0.0 What do all these technical insurance terms mean?:
1.0 Health coverage basics:
1.1 What are the basic types of health coverage available?
1.2 Do employers have to provide health care coverage?
1.3 Do insurance companies and HMO's have to accept everyone?
1.4 My premiums keep going up. What can I do?
2.0 Medical issues:
3.0 Shopping for Coverage:
4.0 The Claims Process:
4.1 Does my health benefit plan have to pay claims promptly? 4.2 Do I get an explanation if the insurer refuses to pay my claim? 4.3 What should I do if my claim is rejected or I'm not reimbursed properly? 4.4 How can I file a formal complaint with TDI?
1.0 Health Coverage Basics
1.1 What are the basic types of health coverage available?
In general, two types of coverage - traditional insurance plans and managed care plans - may be available to you as an individual or as a member of an employer or association group health plan. Managed care plans include preferred provider organization (PPO) plans and health maintenance organization (HMO) plans.
I. Insurance (also indemnity or fee-for-service) plans allow you to go to any physician you choose but require that you pay for the services and file (or allow your physician or provider to file) claims for reimbursement. The most common fee-for-service plans cover comprehensive health services.
II. Managed care plans use networks of selected doctors and other providers to provide comprehensive health services. They may require that you use the plans' providers or they may offer incentives to encourage their use.
- Preferred provider organization (PPO) plans can only be sold by insurance companies. These plans provide a higher rate of reimbursement if you use "PPO network" physicians, providers and hospitals that provide services to health plan members for discounted fees. You choose your personal doctor and do not need a referral to see a specialist. Primary care physicians or "gatekeepers" who provide referrals to other doctors and specialists are prohibited in PPOs and other indemnity health plans.
- Health maintenance organization (HMO) plans can only sold by HMO's themselves. These plans will typically require you use network physicians, hospitals and other health care providers. The personal gatekeeper physician you select from within the network also must provide a referral if you want to go to a specialist or outside the HMO's network for treatment. HMO's eliminate the need to file claims. Members "prepay" for their health care through monthly premiums and co-payments made as services are delivered. HMO's usually pay primary care physicians or providers a set fee, called a capitation fee, for each health plan member, regardless of the amount of services performed.
- Point-of-service (POS) plans are a type of coverage that works similarly to PPO plans that may be available through some HMO's. POS plans give HMO enrollees the option of receiving services outside the HMO's' network without prior approval from a network physician. Inside the network, the plan operates like an HMO. Outside the network, it operates like a traditional insurance plan. The plan will provide a higher rate of reimbursement for using HMO services, however. Some HMO's contract with an insurance company to offer point-of-service plans.
For an in-depth discussion of health care coverage, refer to the Texas Department of Insurance (TDI) consumer publication, Your Health Care Coverage.
For more information about HMO's, refer to the the TDI publication, Health Maintenance Organizations.
1.2 Do employers have to provide health care coverage?
No. If a business does offer health care coverage, certain state and federal regulations may apply. Even if health benefits are offered, certain requirements, such as full-time status, may be imposed and the employer may impose a waiting period for all new employees before coverage is effective. That period may extend up to 90 days for small employers. Large employers have no limit on the length of the waiting period.
Eligible employees for small and large employer plans are those who
- Usually work at least 30 hours a week
- Do not have coverage under another group health benefit plan
- Are not classified as temporary or seasonal workers.
A count of eligible employees is used to determine whether an employer is classified as a small employer or a large employer. For more information, refer to the TDI publication Small Employer Health Insurance.
1.3 Do insurance companies and HMO's have to accept everyone?
Insurance companies and HMO's do not have to accept everyone who applies for individual coverage, meaning any policy that you purchase to cover you or your family directly from an agent or broker. Health carriers use a process called "underwriting" to evaluate health risk factors, such as the age, health status, and medical history of policy applicants. The higher the risk factors of you and your dependents (if you're purchasing a family policy) the more you can expect to pay. If your factors are too high, a company may decline to cover you entirely. For this reason, individual health coverage is often the most difficult to qualify for.
With small employer health plans, state and federal laws now provide guaranteed issue protection. That means if an insurance company or HMO sells small employer coverage, it may not refuse to cover small employers who have employees with health problems. Under small employer plans, all eligible employees and their dependents must be offered coverage. In addition, group members cannot be excluded for health reasons. Health status may be screened, but only to determine the appropriate premium rates for the group.
