Insurance

Find answers to some of the most frequently asked questions about health insurance.

Why should I have health insurance?

The cost of health care has risen drastically over the past few decades. If you do not have medical insurance to help pay bills, a serious injury or illness can be financially devastating to you and your family. If you don’t have coverage you can be exposed to high health care bills; or, if you have too little or the wrong kind of coverage, you won’t have enough protection.

What Types of Health Insurance Are Available?

Major Medical Plans

This type of policy is usually effective in covering serious illness or injury where costs are high. Hospital care, drugs and doctors’ visits, are usually covered. These benefits can be delivered in several different ways:

• Indemnity plans – These major medical plans typically have a deductible – the amount you pay before the insurance company begins paying benefits. After your covered expenses exceed the deductible amount, benefits usually are paid as a percentage of actual expenses, often 80 percent. These plans usually provide the most flexibility in choosing where to receive care.
• Preferred Provider Organization (PPO) plans – In these major medical plans the insurance company enters into contracts with selected hospitals and doctors to furnish services at a discounted rate. As a member of a PPO, you may be able to seek care from a doctor or hospital that is not a preferred provider, but you will probably have to pay a higher deductible or co-payment.
• Health Maintenance Organization (HMO) plans – These major medical plans usually make you choose a primary care physician (PCP) from a list of network providers. Your PCP is responsible for managing all of your health care. If you need care from any network provider other than your PCP, you may have to get a referral from your PCP to see that provider. You must receive care from a network provider in order to have your claim paid through the HMO. Treatment received outside the network is usually not covered, or covered at a significantly reduced level.
• Point of Service (POS) plans – These major medical plans are a hybrid of the PPO and HMO models. They are more flexible than HMOs, but do require you to select a primary care physician (PCP). Like a PPO, you can go to an out-of-network provider and pay more of the cost. However, if the PCP refers you to an out-of-network doctor the health plan will pay the cost.

Limited Benefit Plans

These types of policies provide limited coverage for a particular health care setting, ailment or disease. Here are some of the options that may be available to you:

• Basic Hospital Expense Coverage – Covers a period of usually not less than 31 days of continuous in-hospital care and certain hospital outpatient services.
• Basic Medical-Surgical Expense Coverage – Covers costs associated with a necessary surgery, including a certain number of days (usually not less than 21 days) of in-hospital care.
• Hospital Confinement Indemnity Coverage – Covers a fixed amount (usually not less than $40) for each day that you are in a hospital. The benefits paid are not based on your actual expenses.
• Accident Only Coverage – Covers death, dismemberment, disability or hospital and medical care caused by an accident. Specified accident coverage that covers only certain accidents may also be purchased.
• Specified Disease Coverage – Covers diagnosis and treatment of a specifically named disease or diseases, such as cancer.
• Other Limited Coverage – You may purchase insurance covering only dental or vision or other specified care.

Additional Coverage Options

These types of policies provide added protection should you become disabled, require long-term care, or enroll in Medicare:

• Disability Income – This coverage provides for weekly or monthly benefit payments while you are disabled after a covered injury or sickness. The disability payment is usually a set dollar amount not to exceed a certain percentage of your income. These policies usually expire when you become eligible for Medicare.
• Long-Term Care Insurance – This policy usually pays for skilled, intermediate and custodial care in a nursing home, and also for care in other settings, such as the home, adult day care center or assisted living facility. The policy usually pays a fixed amount per day while a person is receiving care.
• Medicare Supplemental Coverage – The federal Medicare program pays most medical expenses for people 65 or older, or for individuals under 65 receiving Social Security disability benefits. However, Medicare does not pay all expenses. As a result, you may want to buy a Medicare Supplement policy that helps pay for certain expenses, including deductibles not covered by Medicare.

