I have tried to make this as easy to understand and as painless as possible(if that's possible when talking about Insurance). I have simplified the information so that you will be able to understand the concepts without taking a full course in Insurance. If you'd like more in-depth information regarding any of these topics, please feel free to e-mail me at debby@getinsurancehelp.com.
I cannot express how IMPORTANT it is to be PRO-ACTIVE when it comes to your Health Care and your Insurance coverage. The bottom line is this: Shop well- ahead of time, so if the big stuff happens you're covered.
Frequently Asked Questions
INDIVIDUAL & FAMILY HEALTH INSURANCE
1. Does it cost me more to use an Insurance Broker than to shop for Insurance on my own?
No, it doesn't cost a thing to use an Insurance Broker. Insurance Companies have the same rates whether you apply direct or use a broker. In fact, a good Insurance person can help you sift through all the companies, benefits and plan types and help you understand the information and your options so you can make the best decisions for you and your family. A BROKER KNOWS THE underwriting guidelines for the companies, so they can help you get preferred or standard rates. It's also nice to have someone "on your side" should anything go wrong. The job of a good broker can help with claims, in that they can explain what the Insurance Company is doing so you don't feel helpless. The job a good broker is to make your life easier.
2. What's the process of applying for Insurance?
If you choose to use a broker, they will review your Insurance requirements and shop for a policy that best fits your needs. They then should review your options with you in detail and help you fill out your application.
Your application will be submitted with at least 1 months' premium, which, if issued, goes toward your first month's payment. Your application is then forwarded to the Insurance Company's Underwriting team.
An Underwriter is someone who looks at your application for the degree of risk you present to the Insurance Company. Of the many factors reviewed, physical condition, moral hazards (lifestyle) and occupations are the three most important. Other factors include age, sex, health history and avocations (hobbies). After you go through the Underwriting process, the Insurance Company comes back to you with an Effective Date and a Classified Risk (standard, preferred, rated or uninsurable). If you are rated standard (most people are) you just continue to pay the monthly premium at a rate that you sent in initially. If you are rated UP, they offer to cover you for more money. You can either accept or reject this offer. See also: "What if I'm declined?"
3. How long does it take to get covered?
Usually about 30-45 days if all goes well. Once you're completed application and first month's premium are submitted to the carrier (Insurance Company), you are entered into their system and are assigned an Underwriter (see "What is the process"). The Underwriter looks at your application and may or may not ask for Doctors records depending on what you submitted on the medical section of the application. If medical records are required, a request is sent to Doctors who have provided past services with a request for them to copy your records (you can speed this up if you ask the Doctor office to copy records beforehand). All of this is time consuming. On rare occasions they may decline someone (see "What if I'm declined?"). To avoid a decline,
talk to your Insurance Broker if you have any health issues (see
"pre-existing conditions"). Upon approval, the Company will send you a
letter letting you know you're approved and follow up with Insurance Cards and a hard copy of the policy.
4. What's the deal with Pre-existing Conditions?
A Pre-existing condition is defined as a disease or injury that occurred
before your policy was issued. If you had prior coverage, it's no big deal assuming the next Insurance Company takes you. If you had a lapse in coverage, the new Insurance Company can pre-exist (not cover) that
"condition" in California for 6 months. The rule of thumb is this: Insurance
Companies don't cover burning buildings. If you have a condition, they may just rate you UP, thereby charge you more money for the coverage. If you answer yes to any of the following questions, you may not qualify for Individual or Family Health Insurance.
- Are you (or any person to be insured) either pregnant or an expectant father?
- Have you (or any person to be insured) been declined for health Insurance due to a medical reason within the past 5 years?
- Have you (or any person to be insured) received medical consultation or treatment within the last 3 years for heart disease, diabetes, cancer, immune system disorders, or any other serious medical condition?
Check with an Insurance broker about your case if you have a concern. They have access to the Insurance Companies Underwriting Guidelines.
