Get to know your coverage before agreeing to a policy.
Health insurance can be an expensive addition to a person's monthly budget, and since 2014 it has been mandatory in the U.S. to have at least a basic level of insurance coverage.
There are several ways in which an insurer collects money:
- Premium: For any insurer, either you or your employer will pay a monthly premium.
- Deductible or excess: This refers to an amount up to which the insurer will not pay. For example, on a policy with a $2,000 deductible, you will fund the first $2,000 of treatment costs. The benefits of your policy become active after the first $2,000 of costs. A deductible can apply to an individual or a whole family.
- Co-payment: The insured pays a fixed amount for each instance of a certain type of treatment. A visit to a primary care physician, for example, may have a co-payment of $20. This would have to be paid at the clinic or would be deducted from the payment of any claim made for the visit.
- Co-insurance: This is similar to a co-payment but works as a percentage of costs rather than a fixed amount. As an example, physical therapy appointments may be paid at 80 percent with a 20 percent co-insurance.
- Out-of-pocket maximum: On some policies, once the insured has paid out a certain amount in expenses within a single membership year, a certain deductible or co-insurance may no longer apply.
Deductibles, co-insurances, and co-payments can be used to make sure that people on an insurance policy only receive treatment within the approved network. For example, the insured may be charged a 20 percent co-insurance for treatment at an in-network facility but 50 percent for treatment at a facility outside of the network.
Depending on your situation, you can also moderate the cost of the monthly premium by choosing a higher deductible. If you have a low income at present, this may be the best way to save money on regular insurance costs. However, it does mean that, in cases of emergency treatment, you will have more to pay on the day.
Extra costs can emerge when you meet or exceed the annual limit for a benefit. Some treatments may be covered in full, or without any limit on how much of one type of treatment can be received in a year.
However, a person may also have a lifetime limit, meaning that after this amount had been reached, the individual can longer be funded by this policy. Look for a lifetime limit of at least $2 million.
According to an eHealthInsurance survey carried out in 2013, the average monthly premiums among its customers were $279 per month for an individual, with an average deductible of $2,257. Family plans cost an average $605 per month with a $3,422 deductible.
Health insurance premium costs rose by 113 percent in the U.S. from 2001 to 2011. Between 2010 and 2011, a Kaiser Survey showed that the number of people with health insurance dropped by about 20 million. To cope with rapidly rising premium costs, millions of people are opting for larger deductibles.
It can be hard to define exactly what is covered by different policies, as thousands of varied insurance products are available.
Health insurance policies will generally cover:
- emergency care
- inpatient treatment
- cancer treatment
- outpatient consultations
- diagnostics, such as X-ray imaging
Higher-level policies can cover:
- optical and dental care
- maternity care
- preventive treatment and checkups
- psychological care
- prescribed medicines
- some ongoing outpatient therapies
Many insurers offer packages with add-ons, so that your policy can be amended to suit your changing healthcare needs.
Many policies offer outpatient care up to a certain limit. For example, a person may have a specific amount of money available to receive up to a certain number of sessions of physical therapy each year.
Some companies offer special policies to their staff that cover different parts of healthcare. For example, some airlines include cover for sunglasses on their pilots' policies, as they are necessary for protecting a pilot's eyesight during flight.
Underwriting can apply to a policy. This is the process used by an insurer to establish a basis for accepting risk onto a policy. If a person has already had a certain condition, it is likely that an insurer will have to pay to treat this condition further down the line. The insurer has to assess whether this is a risk they are willing to take.
The process of underwriting may identify a particular condition from your medical history that will not be funded. If you declare a medical condition and it is deemed likely to flare up or occur again within a certain time frame, it is likely that the condition will be added to your underwriting, and treatment for it will not be covered.
This underwriting can last a lifetime or for a shorter period, depending on the condition and the policy.
With certain treatments, such as surgeries that reshape the nose, insurers may request further documents to confirm the medical necessity of the claim and rule out any undeclared pre-existing conditions. These may include medical reports, consultant's letters, and imaging scans.
