts are when you are selecting health coverage.

At the end of the deductible period (usually 12 months), the amount usually goes back to zero, and you will begin to pay for covered services again and tracking the amount that goes toward the deductible. In most cases, even if you are in the middle of treatment, when the new deductible period starts, it does not matter if you have just satisfied the deductible in the previous month; you will start a new time period to satisfy the deductible amount.

Does your policy cover 100% of costs after the deductible is satisfied, or must you pay a percentage of costs (known as co-insurance) after your deductible has been satisfied? How much is this percentage?

 

 

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Know what you will pay in premium and deductible limits, and what will be covered when you choose a health plan.

 

Some policies require the policyholder to share the costs of medical services, even after the deductible has been satisfied, or paid. For example, your policy may state that after you have paid the deductible amount, the plan may pay 80% of covered medical expenses, and you would be responsible for 20% of the charge for every visit or procedure. Some policies pay 100% after you have met the deductible amount. Check the policy to determine if there is a shared cost after the deductible has been met.

Is there a “cap” or limit on any of the health insurance benefits? Are there limitations on total expenditure per procedure or treatment?

For example, some policies may only pay for a certain number of physical therapy visits per year. Be sure you understand the amount of any cap on the policy.

Coming up: Under Federal healthcare reform (the Affordable Health Care Act), , insurers can no longer set lifetime limits on benefits. Starting in 2014, coverage cannot be denied coverage due to a person’s pre-existing condition.

Is there a co-pay amount for doctor visits or treatment?

A co-payment or “co-pay” is the amount the policyholder or covered person agrees to pay for each visit to a health provider (such as a doctor or physician’s assistant or lab) or for prescription medication. The policy will state what these co-payments are up front. The policyholder pays the co-payment as a way of sharing expenses with the health insurance carrier.

The co-pay may be a set amount (such as $25 or $35 per doctor visit) or may be a percentage of the covered charge. There may be a different co-payment expected for special services such as an emergency room visit. Be sure you understand what the copayment amount will be before you select your health policy.

Usually, the co-pay amount is paid at the doctor’s office, lab, medical facility or pharmacy at the time of the visit and it is rarely billed by the provider.

Do I have to pay an access fee for services?
What is an access fee?

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Review all materials about your health coverage and ask questions if anything is unclear.


 

 

Generally, an “access fee” is an amount that the individual doctor may charge the patient for services NOT covered or reimbursed by insurance. The types of charges might include consultations by email, phone and fax; consultation fees on weekends or after office hours; handling prescription refills; providing or copying medical records; parking fees for the building where your doctor is located; helping a patient appeal a health insurance carrier denial of benefits; or arranging for medical equipment. The question of “access fees” is one for your doctor or other medical provider. Find out (from your doctor or medical facility) if there are charges you might incur that are not covered by insurance.

Your policy should state whether or not “access fees” will be covered.

What happens if you forget to “disclose” or include information about a pre-existing condition on your application for health insurance? Is there a contestability period and how long is it?

A contestability period is the time during which the health insurance carrier can deny a claim if it finds there were omissions or misrepresentations made in the insurance application. If you smoke, but you said you did not, or if you have a chronic illness or medical condition you did not disclose, or if you did not provide a complete medical history, the carrier may decide to rescind or cancel your policy. If the covered person believes the health condition developed after the effective date of the policy, the individual may appeal the decision. Your policy must state if there is a contestability period and how long it will last.

When shopping for insurance, be sure to ask:

Do I have to use certain doctors or facilities under this health policy? Is there a different reimbursement rate if I use in-network or out-of-network providers?

“In-network” providers have contracted with your health insurance carrier and have agreed upon the rates they will charge for services. Generally, if you have a policy or coverage that uses a network, it will cost less if you visit doctors, labs and medical facilities that are contracted with the carrier. Your carrier should provide or make available a list of providers and facilities which are part of its network.

Do I need a referral or pre-approval in order to see a specialist? If yes, what is the procedure required to get approval to be referred to another provider or specialist?

Are there restrictions on getting a second opinion if my primary provider recommends/does not recommend a certain medical procedure?

Is there a different level of reimbursement or coverage if I go to the emergency room, whether I am admitted to the hospital or whether I am treated and released?

Glossary of Health Insurance Definitions
The “Glossary and Definitions” section is provided so you can be familiar with some of the terms you may see in a health insurance policy. If you have questions, call the Division of Insurance for more information.

Division of Insurance Main Glossary of Insurance Terms 

If you have any questions or complaints about your insurance, please contact the Colorado Division of Insurance for assistance.

We'll be glad to help.

Don't see your question here? Please let us know what other questions you would like to see answered on this page. Email us at insurance@dora.state.co.us

 

 

 

 

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