As medical care advances and treatments increase, health care costs also increase. The purpose of health insurance is to help you pay for care. It protects you and your family financially in the event of an unexpected serious illness or injury that could be very expensive. In addition, you are more likely to get routine and preventive care if you have health insurance.
You need health insurance because you cannot predict what your medical bills will be. In some years, your costs may be low. In other years, you may have very high medical expenses. If you have health insurance, you will have peace of mind in knowing that you are protected from most of these costs. You should not wait until you or a family member becomes seriously ill to try to purchase health insurance.
We also know that there is a link between having health insurance and getting better health care. Research shows that people with health insurance are more likely to have a regular doctor and to get care when they need it.
Most people get health insurance through their employers or organizations to which they belong. This is called group insurance. Some people do not have access to group insurance. They may
choose to purchase their own individual health insurance directly from an insurance company. Many Americans get health insurance through government programs that operate at the national, State, and local levels. Examples include Medicare, Medicaid, and programs run by the Department of Veterans Affairs and Department of Defense.
3 3. Which type of health insurance is right for you?
Whether you are eligible for group insurance or choosing an individual plan, you should carefully compare costs and coverage.
Be sure to compare:
Access to doctors, hospitals, and other providers.
Access to after hours and emergency care.
Out-of-pocket costs (coinsurance, copays, and deductibles).
Exclusions and limitations.
Even if you do not get to choose your health plan—for example, if your employer offers only one plan—you still need to understand your coverage. What kind of services are covered by the plan? What steps do you need to take to get the care you and your family members need? When do you need prior approval to ensure coverage for care (for example, elective hospitalization for scheduled surgery)? How are benefits paid; do you have to submit a claim?
Make sure you understand how your plan works. Don’t wait until you need emergency care to ask questions.
5If you are choosing between indemnity and managed care plans,
remember that they may differ in several important ways, including:
How you access services.
How you obtain specialty care.
How much and sometimes how you pay for care.
Despite these differences, indemnity and managed care plans share some features. For example, both types of plans cover a wide array of medical, surgical, and hospital services. Most plans offer some coverage for prescription drugs. Some plans also have at least partial coverage for dentists and other providers.
The major difference between indemnity (non-network based coverage) and managed care plans (network-based coverage) concerns choice of doctors, hospitals, and other providers; out-of-pocket costs for covered services; and how bills are paid.
Be sure to check on the physicians and hospitals that are included in the plan.
What is consumer-directed coverage?
Consumer-directed health plans allow individuals and families to have greater control over their health care, including when and how they access care, what types of care they receive, and how much they spend on health care services. The major types of consumer-directed coverage are:
Health savings accounts, usually coupled with high deductible
Health reimbursement arrangements.
Flexible spending arrangements.
Archer Medical Savings Accounts.
How does Medicare coverage work?
Medicare is the Federal health insurance program for Americans age 65 and older, some disabled Americans, and individuals who have the end-stage renal disease (ESRD). The Original Medicare Plan, which is available nationwide, is a fee-for-service plan that is managed by the Federal Government. It pays for many health care services and supplies, but it won’t pay all of your health care costs.
Generally, you should enroll in Medicare when you first become eligible. If you choose to enroll at a later time, you will pay a late enrollment penalty.
If you already have health insurance from an employer or another source, talk to your benefits administrator about whether you should join Medicare or not while still covered.
Medicare has four parts: hospital insurance, known as Part A; medical insurance, known as Part B, which provides payments for doctors and related services; and prescription drug coverage, known as Part D. Medicare Part C gives you the choice of receiving the benefits of Medicare A, B, and D through a private health plan, like an HMO or PPO. This coverage is called Medicare Advantage and is described on page 16 of this booklet.
What other government programs are available?
Other government-sponsored programs for specific groups—such as Medicaid and the State Children’s Health Insurance Program (SCHIP) for low-income individuals and families—and plans that meet a specific need, such as long-term care, supplemental coverage, and disability insurance, are also available.
Are there other types of health-related coverage?
Other types of health-related coverage include long-term care insurance, disability insurance, and supplemental insurance.
What happens if you have a preexisting condition?
Before the passage of the Health Insurance Portability and Accountability Act (HIPAA) in 1997, people had to worry about health insurance coverage for preexisting conditions like diabetes, heart disease, or cancer. If you changed jobs and had to change insurers, you might not have been able to get some of your care covered because of the preexisting condition exclusion.
Today, HIPAA helps to assure continued coverage for employees and their dependents, regardless of preexisting conditions. Insurers can impose only a 12-month waiting period for any preexisting condition that has been diagnosed or treated within the preceding 6 months. As long as you have maintained continuous coverage without a break of more than 63 days, your prior health insurance coverage will be credited toward the preexisting condition exclusion period.
If you have had group health coverage for at least 1 year and you change jobs and health plans, your new plan can’t impose another preexisting condition exclusion period. If you have never been covered by an employer’s group plan and you start a new job that offers such a plan, you may be subject to a 12-month pre-existing condition waiting period. Federal law also makes it easier for you to get individual insurance under certain situations. You may, however,
have to pay a higher premium for individual insurance if you have a preexisting condition.
If you have not had coverage previously and you are unable to get insurance on your own, you should check with your State insurance commissioner to see if your State has a high-risk pool (described previously in this booklet). You can find the phone number for your State insurance commissioner in the blue pages of your local phone book.
What happens if you have health insurance through your employer and you leave your job?
If you leave a job where you have had employer-sponsored health insurance, you will want to ensure that you have continued protection against the high costs of healthcare. Whether you leave the job on your own or you are forced to leave, there is a Federal law that may help you to maintain coverage. Under the Consolidated Omnibus Budget Reconciliation Act of 1985 (commonly known as COBRA), group health plans sponsored by employers with 20 or more employees are required to offer continued coverage for you and your family for 18 months after you leave the job. In some cases, the COBRA period may be extended past 18 months. In order to continue your coverage under COBRA, you must notify your employer that you intend to do so within 60 days of losing your employer’s health coverage. You also must pay the entire premium for the cost of the coverage.
Having health insurance helps to protect us from high health care costs that most people could not meet in any other way. It helps us pay for health care, and it ensures that we have access to care when we need it. Research has shown that having health insurance is closely tied to the quality and timeliness of care.