Coverage is normally for domestic treatment only. Treatment in different countries is usually only available on more expensive policies. People will normally have to buy either a travel add-on or an entirely separate travel insurance policy to cover accidents and injuries in other countries.
If your insurance company offers a way to approve or authorize treatment ahead of time, it may be worth securing this peace of mind. Once approved, pre-authorization means that an insurance company agrees ahead of time to pay for treatment.
Insurance companies may sometimes also be able to pay an in-network hospital directly instead of the patient needing to pay out a large amount of money and claim for reimbursement.
Most policies will provide a membership guide or document describing exactly what is covered. Make sure you fully discuss what is included in your policy with your insurer's customer services team or your broker.
What will an insurer need to confirm cover?
Whether you are making contact before treatment or sending in a claim for repayment after having finished, your insurer will need various pieces of information about your treatment.
These may vary from insurer to insurer, but they will standardly include:
- exactly what procedures, diagnostic tests, or consultations were carried out
- an itemized invoice, so that ineligible treatments can be excluded without affecting those included within the policy
- the reason for treatment or the nature of the illness or condition
- the name of the doctor and facility
- the country or state of treatment
- the date of treatment or of each appointment if claims are being made for a full course of treatment, such as psychotherapy
- for inpatient treatment, a doctor's letter confirming the reason admission is clinically necessary and the requested length of stay
Failing to provide this information will usually result in a delayed or incorrectly rejected claim. Be sure to request all necessary information while you are at the facility.
Insurance companies will refuse to fund treatment that does not align with the agreed policy.
There are many reasons that this can happen. Specific reasons depend on the terms of an individual's policy, but common reasons for the rejection of a claim include:
- Treatment was received for an underwritten or previously undisclosed pre-existing condition.
- The doctor was not an appropriate type of physician to treat the named condition.
- Aesthetic or cosmetic treatment was received for non-medical reasons.
- The benefit or permitted funds for a particular treatment had been used up for the coverage period by the time treatment was received.
- Preventive care was received, such as a full checkup, on a policy that only covers active treatment, or the treatment of diseases and conditions.
- A person has tried to purchase devices or physical aids, such as orthotic in-soles for foot problems, on a policy that does not cover these.
- Treatment was received during a break in cover.
- The claim was for administrative costs, such as the printing of medical reports.
- The insured claimed for contraception or family planning, and these are generally not covered.
Treatment will be not be covered if received for a condition that is under a moratorium. Moratorium refers to a particular period during which a condition is not covered, but after which the condition gets added to the policy.
For example, some policies may include a moratorium on maternity care in the first 10 months to prevent people buying a policy when expecting a child and immediately making a huge claim and then canceling. During this time, maternity visits or the inpatient delivery of an infant will not be funded. However, after 10 months, the insurer will pay for these treatments.
In some cases, a claim will only be partly paid if the provider of treatment charged more than was reasonable and customary in that area. If an osteopath in a certain area would normally charge $100 for a consultation, and a patient submits an invoice for $180, the insurer will often only pay up to the reasonable and customary fee.
This can often be avoided by staying within the provider network, where set fees will have been agreed.
Often, an insurer will pay the parts of the claim that are eligible for cover and exclude parts that would not be covered. This is known as a shortfall.
Choosing a policy
An insurance broker or intermediary can help you better understand your coverage needs and buy a policy that matches them.
With all of these options available, it can seem overwhelming to choose a policy that is right for you and your family.
When coverage is available through an employer, it can be a great way to access an often-enhanced set of benefits at a reduced cost. However, not all employers offer health insurance as a perk.
There are some important factors to bear in mind when choosing a policy. These include:
- whether to collect all members the family onto one plan or have each member on a separate plan
- your current doctor being in the network for a particular insurer
- making sure the options you choose in the policy are right for your health needs
- the size of your deductible and whether you would prefer to pay more as a regular premium or more when treatment is necessary
- the amount of time spent outside the country – if you travel for many months of the year, you may benefit from a policy that covers more than just your country of residence
You may wish to get an insurance policy through a broker or intermediary. While their services may cost a little extra on top of your premium, they can provide a clearer breakdown of the available options and how they will impact you and your family and make sure you get the fairest deal.