We've put together a collection of some of the most common questions that are asked by individuals - including self-employed consumers - who are seeking health insurance. Scroll through the entire list OR click on the section that most interests you.

Options in private health insurance
Individual vs. group health insurance coverage
Changing coverage, paying deductibles, co-payments
Important questions to ask as a health insurance consumer

 

OPTIONS IN PRIVATE HEALTH INSURANCE

What are my choices when it comes to private health insurance?

Health insurance can be broken down into two categories: Fee-for-service and managed care. Of the two categories, traditional indemnity coverage - now known as "fee-for-service" has been around the longest. Managed care has been around since the 1930s, but has really become widely popular in the past few decades. Nowadays, most people with private health insurance are covered by one of three categories of managed care: the HMO (health maintenance organization), the PPO (preferred provider organization) or the POS (point of service) plan.

What is fee-for-service coverage?

Fee-for-service coverage is sort of like auto insurance in that you pay a percentage of your medical expenses up front - the deductible - and then most of the remaining expenses are covered by the insurance coverage.

What are the advantages of fee-for-service coverage?

Under this type of health insurance coverage, you typically gain flexibility - the right to choose your healthcare providers and facilities and to visit specialists you choose without the insurance company's permission.

What are the downsides of fee-for-service coverage?

In exchange for that flexibility, you'll probably have more out-of-pocket expenses (for office visits and hospital stays), more paperwork (filing claims and tracking payments) and higher premiums. These plans tend to have a higher ceiling - the amount you must pay yourself before an insurance company will take over and pay 100 percent of costs. Also, you may have to pay up front for treatment and then submit your bill to your insurer for reimbursement. Also, insurers will usually pay for what's "reasonable and customary," leaving you to make up the difference.

What is managed care?

Managed care plans involve a contract between an insurer and a network of selected healthcare providers that are required to meet certain standards. This is intended to ensure quality while controlling costs. Policy holders are offered financial incentives to use the providers in the network.

What is an HMO?

If you are part of an HMO plan, you'll have access to a broad variety of services (including hospitalization and surgery) from providers approved by your HMO. If you obtain those services from within the HMO's network, you'll typically see lower costs in the form of co-pays and premiums. You'll be responsible for less paperwork. But while costs of participating tend to be low, HMO plans dictate that you visit only providers approved by the HMO - or pay most or all of the costs of a visit yourself. In order to see a specialist out of network, you'll need to get a referral from your in-network physician.

What is a PPO?

A preferred provider organization offers more flexibility in that you are allowed to choose your own specialist without insurer approval, as long as the provider is within the network. You can also use providers outside the contracted network, though staying within the network offers distinct financial incentives, including lower co-pays. If you go outside the network, you may have to pay a deductible - or pay the difference between what an in-network and out-of-network provider charges. If you go out of network, you may have access to fewer services and you generally will have to file a claim.

What is POS plan?

With a point-of-service plan, you selected a primary care physician (PCP) from the plan's network of providers. Like a PPO, you can leave the network and still get some level of coverage, but unless you get a referral from your PCP, you'll probably pay a higher percent of the provider's fees and have to deal with more paperwork. You may also have to pay a deductible.

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INDIVIDUAL VS. GROUP HEALTH INSURANCE COVERAGE

What are my options for receiving health insurance as an individual?

Individuals are able to receive health coverage through group insurance plans offered by an employer or through another group affiliation such as a school. They may purchase coverage privately as an individual or through groups with mass buying power such as professional or trade associations, or credit unions. A third option is to get coverage under a government sponsored program such as Medicare or Medicaid, through healthcare systems such as HMOs (health maintenance organizations) and PPOs (preferred provider organizations) and service-type plans such as Blue Cross/Blue Shield.

How is individual insurance different from group insurance?

One of the most obvious differences between individual insurance and group insurance is the process of determining your insurability. When you purchase coverage as an individual, the insurance company will require you to fill out a detailed health questionnaire, including questions about your medical history and your lifestyle. You'll also be required to undergo a medical examination. Based on how you respond to questions about such factors as your personal habits, age, income and medical history, you may be declined coverage - or the insurer may provide coverage, but with limitations built into the policy.

When you apply for group insurance coverage, there's a good chance you will be issued insurance without a medical examination. Why? Because the insurer knows that with a large group, it can cover enough healthy individuals to offset the number of individuals with poor health. The larger the group and the more group policies issued by an insurer, the less risk the insurer faces. With businesses seeking coverage for its employees, the insurer will generally approve coverage for any full-time employee.

Is it more difficult to obtain individual coverage than group coverage?

