A consumers guide to group health insurance in Arizona

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A CONSUMERS
GUIDE TO GROUP
HEALTH INSURANCE
IN ARIZONA
Published by the
Arizona Department of Insurance
Janet Napolitano, Governor
Christina Urias, Director of Insurance
August 2005
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I. What You Need to Know
About Health Insurance Page 3
II. Types of Group Health Insurance Policies Page 4
Major Medical Expense Page 4
Disability Income Protection Page 4
Accident Only Coverage Page 5
Specified Disease or Specified Accident Page 5
Medicare Supplement Page 5
Long-term Care Page 5
Health Maintenance Organizations (HMOs) Page 6
Preferred Provider Organizations (PPOs) Page 6
Point of Service (POS) Page 6
III. Waiting Periods, Preexisting Conditions,
Exclusions and Limitations Page 7
Waiting Periods Page 7
Preexisting Conditions Page 7
Other Exclusions Page 8
IV. Know Your Rights when Buying
Group Health Insurance Page 8
Health Insurance Portability Page 9
V. Renewal Provisions and
Changing of Premium Rates Page 9
Noncancelable Page 10
Guaranteed Renewable Page 10
Conditionally Renewable Page 10
Term or Nonrenewable Page 10
VI. Health Care Appeals Page 10
VII. Medicare Page 11
Table of Contents
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I.
Rising health care costs have made it very expensive to be
injured or ill. If you do not have good medical insurance to
help pay the bills, a serious injury or illness can create major
financial problems. Having no coverage, too little
coverage, or the wrong kind of coverage can be a costly
mistake.
Many types of health insurance are available at various
prices. Some policies pay most of your health care bills for
any serious injury or illness. Others pay only some of your
bills or only for certain injuries or illnesses. Some policies
pay an amount directly related to your actual health care
costs. Others pay a specific amount for each day that you
are in a hospital, without regard to your actual bills.
Even similar types of policies can vary in the details of their
coverage. Health insurance should be selected carefully to
make sure that you are getting adequate protection for your
needs.
This brochure lists most types of health insurance. Your
eligibility will vary from company to company, and may be
determined by such things as your age, gender, health
status and occupation.
What You Need to Know About
Health Insurance
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II.
· Major Medical Expense
This type of policy is usually effective in covering serious
illness or injury where costs are high. Expenses you incur
both in and out of the hospital, including drugs and doctors’
visits, usually are covered. Most major medical plans contain
a deductible -- the amount you pay before the insurance
company begins paying benefits. After your expenses
exceed the deductible amount, benefits are paid as a
percentage of actual expenses, often 80 percent.
 
· Disability Income Protection
This coverage provides for weekly or monthly benefit
payments while you are disabled after a covered injury or
sickness.
The disability payment is usually a set dollar amount not to
exceed a certain percentage of your income. Usually the
most you can qualify for is approximately 60 percent of your
gross earnings.
Be aware that some disability income policies contain an
elimination period, measured from the start of each disability.
During that time, no benefits are paid. Elimination periods
vary, generally from 30 days to six months, depending on the
policy. A longer elimination period may provide lower
premium payments.
Also, many disability income policies reduce benefits based
on other income to which you may be entitled, such as sick
leave pay, disability retirement income, and Social Security
disability benefits.
Types of Group Health
Insurance Policies
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· Accident Only Coverage
This policy covers losses due to an accident. Benefits vary
greatly. Coverage may be provided for death, loss of limb or
sight, disability, or hospital and medical care.
· Specified Disease or Specified Accident
Some policies cover a specific disease, such as cancer, or a
specific kind of accident, such as while traveling away from
home. Benefits are not paid for any other sickness or injury.
The benefits may be based on your actual medical expenses
or payable as a lump sum indemnity.
· Medicare Supplement
The federal Medicare program pays most medical expenses
for people 65 or older, or for individuals under 65 receiving
Social Security disability benefits. However, Medicare does
not pay all expenses. As a result, you may consider
purchasing a Medicare Supplement policy that helps pay for
certain expenses, including deductibles not covered by
Medicare.
· Long-Term Care
This policy usually pays for skilled, intermediate and custodial
care in a nursing home.
It usually pays a fixed amount per day while a person is in a
nursing home. Most policies contain elimination periods,
during which no benefits are paid. Some policies also cover
alternative types of care such as home health care or adult
day care. Some even cover home modification expenses.
Normally, these policies pay only for expenses in facilities
that are licensed by the state and/or participate in Medicaid
and Medicare, and meet the policy’s definition of skilled,
intermediate or custodial care. For this reason, it is important
to find out about the types of nursing homes that are in your
area before you buy the policy.
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· Health Maintenance Organizations (HMOs)
These organizations provide health care services directly to
their members, who pay a fixed monthly fee to the HMO.
These services include such things as hospital care, surgery
and routine office visits. The HMO is an alternative to
traditional health insurance because it provides actual
services rather than just reimbursement for health care
expenses. Enrollees usually pay a small co-payment for care
or services they receive.
There are various ways that HMOs can be set up. Some
HMOs employ their own physicians, who treat patients at an
HMO center. Others contract with individual physicians or
groups of physicians. Patients are treated at the physicians’
offices or health centers. Usually, HMO members must
receive health care treatment at a designated hospital, HMO
facility or from physicians who contract with the HMO.
Before you pay a fee to join an HMO, ask questions about
how it works and where you would receive care, and talk to
people who belong to it. Consider whether you will have to
stop seeing a particular physician and choose another.
 
