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  1. 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.

  2. 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.

  3. 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.

  4. 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.

  5. 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.

  6. 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.

    U.S. News & World Report also offers a Best Health Plan Search in conjunction with the National Committee for Quality Assurance that rates the quality of insurance plans.

    If these plans are still out of reach financially, read about more options in the other questions on this site.

  7. 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.

  8. 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.

  9. 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.

    Read Denied a health claim? Now what? or Things insurers don’t want you to know for a more detailed answer.

  10. 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.