5. What if I'm Declined?
You may wish to investigate the state sponsored program, Major Risk Medical Insurance Program (MRMIP) in California. If you are coming off a work related Insurance plan you may be eligible for COBRA. If you have exhausted COBRA coverage you may be eligible for HIPAA. Detailed information is available at www.healthinsurance.info.net. At the very least there are discount medical plans. Although not true Insurance these discount plans are a way for you to get discounted services.
6. What's the difference between a PPO and a HMO?
PPO or Preferred Provider Organizations, are networks or groups of doctors. Most Insurance Companies use some kind of Network. The good news is that you can go directly to anyone in the group while staying "In-Network".
PPO's are not the Insurance Company. They are the groups or Networks contracted by Insurance Companies. For instance: Blue Shield has it's own PPO, the Blue Shield Network. If you go to their Providers, you get the best deal (and so does the Insurance Company), because they have contracted with a group of doctors, hospitals, labs, surgery centers, etc., to accept a negotiated rate for services provided. |
With PPO's you can go outside the network as well, although your benefits with most companies will be reduced. Usually there are different "maximum out of pocket" costs for In-Network and Out-of-Network services (see Stop Loss and In-Network/Out-of-Network). PPO's are characterized by "Deductible Plans" or "Co-Pay Plans" and you will pay a little more for them in terms of Deductibles, Co-Payments and Maximum Out of Pocket per year. What you're paying for is the freedom to choose to see whom you want when you want.
HMO or Health Maintenance Organizations (also called Managed Care Plans,) are set up a little differently. They are geared to keeping you healthy thru easy access to their Doctors (provided you can get an appointment). They use what's called a gatekeeper system, whereby you have a Primary Care Physician (PCP) usually a General Practitioner or Doctor of Internal Medicine who refers you to an array of specialists and other service providers (lab, X-ray, surgery, etc). You pay a small co-payment for all services and hospitalization is usually paid at 100%. The down side is that you're usually working with a much smaller network, with a limited group of doctors (a page rather than a book). And, if you go Out-of-Network they won't pay for the services.
| This year, if you are a Self Employed Person, you can deduct ALL of your Medical premiums and expenses whether you're using an MSA or not. |
7. What is an HSA?
An HSA, or Health Savings Account, works a bit like an individual retirement account. You deposit money in the HSA account and deduct the amount from taxable income. When you use the HSA money for qualified medical expenses, the money remains tax free. Money left unspent may be rolled over year after year, providing a savings account to use for health related expenses when you are older – provided you stay healthy and don’t spend the money.
8. What's the difference between "In-Network" and "Out-of-Network" services?
Most Insurance Companies use a Network of doctors, hospitals, labs, etc. who have agreed to work for a negotiated (less than the going) rate. This Network of providers is typically presented in a book for you to choose from. Out-of-Network refers to providers who have not contracted with the Insurance Company or Plan you have.
With a Plan that uses a Network, it does not mean that you MUST go to their doctors exclusively. What it means is that if you go out of the Network, you pay more. There is a limit to how much you would be responsible for, per year, for In-Network and Out-of-Network; usually Out-of-Network is more.(see Stop Loss).
9. What is a Stop Loss?
A Stop Loss or Maximum Out of Pocket is where your spending stops per year. Insurance Companies' calendar years are usually Jan 1-December 31. Another way to put it is that there's a limit on how much money you are responsible for, per year, in the event that you need major care. Insurance companies usually have different stop loss maximums for "In-Network" and "Out-of-Network" providers.
| If you are using services (going to the doctor, lab work, X-Rays, etc.) prior to your deductible being met and you stay In-network, you will only pay the negotiated rate which is usually far less than if you didn't have an Insurance plan. |
11. What if my doctor "Doesn't take Insurance"?
| That extra (over & above "usual") does NOT go toward your Out of Pocket Maximum per year. |
12. Can I keep my same doctor?
Sure. First ask your favorite Doctor which Insurance Companies or plans he accepts. Then we can look at those Companies and their rates and plans (plus the Stop Loss, Deductible, Co-Insurance, etc). If the Doctor doesn't take Insurance you'll be going Out-of-Network no matter which plan you choose (See: What if Doctor doesn't take Insurance section). Remember, you can always go where you want, you may just have to pay extra for it.
