A Health Insurance Policy
A surprising number of small business people don't have health insurance, either because they don't know where to look for coverage, or can't afford it once they find it. This is a mistake, since an illness or accident can devastate your business if you don't have proper coverage.
When you're looking for health insurance, either an individual or a group plan, keep the following in mind:
· Look for guaranteed renewal. Make sure your contract has the words "not cancelable by company" or "guaranteed renewable" in it.
· You want a company that pays benefits based on customary costs, not by a fixed schedule. Strict limits on what an insurer will pay may result in medical bills beyond your deductible. Also, look out for coverage that only pays for in-hospital care, or leaves out a long list of medical treatments.
· Many business or industry associations offer members the option of being part of a group insurance plan. This can be a good way to go, but these policies are also often overpriced, so don't automatically assume that your professional association is giving you the best deal.
· HMOs and other managed care companies aren't always the least expensive option either, because they historically have been more liberal about who they insure; the cost of covering these people may be passed on to you.
· You may choose to buy insurance through a PPO, an organization which allows you to choose a doctor from a list of providers or go outside of its network if you pay a deductible. If you buy coverage through a PPO, be sure to check for hidden expenses such as "hospital admission expense."
How it works
A health insurance policy is a contract between an insurance company and an individual. The contract can be renewable annually or monthly. The type and amount of health care costs that will be covered by the health plan are specified in advance, in the member contract or Evidence of Coverage booklet.
The individual policy-holder's payment obligations may take several forms:
· Premium: The amount the policy-holder pays to the health plan each month to purchase health coverage.
· Deductible: The amount that the policy-holder must pay out-of-pocket before the health plan pays its share. For example, a policy-holder might have to pay a $500 deductible per year, before any of their health care is covered by the health plan. It may take several doctor's visits or prescription refills before the policy-holder reaches the deductible and the health plan starts to pay for care.
· Copayment: The amount that the policy-holder must pay out of pocket before the health plan pays for a particular visit or service. For example, a policy-holder might pay a $45 copayment for a doctor's visit, or to obtain a prescription. A copayment must be paid each time a particular service is obtained.
· Coinsurance: Instead of paying a fixed amount up front (a copayment), the policy-holder must pay a percentage of the total cost. For example, the member might have to pay 20% of the cost of a surgery, while the health plan pays the other 80%. Because there is no upper limit on coinsurance, the policy-holder can end up owing very little, or a significant amount, depending on the actual costs of the services they obtain.
· Exclusions: Not all services are covered. The policy-holder is generally expected to pay the full cost of non-covered services out of their own pocket.
· Coverage limits: Some health plans only pay for health care up to a certain dollar amount. The policy-holder may be expected to pay any charges in excess of the health plan's maximum payment for a specific service. In addition, some plans have annual or lifetime coverage maximums. In these cases, the health plan will stop payment when they reach the benefit maximum, and the policy-holder must pay all remaining costs.
· Out-of-pocket maximums: Similar to coverage limits, except that in this case, the member's payment obligation ends when they reach the out-of-pocket maximum, and the health plan pays all further covered costs. Out-of-pocket maximums can be limited to a specific benefit category or can apply to all coverage provided during a specific benefit year.
· Capitation: An amount paid by an insurer to a health care provider, for which the provider agrees to treat all members of the insurer.
· In-Network Provider: A health care provider on a list of providers preselected by the insurer. The insurer will offer discounted coinsurance or copayments, or additional benefits, to a plan member to see an in-network provider.
· Generally, providers in network are providers who have a contract with the insurer to accept rates further discounted from the "usual and customary" charges the insurer pays to out-of-network providers.
· Prior Authorization: A certification or authorization that an insurer provides prior to medical service occuring. Obtaining an authorization means that the insurer is obligated to pay for the service, assume it matches what was authorized. Many smaller, routine services do not require authorization
· Explanation of Benefits: A document sent by an insurer to a patient explaining what was covered for a medical service, and how they arrived at the payment amount and patient responsibility amount
Prescription drug plans are a form of insurance offered through some employer benefit plans in the US, where the patient pays a copayment and the prescription drug insurance part or all of the balance for drugs covered in the formulary of the plan.
Some, if not most, health care providers in the United States will agree to bill the insurance company if patients are willing to sign an agreement that they will be responsible for the amount that the insurance company doesn't pay. The insurance company pays out of network providers according to "reasonable and customary" charges, which may be less than the provider's usual fee. The provider may also have a separate contract with the insurer to accept what amounts to a discounted rate or capitation to the provider's standard charges. It generally costs the patient less to use an in-network provider.
Health plan vs. health insurance
Historically, HMOs tended to use the term "health plan", while commercial insurance companies used the term "health insurance". A health plan can also refer to a subscription-based medical care arrangement offered through HMOs, preferred provider organizations, or point of service plans. These plans are similar to pre-paid dental, pre-paid legal, and pre-paid vision plans. Pre-paid health plans typically pay for a fixed number of services (for instance, $300 in preventive care, a certain number of days of hospice care or care in a skilled nursing facility, a fixed number of home health visits, a fixed number of spinal manipulation charges, etc.) The services offered are usually at the discretion of a utilization review nurse who is often contracted through the managed care entity providing the subscription health plan. This determination may be made either prior to or after hospital admission.---Source:answers.com