Cancer Insurance

• Cancer insurance is not a substitute for comprehensive coverage – Cancer treatment only accounts for a small percentage of the American public’s health care bill. That is why it is essential to have insurance coverage for all conditions, not just cancer.
• Consider a major medical policy if your family is not protected – If you and your family are not protected against catastrophic medical costs, consider a major medical policy. These policies pay a large percentage of your covered costs after a deductible is paid.
• You may not need extra coverage – Ask yourself these three questions: Is my current coverage adequate for these costs? How much will the treatment cost if I do get cancer? How likely am I to contract the disease?
• Duplicate coverage is expensive and unnecessary – Buy basic coverage first, and then make sure a cancer policy will meet any needs not covered by your primary plan. Don’t assume that double coverage will result in double benefits.
• Check the policy’s limitations – Some policies pay only for hospital care. Many treatments, including radiation, chemotherapy and some surgery are often given on an outpatient basis. Cancer patients often face large, non-medical expenses that are not usually covered by cancer insurance. Examples are home care, transportation and rehabilitation costs.
• No policy will cover cancer diagnosed prior to policy application – Some policies will deny coverage if you are later found to have had cancer at the time of purchase, even if you did not know it.
• Most cancer insurance does not cover cancer-related illnesses – Cancer or its treatment may lead to other physical problems, such as infection, diabetes or pneumonia.
• Many policies contain time limits – Some policies require waiting periods of 30 days or even several months before you are covered. Others stop paying benefits after a fixed period of two or three years.

These are NOT health insurance plans:

• Discount Plans – You may receive advertisements from plans offering discounts on health care for a monthly fee. These are not health insurance plans and participants do not have the same protections as under licensed health insurance plans. Insurance commissioners strongly recommend that you thoroughly investigate any plan promising deep discounts for a “low” monthly fee and weigh the benefits against the cost carefully.
• Non-Licensed Risk-Sharing Plans – You may receive offers to join a group or association that will take your monthly payments, put them in a savings account (or trust) with other participants’ money, and then help pay some of your health care costs, as needed. Such arrangements are not insurance and the participants do not have the protections available to purchasers of licensed insurance plans. Insurance commissioners strongly recommend that you thoroughly investigate such plans before joining.

Can my employer change our health insurance carrier and level of benefits during the year?

Yes. An employer is required to offer health insurance to all employees who work 20+ hours a week for four consecutive weeks {HRS§§ 393-3(8), 393-11, 393-14}.

The employer shall give each covered employee thirty days notice should the employer elect to change the employer’s plan or health care Contractor {HAR 12-12-17(b)}.

If an employer changes health care plans, the new plan must be a plan that provides mandated benefits and has been approved by the Prepaid Health Care Advisory Council {HRS 393-7}. The employer must pay at least 50% of the premiums and cannot charge the employee more than 1.5% of the employee’s wages, so if the employer changes to a more expensive plan with richer benefits, the employee’s contributions will remain capped at 1.5% of their wages {HRS 393-13}.

What happens when my group health coverage ends?

You can apply for individual health coverage under the federal law Health Insurance Portability and Accountability Act (HIPAA). This type of policy is issued on a guaranteed issue basis if you meet the qualifying criteria. However, there is no limit on the maximum premium the insurance company can charge. Care for preexisting conditions may not be excluded from coverage.

What happens to my group health coverage if I leave my employer?

You may be eligible for protection under the Consolidated Omnibus Budget Reconciliation Act (COBRA) law and entitled to a minimum of 18 months of continuation coverage. You can find out more about COBRA continuation of group health benefits from the Federal Department of Labor Office of Employee Benefits Security Administration website.

Can health insurance companies deny my application for individual insurance due to a health condition?

Yes, a company has the right to deny coverage for almost any reason on a new application. However, once you are accepted for coverage, the company cannot cancel your policy except for nonpayment of premium.

What is a preexisting condition?

This is normally a physical or mental condition for which medical advice, diagnosis, care or treatment is recommended or received before the effective date of the policy.

Is there assistance available?

There are many programs available through the federal or state governments to assist with the high cost of health care and health insurance. You may contact your state government to learn about your eligibility for Medicaid (for low-income and disabled persons), the State Children’s Health Insurance Program (SCHIP), high-risk pool coverage for individuals who are denied coverage, prescription drug assistance programs, or other assistance.

You may also contact the Department of Health and Human Services for information about Medicare (including the new prescription drug program which provides many subsidies). In addition, the federal government provides tax credits for certain workers who have lost their jobs because of federal trade agreements or whose pension program has failed.

What is a “self-insured” plan?

An employer may choose to “self-insure” by paying out benefits from its own funds. Typically, an insurance company administers the program, but the liability for paying for the care of the employees rests on the employer. It is important for workers to understand that if their employer “self-insures,” state patient protections (such as access to internal and external appeals processes, assurance of certain benefits, and the right to have grievances heard by their State Insurance Department) do not apply. All federal protections (i.e., HIPAA and COBRA) do remain.

Where can I go for help?

If you have any questions about your policy, your rights and protections, or a potential agent or insurer, you can contact the state Insurance Division for information. You can also contact your State Insurance Department for assistance if you have a grievance against a licensed health insurer.