13. WHY is Health Insurance so EXPENSIVE?
Briefly, three primary factors are used to determine rates in Health Insurance. They are: morbidity (indicates the average number of people at various ages who can be expected to become disabled due to sickness or accident), interest and expenses. Obviously, as we get older the likeliness of sickness increases. Secondary factors in Health Insurance rates include what the Insurance Company is offering in terms of benefits, past claims experience, age, sex, occupations and hobbies. You can control your monthly costs by choosing higher deductibles or an MSA (Medical Savings Account). For example: rates on a $2000 Deductible plan are far less the on a $500 Deductible plan.
14. Are policy rates negotiable?
No, rates are rates. We Insurance broker folks do not determine them. They are set by the Insurance Companies and are really not negotiable. A broker can help you shop around for the best policy to meet your needs, research the most bang for your buck, and help translate policies (Policies change on a fairly regular basis from company to company). When you hear someone talk about discounted rates, it's simply not true. It's ultimately the Insurance Company Underwriter who decides what your rates are going to be (see Insurance Process). What a broker can do (or you can do yourself) is comparison shop for rates and benefits.
15. Do you have just Major Medical?
Yes, however, I don't recommend it. If you must go that way, it is better than having no Insurance. Major Medical refers to Hospital Only policies. If you have outpatient services (like minor surgery, broken bones, etc.) it's not covered. More and more, Insurance Companies are trying to cut down on costs. Utilizing outpatient services is one of the ways they do this. Most of what goes on with Healthcare expenses is done outpatient. Therefore, the more YOU use facilities outside a hospital setting the better (FROM A COST CONTAINMENT POINT OF VIEW) In my opinion, it's better to have a comprehensive (everything covered) plan with a higher deductible than just Major Medical.
16. I own my own business, does my personal Insurance plan cover me at work?
Yes, provided you aren't covered under Workman's Comp or other Business Insurance that covers you while you are working (also see "Group Coverage").
17. Can my Insurance cancel me if I get sick?
NO. It's against the law.
18. Will my rates go up if I file a claim?
Health Insurance is not like Car Insurance. They can't drop you if you get sick. They can rate you up for chronic or long-term illness. Once they have you they're stuck with you. You, however, can change Insurance Companies any time you want provided your healthy. Remember: Insurance Companies don't insure "burning buildings". If you get rated, and the problem goes away, you can petition for a removal of the rating.
19. Am I covered while traveling?
Most Insurance Companies will cover you while traveling. Some on a limited basis. If you're not sure - check. There are Insurance Companies that specialize in travel Insurance. It's wise to make sure what your coverage is before you go abroad- don't assume anything.
LIFE INSURANCE
20. Do I really need Life Insurance?
Yes, everyone does. Whether people depend on you or not, the fact is Life Insurance can help create a sense of security. And, the cost is pennies for dollars. The loss of a loved one is hard enough to deal with. It's even harder when your loved one's have to pay your final expenses and burial.
21. What types of Life Insurance are there?
Basically, there are three types of Life Insurance Policies: Term, Universal and Whole Life.
Term Life Insurance is for a term, or period of time. Term policies go from 1-30 years. You can cover yourself or family until the kids get through school, mortgage is paid, etc. Term is the least expensive of Life Insurance policies on a monthly COST basis. You can lock in a rate for whatever term you need. After the term has expired, most policies will allow you to convert to a permanent (Universal or Whole Life) policy without underwriting, at your attained (when you convert) age. Obviously, the older you are, the more it costs. In addition, most Term policies will convert to an ART (Annual Renewable Term) policy. These policies will go up according to your age every year. They are guaranteed to be renewable.
