What is an insurance premium
A premium is what you pay to be a part of an insurance plan. You pay this regardless of if you ever use any benefits or not. Often times, employers pay some or all of the premiums for their employees. Premiums can change and sometimes have introductory rates so be sure to ask for specifics on what you will pay throughout the life of the plan and if you have a right to renew. You can’t afford to be priced out or dropped when you get sick.
What’s a deductible?
The deductible is what you have to pay every year before insurance will pay. This is in addition to the premiums you pay to purchase the insurance. So, if you have a $1000 deductible then you have to pay that $1000 before the insurance will pay. But not so fast, some insurance plans will pay for part of some types of services before you reach your deductible. This may be for something like vaccinations, well-baby care, or yearly gynecological exams. Since this can make a big difference, you should be familiar with what your plan covers.
Deductible amounts can be based on individual family members and the family as a whole. For example, you may have a $500 deductible on each family member but a $1000 deductible for the entire family. So, if you have four family members and all are hospitalized in one year, your family would be required only to meet a $1000 deductible before receiving benefits.
Deductibles can also vary depending on whether or not your health care was provided by someone in the plan’s network or not. Because the difference can be substantial, it is a good idea to ask if every provider from doctors to anesthesiologists is in network. If you have a copay for each office visit, some plans count it towards your deductible, some don’t.
What’s a copay?
A copay is what you pay each time you go to the doctor, dentist, or hospital. You may also have a copay for prescriptions. The amount you are required to pay can be higher if you are seeing a specialist or an out-of-network provider. With some plans, you may have to pay for all of your services until you meet your deductible. After that you would have to pay a copay. After paying a certain amount, your plan may pay the entire bill. Copayments may not always apply as in the case pre-natal care where patients may be billed for the entire pregnancy instead of for each visit.
What does co-insurance mean?
If you have met your deductible, you may have to pay a percentage of the bill until you reach a maximum amount determined by your plan. For example, suppose you have a plan that has a $100 deductible followed by 80/20 coinsurance with a $5000 out-of-pocket maximum for the year. This means that you would pay your $100 deductible and after that you would be required to pay 20% of the bill until you reach $5000. After you have paid $5000 out-of-pocket, the insurance company pays everything for the remainder of the year. This is why surgeries are popular at the end of the year. People who have met their deductibles save by doing it before the calendar year changes.
What is the difference between individual coverage and group coverage?
People usually gain access to group coverage through their employers. People who don’t work for employers that offer plans, are unemployed, or self-employed may have to try and find individual coverage. The rules and laws governing group insurance are not the same as those for individual plans. Group plans are not allowed to exclude individuals the way individual plans can (although this is changing). People needing individual plans can find it challenging to find affordable coverage if they have any pre-existing conditions and care for things like maternity may not be included. Because there are a lot of individual plans, it’s important to be a very careful consumer and know what you are buying. Some plans may not offer enough coverage in the event you get sick and may be able to refuse to renew your coverage after you do. In the event of a major, long-term illness, this could lead to a major financial problem. Also, some products may look like insurance and use the words like coverage, but they are discount programs and not insurance. You can find out which private insurance plans, public programs and community services are available at www.healthcare.gov. You can also start comparison shopping for individual plans at a site like eHealthInsurance.com.
Where can I find affordable and reliable insurance?
This can be a really big challenge and laws and procedures are in flux right now as reforms under the Affordable Health Care Act ramp up. Details about the new law and resources for consumers are available at www.healthcare.gov.
Ehealthinsurance.com offers a site to help people compare plan benefits and prices on the individual market. You could also work through an agent that you have confidence in. Experts warn against short-term and serial short-term policies as these don’t offer protection against the kind of major illnesses that would be truly devastating. Time Magazine featured this problem in their cover story in March of 2009.
Also, check out the reputation of the insurance company you are buying your plan through. People have been cheated by companies selling fake coverage. They have also run into trouble if the insurer goes under. To see complaint and financial information about a particular company, go to the National Association of Insurance Commissioner’s Web site. They also list licensed insured companies by state here.
If these plans are still out of reach financially, read about more options in the other questions on this site.
What’s a COBRA plan?
A COBRA plan allows people to continue their employer-based health insurance after their job ends (provided their employer still exists). This coverage can last anywhere from 18 to 36 months depending on different circumstances.
COBRA is not always a popular option for people because it requires participants to pay the full amount of the premium plus an administrative charge. This can be expensive ($1000+) for family coverage.
COBRA may be a prerequisite for getting into a state’s high risk insurance pool if you can’t get individual insurance on the open market because of a pre-existing condition. It may also help you to avoid a lapse in coverage if you need to reduce or eliminate waiting periods on your next plan.
What is a pre-existing condition? Can I be covered?
