Health Insurance FAQs
Q: If I am healthy, do I really need health insurance?
A: It is a common misnomer that healthy people do not need health insurance. The idea that health insurance is needed for those not of a healthy disposition is erroneous. Every person should have health insurance as an “insurance” policy for the rising health care costs. Without trying to sound too much like doomsday is approaching, strange accidents or health problems occur even among the healthiest of people. In reference to health care, people should hope for the best and plan for the worst.
Q: What is the difference between a group and an individual policy?
A: A group policy is a company-purchased or employer-purchased policy. It is a common practice for companies to offer insurance to their employees. These companies pay a certain percentage of the premium, and the employee pays the remaining percentage. A group policy is generally less expensive because risk is spread over a larger group of people. The employer could use either an HMO or a PPO. An individual policy can be purchased for individuals that are single, married, or in a family. An individual policy is available for those not covered by their employer. Generally individual policies are more expensive than group plans, and fewer services are offered under the individual policy.
Q: What is a fee-for-service insurance plan?
A: A fee-for-service plan is the most common type of insurance plan. It allows a person to use any doctor from any hospital and switch if needed or wanted. It requires a monthly payment called a premium and has deductible, a dollar amount that is paid before any obligation to the insurance company takes effect. After the deductible is paid, the insurance company then assumes responsibility of a percentage of the remaining bills for that calendar year. The percentage and deductible amount vary depending on the plan, the coverage, and the premium.
A: HMO stands for health maintenance organization. An HMO is a prepaid health plan that generally covers comprehensive care for you and your family, including doctors’ visits, hospital stays, emergency care, surgery, lab tests, X-rays, and various types of therapy. HMO plans require a monthly premium and a standard co-payment (generally around $20 for a normal office visit). The premiums and deductibles of an HMO plan are generally less expensive than the premium and deductible of the fee-for-service plans. However, HMOs only cover care provided by certain doctors and hospitals whereas fee-for-service plans generally allow you to choose your doctors and hospitals.
Q: What is a PPO?
A: A PPO is a preferred provider organization, which is a combination of a fee-for-service plan and an HMO plan. Similar to the HMO, there are limited doctors and hospitals that are available to choose from. By attending the doctors or hospitals provided in the plan, most medical bills will be covered after a small co-payment. Most PPOs cover preventive care that includes physicals, baby exams, and mammograms. Unlike an HMO, a PPO allows you to use any doctor or hospital. Even if a doctor or a hospital is not a part of your plan, the insurance company will still pay a percentage of the health care costs; it will simply be a lower percentage for the visit or the procedure.
Q: Do group health insurance plans have an advantage over individual health insurance plans?
A: The short answer is yes. Group health insurance plans work off of the idea that risk is spread over a larger group. Therefore, premiums are much less than if you bought an individual plan because if you get sick, there is not a healthy person that is paying premiums that can counterbalance you. Because risk is spread to a larger group of people, generally more services are offered or are more affordable in group health insurance plans than they would be in individual plans.
A: COBRA is a program that allows the temporary continuation of health insurance at group rates for former employees, spouses, dependent children, retirees, and former spouses if coverage is lost because of a qualifying event (this includes employment termination and retirement; a full list of qualifying events can be found at COBRA’s Web site). Under COBRA, you continue with your current group health insurance plan, but you pay both your portion of the premium and your former employer’s portion of the premium. COBRA payments are more expensive than the group insurance premiums because you are now paying the full premium, but the full benefits of the group health insurance plan are still in place while COBRA is in effect.
Q: What is the difference between primary and secondary coverage?
A: Primary and secondary coverage occurs when two individuals in a family are covered under an employer’s group health insurance plan. The insurance industry does not want to have a family profit from dual coverage by having two companies pay for a procedure. Therefore, insurance companies establish primary coverage (either the plan offered by the individual’s employer or the plan that the individual has been with the longest), which covers a procedure up to the limit specified by the plan, and secondary coverage (coverage from being a dependent under another plan), which reimburses the individual after the individual has reached the maximum limit of the primary coverage.
Q: Can I join a group policy with a preexisting condition?
A: A preexisting condition is defined as a medical condition that is either physical or mental that exists prior to signing or applying for any insurance policy. In most cases, preexisting conditions are not covered by a new insurance policy and can be grounds for an insurance company to deny an applicant insurance. However, there are exceptions to the preexisting condition rule: pregnancy is often referred to as a preexisting condition, but health insurance companies are required to treat women who have been pregnant as individuals without any preexisting condition.
Q: My employer is going out of business. Can I continue on with my group policy?
A: Unfortunately, when an employer goes out of business, the group policy ceases to exist, and all previous employees are required to find new forms of insurance. Most insurance companies will work with employees to switch over to an individual policy that matches the group policy. However, individual policies are generally more expensive than group policies. An individual would have to find another job offering insurance in order to have the benefits of being under a group health insurance plan.