· Preferred Provider Organizations (PPOs)
Under this program, an insurance company enters into
contracts with selected hospitals and doctors to furnish
services at discounted rates. As a member of a PPO, you
might be able to seek care from a doctor or hospital that is
not a preferred provider, but you will probably have to pay a
higher deductible or co-payment.
· Point of Service (POS)
This plan combines the benefits of an HMO and traditional
health insurance. Enrollees can use providers in the HMO for
a nominal co-payment or seek care outside the HMO network
where a deductible and a share of the expenses, often 20
percent to 30 percent, may have to be paid.
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III.
These provisions limit or exclude the insurance company’s
obligation to pay benefits. Policies have a list of exclusions
and limitations. Policies with fewer exclusions may be more
expensive than policies with more exclusions. Make sure you
understand what will and will not be covered.
· Waiting Periods
A waiting period is the amount of time that must pass after
the policy takes effect and before coverage begins. If a policy
has a waiting period, benefits will not be paid or they might
be limited for expenses that arise during a specific number of
days after the policy is in effect. Waiting periods are not
applicable in some cases if an individual had certain types of
prior coverage. Waiting periods may apply only to certain
conditions or services.
 
· Preexisting Conditions
Individual policies usually will not pay benefits until a certain
time period has elapsed for a health condition you had when
you bought the policy. This type of health condition is known
as a “preexisting” condition. Exclusions for preexisting
conditions are intended to preclude individuals with an illness
or injury from waiting to buy a policy until they need treatment
that would otherwise be paid for under the policy.
You should know the meaning of any provisions
excluding benefits for preexisting conditions. Also, you
should know how long the provision will exclude benefits
for preexisting conditions. Many claims are denied
because of these provisions.
Waiting Periods, Preexisting Conditions,
Exclusions and Limitations
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If you are covered by a group policy provided by your
employer, the waiting period for preexisting conditions cannot
be any longer than 12 months. It may be less or not
applicable at all if you have had previous group coverage.
Do not think that because the application asks no questions
about your health or medical history or the policy requires no
physical examination, the policy will cover conditions that you
already have. It probably will not. If the company asks
questions about your health history it is important to answer
them truthfully.
Under some definitions a condition would be considered
“preexisting” even if you did not know that you had the
condition before you bought your policy. Also, you need to
know how many previous years will be considered for
determining a preexisting condition. A group health plan
provided through your employer cannot look back any further
than six months before your effective date.
· Other Exclusions
In addition to preexisting conditions, health insurance policies
usually exclude illness or injury resulting from war or military
service or those covered under workers’ compensation.
IV.
COBRA, which gets its name from the Consolidated Omnibus
Budget Reconciliation Act of 1986, is a federal program that
gives many individuals the right to continue coverage under a
group plan. This law applies to insured plans and self-funded,
employer-sponsored plans.
Know Your Rights When Buying
Group Health Insurance
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Renewal Provisions and Changing
of Premium Rates
HIPAA, the Health Insurance Portability and Accountability
Act of 1996, limits insurers’ power to deny or delay claims;
reduces your chances of losing existing coverage; makes it
easier and less risky to switch health plans; and prohibits
insurance discrimination based on health problems.
· If you are leaving your job and you had group coverage,
you may be able to stay in your plan an extended time
(usually 18 months) through COBRA continuation coverage.
· If you are leaving a fully insured group or individual health
plan, you may be able to buy a health policy from the
company that provided your prior coverage. This is called a
conversion policy. The benefits may not be as generous as
those under your former plan.
 
· Under Arizona law, if an individual or group health policy
provides family coverage, newborns, adopted children and
children placed for adoption are automatically covered under
the parents’ fully insured health policy for the first 31 days.
The insurer may require notification of birth within 31 days to
continue coverage beyond the 31-day period.
· If you change jobs or your employer changes health
insurance companies you will usually receive credit toward
any waiting periods under the new plan.
V.
The renewal provision defines how the policy can be
renewed as well as the insurance company’s right to revise
the policy and the premium rates. This provision can affect
the cost of a policy and the coverage. Here are the basic
renewal provisions:
Renewal Provisions and Changing
Of Premium Rates
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· Noncancelable
Under this policy, the insurance company cannot change,
cancel or refuse to renew the policy as long as premiums are
paid on time. The premium rates cannot be changed.
However, the policy can provide for scheduled rate increases
as you age.
 
· Guaranteed Renewable
Under this policy, you have the right to renew your policy until
a specified age.
· Conditionally Renewable
This type of policy allows you to renew until a specified age,
subject to the insurance company’s right to decline renewal
under conditions specified in the contract.
 
· Term or Nonrenewable
These policies cannot be renewed, and are often purchased
to provide coverage for a short period of time.
VI.
If, after you have purchased a health insurance policy, you
disagree with the insurance company regarding a denial of a
claim or a request for a medical procedure, you can file a
formal appeal. The first step is for the consumer to appeal
directly to the insurance company. If the insurer denies a
formal appeal, the consumer has 30 days to request an
external, independent review. Those appeals are referred to
the Arizona Department of Insurance or to an independent
medical reviewer approved by the Insurance Department.
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Health Care Appeals
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An Expedited Medical Review is also available when denial of
a treatment or service could cause a negative change in your
medical condition. The Insurance Department offers a free
brochure that spells out in detail how the Health Care
Appeals process works.
VII.
Medicare is a federal program administered by the Center
for Medicare & Medicaid Services (CMS) of the U.S. De-partment
of Health and Human Services. Call CMS at
(1-800) MEDICARE (1-800-633-4227), or call the State Health
Insurance Assistance Program (SHIP) at (800) 432-4040.
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Medicare
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If you have questions or complaints regarding specific
insurers, contact the Consumer Affairs Division of the
Arizona Department of Insurance:
2910 North 44th Street, Suite 210
Phoenix, Arizona, 85018
Phone: 602-364-2499
Toll Free: 1-800-325-2548 outside Phoenix
www.id.state.az.us