This is complicated question with a lot of variables in the answer. If you are perfectly healthy, insurance companies want to insure you. If you already have a medical condition, the company may call it a pre-existing condition and refuse to cover expenses related to that particular problem or you may have trouble getting coverage entirely. On an individual plan you may have an exclusion period before you are covered or other times, you won’t be covered for that particular condition at all. If you are part of a group plan, you likely won’t be excluded from coverage after a certain time periods and certificates of prior credible coverage from previous insurers can help reduce this time. Laws vary, but some states have community-rated insurance which means pre-existing conditions don’t affect your rates. There are a lot of nuances to this situation and you might find asking questions on our forums yields a more complete answer to your own situation. Also a visit to this statistician’s site may help you more fully investigate the challenges of this problem. He also breaks down the some of the available resources by states here. Sometimes people with specific conditions may be able to get help from organizations dedicated to their specific conditions. Cancer patients, for example, can get extensive advice about getting care through the American Cancer Society by calling 1-800-ACS-2345.
If my insurance company denies my claim, do I have options? What’s rescission?
Yes. First, appeal directly to the insurance company. This is called an internal appeal. When you are denied, your insurance company should provide you with details on their appeals process. Follow it carefully and you may be able to save yourself some money. A letter from your doctor can help support your claim. If the internal appeals process doesn’t work, you can even appeal externally to certain state agencies for help.
Insurance companies have also been known to practice rescission which means when you need an expensive treatment they go back and look carefully through your medical records and application for any reason to deny paying your claims and/or cancel your policy. For example, if you mentioned headaches at an appointment prior to being insured and then were diagnosed with a brain tumor after being insured, they could try to use that information to label the tumor as a pre-existing condition, something they don’t have to pay for. Blue Cross in California was fined $1 million in 2007 for unjustified rescission so you may need to explore options with a lawyer if this happens to you.
Can a Flexible Spending Account or Health Savings Account be used with insurance plans?
Yes, both can. Flexible Spending Accounts or FSA accounts are set up through employers and allow employees to pay for health related expenses with pre-tax dollars. This can help lessen the cost of copays, coninsurance, and other non-covered health-related expenses like glasses. Paying with pre-tax money means a discount but there are rules as to what happens with the unspent money that may make it possible for your employer to keep any unspent funds after a certain time period or if employment is terminated.
Health Savings Accounts started in 2003 and allow people with high-deductible plans to pay for medical expenses and their deductible tax free. These plans differ because they are owned by individuals and money in the account can be rolled over from year to year. They are available through banks, credit unions, and insurance companies. Employers sometimes set them up and contribute to them as well. Details about eligibility and information on contribution limits can be found at the IRS website here.
What if I’m insured and the bill is still too much?
First, look carefully at your bills to make sure they are accurate. Ask for an itemized statement. Check that your name and other information are correct and that you haven’t accidentally been charged for care you never received, someone else’s care, or that someone isn’t using your information fraudulently. Other obvious accidents can occur too. If you have a circumcision charge for your baby girl, it’s an obvious error. Make sure you are being given the rates negotiated by your insurer. More complicated errors can be harder to figure out and if you are overwhelmed by very large, complex bills, it may be worth it to hire an advocate to help you sort through the charges. You can find one at Medical Billing Advocates of America but make sure you understand what you will have to pay them as they take a percentage of any savings. You want to avoid errors even if you don’t have to pay for them directly because they cost your plan more and make premiums more expensive.
If your bill is error free and still too high, don’t ignore it! Call the hospital or provider and ask for a discount. If you offer to pay a percentage right away, that can help. You also might be pleasantly surprised at how much they can deduct. Plus, the billing staff may be able to send you a financial aid application. These programs are often more generous than you might expect. Also, you can set up a payment plan and may be able to negotiate some of the charges down. It can’t hurt to ask, but it can hurt to ignore the situation. If you aren’t working with the hospital, your credit can be damaged, you can face collection calls, and you can even be sued. Author, nurse, and healthcare savings expert, Michelle Katzman also offers these suggestions on negotiating your bill.
Here are some more good articles on understanding your bill:
I don’t have insurance, but I think I make too much to qualify for any government assistance, where should I start to pay my bills?
This is not a good situation. Insurance companies negotiate big savings for their customers. Without those negotiated rates, you are on your own and you can and probably will be charged a lot more in the event you need care. If you don’t have an insurer negotiating for you, you will need to try to do it yourself. Try finding out what the Medicare or Medicaid rate is for your treatments and see if you can pay an amount close to that instead of full price. The federal government started providing data online in 2006 for what Medicare pays for certain procedures as well as information about patient care. Click here to compare hospital rates in your area. Read the directions as it takes a bit of patience to navigate the site, but you may find what you are looking for.
If not, you can try paying a fee at Heathgrades.com to estimate the local cost of a medical procedure and use that as a starting point for negotiations as well.
Some uninsured people have also had success going abroad for treatment in places like India and Costa Rica. This works better for some patients and conditions than others, but the savings can be substantial if you are a good candidate and research carefully what you are signing up for. The New York Times featured an article here in March of 2009 with questions to ask and ways to find out if this is an option for you.