Insurance companies and HMO's who offer large employer plans and valid self-funded ERISA plans have to accept the entire group or reject the entire group. Once they accept a group, no member of that group may be excluded.
Large employers, including those with valid self-funded ERISA plans, are permitted to determine which class of employees (if any) is eligible for coverage. For example, they may offer health plans to executive employees only. Once coverage is offered, however, the insurer or HMO must accept all or reject all employees in that class. They may not exclude any employee because of health status. The health history of the large employer's group of workers (and dependents, if dependent coverage is offered) may be screened, but only to determine whether to accept or reject the entire group or what premium rate to charge the entire group.
1.4 My health premiums keep going up. What can I do?
Most states, including Texas, do not have authority to set or disapprove rates for health care coverage premiums. Each insurance company, HMO, or other health plan sets its own rates. (Certain restrictions are placed on plans issued to small employers, however.) In general, rates for health care coverage may vary depending on
- geographic location
- kinds and amounts of benefits paid
- amount of any deductibles
- number of covered dependents
- claims experience of its customers
Insurance companies and HMO's must give 30 days' notice to group policyholders before increasing group coverage premiums. (The group policyholder, in many cases, is your employer.)
If your premiums are increasing and you have individual coverage, re-examine current benefit levels and ask your insurance company or HMO to negotiate changes that will lower your premium or minimize any increase. Some companies negotiate and some do not. If the company will negotiate, you may be able to revise your benefit package to reduce the premium. Be careful not to give up an essential benefit. Options for negotiation might include paying a higher deductible and/or co payment, increasing your maximum out-of-pocket payment, reducing or limiting a medical benefit, or accepting "pre-certification" before costly medical procedures are allowed.
If you are concerned about the size of certain physician fees and hospital charges check with your health benefit plan to see if the provider's estimate of how much the treatment will cost is within the "usual and customary" range, keep a record of whom you talk to and when, and get a second opinion if surgery is involved.
2.0 Medical Issues
2.1 What if I currently have a medical problem or have had one in the past?
With an individual policy, you may be
- Required to undergo a physical or a health screening
- Refused individual coverage based on your medical history
- Offered individual coverage with a rider that excludes coverage of your medical problem
- Offered a policy that delays coverage of your medical problem for up to two years. In some cases, this period may be reduced if you've had prior health coverage.
With an employer group policy, you may be required to
- Wait up to 12 months before receiving benefit payments for any pre-existing medical condition. However, in some cases, this may be reduced by prior creditable coverage
- Complete an HMO affiliation period of up to two months if you are a new enrollee, as long as the requirement is applied uniformly and is not based on health status. Late enrollees may have to wait up to 90 days. During the affiliation period, premiums are not collected and coverage is not provided. If an employer imposes a waiting period, an HMO affiliation period will run concurrently with the waiting period.
2.2 What should I know about coverage for AIDS or HIV?
Insurance companies may limit the amount they will pay for AIDS-related medical expenses, but HMO contracts and group policies for certain government workers do not allow such limits. Only some supplemental or limited-benefit individual health policies allow exclusions for AIDS or AIDS-related medical problems. Also keep in mind:
- An insurance company or HMO cannot cancel individual or group coverage solely because a person is diagnosed with AIDS or an HIV-related illness.
- An insurance company or HMO does not have to sell an individual policy to a person with AIDS or HIV. A large employer group also can be denied coverage. In some cases, large employer groups are denied coverage when one member has AIDS.
Insurance companies may test individuals for AIDS on a nondiscriminatory basis or rely on an applicant's response to questions. If the company tests, it cannot deny coverage for AIDS without confirmation. Confirmation requires three positive results for the presence of Human Immunodeficiency Virus (HIV). The tests must include two positive ELISA tests and one positive Western Blot test. Results must be kept confidential except as required by law.
3.0 Shopping for Coverage
3.1 What are some questions I should ask when evaluating a health care plan?
Compare benefit levels, as well as any deductibles, co-insurance, maximum out-of-pocket expenses and dollar or day limits on certain medical treatments. Also, you should review exclusions in the policy and any cost containment features such as only paying for usual, customary and reasonable charges.
