Is the individual covered? A family policy doesn’t automatically cover all family members. Most policies automatically cover children of the policyholder or covered spouse for the first 31 days after birth or adoption only. To continue coverage after that time, you must notify the insurer to enroll the child and pay any applicable policy premiums.
The Affordable Care Act allows your children can stay on your health plan until they reach the age of 26, whether single or married. This rule applies to all plans in the individual market and to new employer plans. It also applies to existing employer plans unless the adult child has another offer of employer-based coverage. Beginning in 2014, children up to age 26 can stay on their parent’s employer plan even if they have another offer of coverage through an employer.
Please note that an adult child who qualifies for benefits under your health insurance policy might not qualify for benefits under your health reimbursement arrangement (HRA) or health savings account (HSA). An individual must meet the IRS’s definition of “dependent” to receive distributions from an HRA or HSA, otherwise the funds will be treated as taxable income.
Is the service covered? Your policy’s summary of benefits provides an overview; for detailed information, see the section describing “Benefits” or “Covered Services.” Most health plans limit coverage to “medically necessary” care to treat an illness, injury or condition of the body, and preventive care designed to prevent illness or disease. If your physician recommends a treatment that isn’t specifically covered by the policy, discuss the matter with your insurer before proceeding to avoid sticker shock due to an unpaid claim.
Have you obtained preauthorization? Some health plans require preauthorization (sometimes called prior authorization, prior approval or precertification) for certain services, except in an emergency. In preauthorization, a healthcare provider submits information to your insurer, detailing why a specific health service, treatment plan, prescription drug or durable medical equipment is medically necessary. Your insurer can deny payment of a claim that might otherwise be covered if you fail to obtain preauthorization when required.
Is the provider covered? Your health plan probably specifies that you must obtain medical services from a “qualified provider” or “covered provider,” usually defined as a licensed physician or other professional working under a physician’s supervision, or a licensed healthcare facility such as hospital or urgent care clinic. Some policies provide benefits for “alternative care,” such as chiropractic or acupuncture treatments to treat injuries or illness, but cap the number of covered visits per year. Most do not cover services from naturopaths and other nontraditional health practitioners.
Is your provider a member of your plan’s network? Health maintenance organization (HMO) plans usually cover only services provided by a member of the HMO’s network, except in case of emergency. Preferred provider organization (PPO) plans often cover services from both network and non-network physicians and facilities; however, you will have a higher co-insurance payment when seeing an out-of-network provider. A co-insurance payment is your share of the costs of a covered health care service, calculated as a percent (for example, 20 percent) of the allowed amount for the service.
A network provider will typically file a claim for you if you provide your plan information. The plan will pay your provider directly for any covered services, subject to any allowable maximums and minus any deductibles and co-insurance that might apply. You will then receive a bill for any balance you owe. An out-of-network provider might require payment at time of service. In that case, you will have to file a claim for reimbursement from the insurer. You’ll need a claim form from your insurer and an itemized receipt from your provider, detailing the services you received and their cost. Once you complete the form, make a copy of it and any attached receipts for your records before sending it.
Just because a claim is covered doesn’t mean your insurer will pay 100 percent of the provider’s charges.
The following features can reduce the amount your policy pays:
Allowed Amount. All health plans specify that they will pay a maximum amount for covered services. Your plan might call this an “eligible expense,” “payment allowance” or “negotiated rate.” Insurers often base this maximum on a “UCR (usual, customary and reasonable) rate schedule, which uses information on what providers in a specific area usually charge for the same or similar medical service.
Healthcare providers often complain that insurers’ UCR information is out of date and doesn’t reimburse them the true cost of providing services. However, fees can vary widely among providers even in the same city, so UCRs provide some cost controls for consumers.
Balance Billing. If your provider charges more than the insurer’s allowed amount for a covered service, you may have to pay the difference, called “balance billing.” Preferred providers’ agreements with health plans prohibit balance billing—just one more way using a network provider saves you money!
Deductibles. Most health insurance plans require you to pay a deductible, or specified out-of-pocket amount, toward covered health expenses per calendar year before the plan will begin to pay benefits.
Many health plans cover preventive care with no deductible, so the cost of vaccinations, annual exams, etc. might not apply to your deductible. Preventive care can include (but is not limited to):
- Periodic health evaluations, including tests and diagnostic procedures ordered in connection with routine examinations, such as annual physicals.
Routine prenatal and well-child care.
- Child and adult immunizations.
- Tobacco cessation programs.
- Obesity weight-loss programs.
- Screening services, including services for cancer; heart and vascular diseases, infectious diseases, mental health conditions, substance abuse and more.
Family plans typically have two deductibles—an individual deductible and a family deductible. In a PPO or traditional fee-for-service plan, once any covered individual meets the individual deductible, the policy will begin paying benefits for that person. Other covered family members must continue paying toward the deductible. Once total payments for any family member(s) reach the family deductible amount, no covered individual must pay a deductible for the rest of the calendar year.
A high-deductible health plan (HDHP) linked to a health savings account (HSA) has different rules for deductibles. To qualify for the HSA, an HDHP covering a family must have a minimum deductible of $2,500 for 2013. If either the deductible for the family as a whole or the deductible for an individual family member is below the minimum annual deductible for family coverage, the plan does not qualify as an HDHP.
How much of your deductible have you satisfied to date? Check the latest Explanation of Benefits (EOB), or statement from your health insurer that shows what claims it has paid on your behalf. In addition to showing what your provider charged and how much your plan paid (after fee adjustments), the EOB should show the individual and family deductible satisfied to date.
Copayments. HMO and PPO plans require insureds to pay a fixed amount (such as $25) each time they access a covered health service. Copayments help control overuse of medical services, so some plans do not charge copayments for certain visits that they want to encourage, such as annual exams. Copayments do not apply to your deductible.
Coordination of Benefits. If you or your dependents have coverage under more than one health plan, “coordination of benefits” rules determine which pays first. The “primary payer” pays what it owes on your bills first, and then sends the rest to the “secondary payer” to pay. In some cases, there may also be a “third payer.”
Coordination of benefits rules make it possible for insureds to receive coverage for up to 100 percent of their claim amount, but not more. Many insurers follow coordination of benefits rules set by the National Association of Insurance Commissioners (NAIC). These rules generally set the order of payment as:
- The plan without coordination of benefits provisions.
- An employer’s group plan, if you are the employee. Your employer’s plan will cover your spouse on a secondary payer basis if he/she has coverage under his/her own employer’s plan.
- An active employee plan, versus a retiree plan. If you are working and also have coverage as a retiree under another employer’s plan, the plan of the employer you are currently working for would become primary.
- Children who have coverage under both parents’ group plans would have primary coverage under the plan of the parent whose birthday is earlier in the year. For example, Beth and Dave both have employer-sponsored coverage for their children. Beth’s birthday is in January and Dave’s is in March. Beth’s plan would be the primary payer; Dave’s the secondary. In cases of divorce, the plan of the parent financially responsible for the child’s healthcare generally becomes the primary payer.
- If none of these rules apply, the plan you’ve had the longest will be considered the primary plan.
Different rules apply for those who have Medicare plus private health insurance. For specifics, go to www.medicare.gov and type in “who pays first.”
Doctors and other healthcare providers might have a working knowledge of what a health plan will pay, but they can’t be experts in all of them. To avoid surprises, review your plan to ensure it covers any elective procedures or treatments before scheduling them. If you’re unsure, or if your healthcare provider recommends an uncovered or experimental treatment, you can ask your insurer if it will provide coverage.
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