When it comes to medications, if you have a doctor, try talking with him or her about more affordable treatments for your condition. If your doctor can prescribe you a generic drug for your condition, you can save huge amounts of money. You can price shop by looking on this site or calling your local pharmacies to see if one has a better price than the other.
If you are having trouble with hospital or medical bills, get in touch with the provider as soon as possible and negotiate the bill. Providers will often waive a percentage of the bill and can help you sign up for their in-house financial aid. Their programs are often much more generous than the government programs. Providers can help you set up a payment plan as well. Don’t ignore your bills or you can make things much worse. Author, nurse, and healthcare savings expert, Michelle Katzman offers these suggestions on negotiating your bill. The New York Times offers more ideas here too.
The more complicated and extensive your diagnosis, the more you are going to have to do to investigate options through your local and state governments to get help. You may also be able to search for help through organizations that represent specific illnesses. Cancer patients, for example, can get extensive advice and support through the American Cancer Society by calling 1-800-ACS-2345. Social workers can help advocate for you, but health care costs are a leading factor in bankruptcies so even doing everything you can may not be enough to avoid financial ruin. This is why it is best to explore all your options before you ever need help.
What are SCHIP programs?
SCHIP stands for State Children’s Health Insurance Program. The income levels to qualify children for SCHIP are higher than the Medicaid levels. Click here for more information.
What other programs to help find care and insurance are available?
Some states offer high-risk insurance pools and Medicaid can be an option for people with low income or special circumstances. Look at Healthcare.gov to explore resources for people with no insurance.
Also, try the Foundation for Health Coverage Education. They have a five question quiz that can help you determine what you would be eligible for.
How can I find a low-cost or free clinic?
Use the U.S Department of Health and Human Services Department site to start.
Also, try using Google to search for the name of your county and the words health department. Your state’s department of Heath & Human Services may also offer help.
How do prescription drug formularies work and why should I bring them with me to the doctor?
A drug formulary is a prescription list that separates prescriptions into different levels. These levels are sometimes referred to as tiers and each are assigned a different copayment. Formularies are established by insurance companies to manage their costs. Companies would likely assign common generics to a lower tier and brand name drugs or more expensive medications to a higher tier. The pharmacy management company negotiates large discounts on certain maintenance drugs and depending on which company they get the best price from may determine which drugs get the lower copayment for their formulary. That's why every company’s list is different.
In addition most insurance companies automatically dispense the generic when available and if you choose to purchase the name brand you will pay the higher copay plus the full difference in cost. Also, some plans will require you to pay the entire cost of the medication until a deductible has been met. You will still get the price negotiated by your insurance company, but using this site to help with comparison shopping could save you money. After that, you still may have to pay coinsurance.
Because these formularies are different for each insurance company and some plans within your company, your doctor might not know that he or she prescribed a medication with the highest copayment. That’s why bringing the formulary with you to your doctor visit can save you money. For example, if you need medication for acid reflux, you can ask your doctor to look at your formulary and he or she can see if there is a medication in the low copayment category that would work for you. You may have received this formulary in the information packet your insurer sent you when you signed up for their plan. Companies like United Health Care, and Blue Cross and Blue Shield (Google your local state plan and the word formulary), and Coventry offer their formularies online.
You may also want to investigate getting your prescriptions drugs through the mail. You may save ½ to 1 copay if it is offered by your insurance company. If you get employer-based health insurance, you can usually call your HR office to get a mail order kit or you can download them off the internet.
Sometimes it’s less expensive to leave insurance out of prescriptions all together and just pay the cash price. A lot of well-known pharmacies offer $4 or $5 prescription options. You may pay less than the insurance plan charges by taking it outside of insurance and using the promotional drug list at the pharmacy. Most pharmacies have a list available.
How can I find the best cash price for prescription drugs?
You will have to investigate, and that's what FrugalPharmacies.com is all about! It can really be worth it to do some comparison shopping. According to a CNN article about saving money on prescriptions, Consumer Reports found that prices for the same bottle of pills can vary by more than $100. Start by looking for your prescription on our site but if the data is not yet available, it may not be easily accessible online. So, you will have to call individual pharmacies and ask for their cash price. Don’t forget to call pharmacies in membership clubs. Costco and Sam’s Club, for example, do not require that you are a member to purchase prescriptions. Also when you call, ask the pharmacist if there is anything he or she knows about how to get a better price for your particular medication. Sometimes there are programs available that require little to no obligation on your part. It does not hurt to ask medical professionals what they know about getting the best price.
Where can I get help with the cost of prescription drugs?
Start here at FrugalPharmacies.com by looking to see if there is a pharmacy that has what you need at a price you can pay. Your doctor and pharmacist may also be good people to ask about lower-cost generics or alternatives. If you are looking for a Patient Assistant Program (PAP) several organizations and drug companies offer them to help patients pay for their prescriptions. However, this is not without caveats that should be explored. For example, if you apply for assistance with the drug companies, you will likely be getting name-brand drugs which may cost a lot more in the long run than a generic alternative. Consumer Reports has a free Shopper’s Guide to Prescription Drug Assistance Programs that can help with the options available.