Whole Life covers you for your entire life and premiums reflect that (they're higher). Insurance companies figure you'll live to be 100. Your rate is locked in when you get it. The younger you are the better. The cool part of Whole Life is that it develops "cash values". Cash values within the policy (are like dollars) that you may use if you stop paying premiums. You can generally either take the cash out or use it to buy some continuing insurance protection. Technically speaking, these values are called "non-forfeiture benefits" this refers to benefits you do not lose (or 'forfeit") when you stop paying premiums. The amount of these benefits depends on the kind of policy you have, it's size, and how long you have owned it. A policy with cash values may also be used as collateral for a loan. Any money you owe on a policy loan would be deducted from the benefits if you were to die, or from the cash value if you were to stop paying premiums.
Universal Life is a cross between Whole Life and Term Life. It is a permanent policy that builds cash value while providing flexible life insurance coverage to meet changing needs. Essentially, the premium you pay goes toward covering the cost of the Insurance policy and the remaining premium is invested and earns interest on a tax-deferred basis. Premium payments are adjustable. It's also the middle ground in terms of premium.
22. How are the rates determined for Life Insurance?
The primary factors affecting Life Insurance rates are mortality (indicates the average number who will die at various ages under various circumstances) interest and expenses. Secondary factors are medical history and condition, age, sex, occupations, and avocations (hobbies). Benefits are expressed in the type of policy: Generally, Term Life, Universal Life and Whole life.
23. What is Long Term Care?
According to the California Department of Insurance, Long Term Care is the assistance or supervision you may need when you are not able to do some basic "activities of daily living" (ADL's) like bathing, dressing or moving from bed to chair. You may need assistance with ADL's if you suffer from an injury like a broken hip, an illness, a stroke or from advanced age or fragility. Other needs for long-term care may be from "cognitive impairments", like Alzheimer's Disease or other mental illness or brain disorders.
Long Term care is sometimes called "custodial care" or "personal care" Formal Long Term Care (the kind you pay for) is most often provided by professional skilled or unskilled workers. Informal Long-term care is frequently provided by unpaid family members and friends. Long Term care services can be provided in your own home or in a community program like an Adult Day Care Center, or in an assisted living facility or in a nursing home. Long-term care is not necessarily "long term". For instance, about half of all nursing home stays last 6 months or less. Some people only need long-term care for a few months, for example, while recovering at home from a broken hip, while others may need care for the rest of their life.
The cost of this kind of care in the future will be much higher than it is today. California nursing home rates increased an average rate of 5% per year during the past 20 years(according to an Issuers Bulletin for 2002, California Partnership for Long-Term Care, based on data from the California Office of Statewide Health Planning and Development), and are likely to increase by at least 5% per year. A 5% increase means a year of care that costs $50,000 today will cost twice that amount in 14 years, or $100,00 a year!
Long Term Insurance covers any of the following:
- Care in a Facility
- Home Care
- Community based Care.
With the population aging and people living longer, not necessarily in good health, Long Term Care provides Insurance that will cover your assets if you need assisted living. If you ever had a parent or grandparent that needed skilled Nursing, you know what I'm talking about. Who's going to take care of the relative who needs special care? What happens if that person is you? People have spent their life saving at these Nursing Facilities so they can spend down enough to qualify for State Aided Medi-Cal. If you don't have any assets and don't care about using the state's system, don't bother. If you have assets and want to make sure you pass them on or if you want to maintain you independence should you need assisted living either in a facility or at home- do bother.
GROUP HEALTH INSURANCE
24. Who qualifies for Group Health Insurance?
In California, two or more principals and/or employees in a business qualify for Group Health Insurance. Insurance companies ask that you provide proof of qualification (PROOF OF A GOING CONCERN) through Workman's Compensation, A Company D.B.A. and other specific information. Group Health Insurance provides a host of additional options not available with individual coverage. I work with all of the reputable Group Insurance Companies in the State of California. If you would like more information on Group coverage, please contact me at debby@getinsurancehelp.com or call (310) 745.0729.
O'CONNOR INSURANCE