As an insurance policy, health insurance plans cover medical expenses. Depending on the policy and coverage, the insured individual pays out-of-pocket expenses and is reimbursed, or the insurer directly pays the provider. Many policies cover the payment of medical bills, including doctor visits, laboratory tests, and prescription drug costs. Coverage for medical and surgical treatments may be limited.
Health insurance can be self-insured or employer-sponsored. A self-insured plan means an individual is directly enrolled, making his or her own premium payments. Employer-sponsored health insurance enrolls an individual through work.
If you have an employer-sponsored plan, your employer either buys coverage from an insurance company or pays the costs of employee health care directly. When employers pay health care costs directly, they still may use a health insurance company as a third-party administrator.
Types of Health Care
A Health Maintenance Organization (HMO) is a managed care health plan in which members choose their doctors from pre-approved lists of groups of participating doctors and hospitals. The result is a lower premium and typically a lower copayment without a deductible for the calendar year. Specialists are not covered unless the patient first receives a referral to that specialist from his or her primary care doctor. Again, that specialist would be part of your HMO doctor network.
A Preferred Provider Organization (PPO) offers participants multiple health care providers to choose from, and the plan does not require a referral to a specialist. The downside is that PPO members pay higher premiums than HMO members. But, unlike an HMO, the PPO plan pays all or most of the cost of treatment by an in-network provider. The amount of coverage for out-of-network providers differs among plans. Seeing an in-network provider can help to lower out-of-pocket spending.
Fee-for-Service, or traditional indemnity, is a plan that provides reimbursement for services. Participants in a fee-for-service plan can visit nearly any doctor or health care facility. They would pay directly for the service and submit a claim to their insurance company to be reimbursed.
Common Coverage Limitations
Every health insurance policy sets forth its covered treatments, services, and procedures. Services that might be covered in one policy may not be covered under another plan. For example, acupuncture, mental health care, and substance abuse treatments are often excluded from plans. Other coverage limitations include preexisting conditions, service limits per calendar year, and lifetime maximums.
Health Insurance Policy Procedures
Other policy considerations include pre-authorization for certain services. Patients may be required to secure pre-authorization from the health plan before undergoing certain kinds of medical treatment. Failing to obtain pre-authorization may mean that the plan denies coverage for an otherwise covered service.
In an emergency situation, certain procedures must be followed after using an out-of-network doctor or hospital. Health plans often provide coverage for doctors or hospitals they may not normally cover because it was an emergency situation.
Procedures for paying health insurance costs include meeting a deductible and making copayments. These are shared expenses between the insured and the insurance provider. Costs for copayments range between $10 and $50 per visit. Surgeries and hospital visits are often higher.
Deductibles are the amount that must be paid before a health plan contributes to cost. For example, some PPOs require participants to meet a $500 deductible. This means that the full cost of services will be paid until $500 is reached. Deductibles refer to a calendar year, and once you have spent the deductible amount that year, the health plan coverage takes effect.
Disputes about Coverage
As a health insurance plan participant, you have a right to review decisions and actions taken by your plan. A common issue is denial of coverage, and as the plan participant, you may have a right to review that decision. Review could be limited to certain kinds of claims, and there are time limits for requesting a review.
The first step is an internal review, in which you make a formal request for reconsideration of the decision relating to coverage. External review would be the next step, and it may include an appeal heard by a panel or organization not affiliated with your health plan. Particular forms and documents often accompany a request for review.