When an employer provides insurance coverage for its employees, the employer enters into a contract that insures a group of persons - not individuals. That means that employees may enter or leave the group, but that the names of the employees never appear in the contract. This provides an advantage to new employees with known health problems - who might otherwise be denied individual insurance - because they can be automatically covered. Although the insurer can set limits for new employees, it's likely that most employees can be covered.

Conversely, before a company will issue coverage to you as an individual, the insurer will evaluate you based on the risk you present. That means they'll want to know everything about your health, including pre-existing conditions. It's not wise to attempt to hide these conditions since many insurers can obtain your information from the Medical Information Bureau. At the same time, you should know that even if the insurer doesn't want to cover your particular condition, you may still be able to get coverage with an exclusion rider.

Is group insurance less expensive than individual coverage?

Through group insurance, insurers can provide one policy that covers the medical expenses of many individuals. The premium for the group is determined by the characteristics of the group as a whole - not based on each individual's risk potential. This results in a lower cost per unit than individual insurance and a lower cost to the individuals in that plan.

What are the advantages of individual coverage?

Unlike group insurance, persons who secure individual insurance are in control of their policies. You may be able to negotiate to have provisions of the policy included or excluded and to adjust your deductible and co-payment.

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CHANGING COVERAGE, PAYING DEDUCTIBLES, CO-PAYMENTS

Are there limits on when I can modify my health plan?

After you've enrolled in a health insurance plan, you'll typically have an open-enrollment period. During this period - generally once a year - you can modify your insurance coverage. Outside this period, you may also modify your coverage if you have a major life change, including the birth of a child or a change in your marital status.

How does a deductible work?

The deductible is the amount an individual is required to pay during a plan year for health care expenses before insurance or a self-insured company begins to cover costs. A plan with a $750 deductible means the individual pays the first $750 of health care expenses before insurance begins to pay. Generally, the higher your deductible, the lower the cost of your health insurance premiums.

If I have dependents, does each dependent have to meet a deductible before reimbursement starts?

Each person covered under a health plan must meet a deductible before expenses will be covered. However, a plan may offer a family deductible - some multiple of an individual deductible - that would cost less than the sum of the deductibles for every dependent. Some of these plans may require that at least one family member pay the full deductible before the family deductible can be exercised.

What is co-insurance?

Most group health insurance plans include co-insurance, which establishes a percent of the covered expenses paid by the insured and the insurance plan after you've paid your deductible. A common co-insurance level of 80 percent co-insurance means that the insured pays 20 percent of covered expenses and the insurer pays 80 percent.

What is a covered expense?

A covered expense is an expense that's eligible for reimbursement by a health insurance plan. However, while a plan may cover an eligible expense, there may be limits on how much of a particular expense will be reimbursed. An insurer may cap payments for a type of procedure or service, may limit the number of visits to a provider in a plan year or may impose a "reasonable and customary" charge.

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IMPORTANT QUESTIONS TO ASK AS A HEALTH INSURANCE CONSUMER

Providers contracted through the plan

• Is my doctor a participating physician in the plan? How many doctors are in the plan?
• How far does the service area extend? Can I see the directory?
• How many hospitals are included in the PPO? Which hospitals are closest to me?
• How are referrals made to specialists?

Services offered under the plan

• If you are being treated for an existing medical condition, will it be covered under the new plan? Would there be a waiting period?
• If you are self-employed, will your plan cover work-related injuries or conditions?
• What guidelines have been established for emergency treatment? What steps must you take for treatment if you or your family members are out of town?
• Are there limits on medical tests, out-of-hospital care, mental health care, prescription drugs, or other services that are important to you?
• What services are covered under the plan? What preventive services does the plan offer? Does it cover:
  Chiropractic treatment
  Alternative health care counseling and treatment
  Experimental treatments
  Mental health counseling and care
  Substance abuse counseling and treatment
  Family planning services
  Physical therapy
  Care for chronic (long-term) conditions, diseases or disability
  Home healthcare, hospice care

Costs and conditions

• What will the plan cost specifically? How much is the monthly premium? Can I lower the premium by purchasing coverage with a higher deductible?
• How much is the co-pay per visit to an in-network physician - and to an out-of-network physician? How much more will it cost me if I decide to use an out-of-network physician?
• What is the maximum I would pay out of pocket in a plan year? How much will I pay before the insurer takes over payment of the remaining expenses?
• Does the plan specify a lifetime maximum cap that the insurer will pay?
• Does the plan have a waiting period during which your medical expenses will not be covered?
• If my spouse already has a health insurance plan, how will that plan affect my plan?
• Does the plan offer a review period during which you can review your plan and, if you opt, cancel the plan with a full premium refund?