3.2 Do I need more than one health policy?
One comprehensive major medical policy should be enough. Other kinds of policies may cost less but probably provide fewer benefits. They are too limited to be your sole health care coverage and might duplicate coverage you already have. Policies with restricted benefits include:
- policies that pay medical expenses ONLY in the case of accidents
- hospital confinement policies that pay so much per day while you are hospitalized
- policies covering only in-patient hospital care
- "specified disease" policies that pay only if you are hospitalized or treated for the specific disease named in the policy, such as cancer, heart disease or AIDS (Auto Immune Deficiency Syndrome)
You don't need these policies if you have a good major medical policy. If you need more coverage, some health plans allow you to add benefits through riders, including, but not limited to, those providing for maternity or prescription drug coverage.
4.0 The Claims Process
4.1 Does my health benefit plan have to pay claims promptly?
Yes. The state's prompt payment law requires insurance companies and HMO's (in the case of claims filed for out-of-area or emergency care) to pay claims promptly and fairly, and it subjects them to penalties if they don't. It does not apply to valid self-funded ERISA plans even though they may use an insurance company or HMO to administer the health plan.
In general, the prompt payment law requires licensed insurance companies and HMO's to
- Acknowledge receipt of your claim within 15 days after receiving it in writing. It is important to note, pre-certification of a procedure or treatment as required by many managed care plans is not the same as pre-approval of a claim payment.
- Accept or reject your claim within 15 business days of receiving all required information. (The company may request additional information, including a signed claim, or proof-of-loss form, giving details about the medical service or treatment.)
- Send you notice explaining any delay. (After giving notice, an insurance company or HMO can take up to 45 additional days to gather all required information.)
- Give reasons in writing if they reject your claim.
- Make payment within five business days after sending notice that your claim will be paid. (If payment requires action by you, payment must be made within five business days after that action is taken.)
If your insurance company or HMO fails to meet the timetable, you have the right to sue to recover your claim, plus 18 percent damages and attorneys' fees. The company must prove it is not obligated to pay.
4.2 Do I get an explanation if the insurer refuses to pay my claim?
Yes. You must receive a written explanation. If you are not satisfied, you should
- Ask to see the policy language backing up denial of your claim.
- File a complaint with the insurance company or HMO or with TDI.
If you are in a claims dispute, it sometimes helps to
- Provide the insurer with additional details about your treatment, your condition, and any special qualifications your provider might have. Ask the physician or provider to send a letter explaining anything unusual about the procedure or the amount charged.
- Make sure your physician or provider used the proper treatment or procedure code. An improper code may result in a claim being rejected or incorrectly paid.
Remember, it's unlikely any health benefit plan will pay 100 percent of your bill. Your settlement may be reduced by any of the following:
- Deductibles - That portion of your covered medical bills not reimbursed by the insurance company. Common deductibles include $200 and $500 per person per year.
- Co-payments - A partial payment for health services, paid to the provider at the time you receive the services.
- Co-insurance - A percentage of each health care bill you must pay, including any non-covered charges and deductibles. An example of co-insurance is an 80/20 split of approved charges, with you paying 20 percent. The 80 percent is the insurance company's share of the bill.
- Fees that exceed "usual and customary" charges (unless the provider is under contract with the health plan to accept the "usual and customary" charges or other negotiated fees.) HMO enrollees usually don't have to worry about deductibles, co-insurance or "usual and customary" charges.
4.3 What should I do if my claim is rejected or I'm not reimbursed properly?
The majority of insurance companies maintain a toll-free telephone information and complaint line, and some companies and HMO's provide special mediation or arbitration procedures for handling complaints. Here are a few suggestions for handling claim or reimbursement problems:
- For group coverage, contact your group health benefit plan benefits administrator, if one is available. If there is no benefits administrator or if you have an individual health care policy, you should contact the insurance company or HMO.
- Submit a written complaint to your health benefit plan, insurance company or HMO specifying your concerns.
- Ask for explanations in writing and keep good records, including the names of people you talk to while trying to resolve the matter.
- Ask your health benefit plan to verify that your share of the bill (co-insurance or HMO co-payments) was based on the actual bill the insurance company paid AFTER any negotiated discount arrangement. An insurance company or HMO that refuses to base your share of the bill on actual billings is engaging in a prohibited and unfair claim settlement practice.
- If you do not resolve the matter, file a formal complaint with TDI.
4.4 How can I file a formal complaint with TDI?
Perhaps the easiest way is to fill out an online complaint form on the TDI web site. Referring to the TDI publication, Helping You With Your Insurance Complaint. may also be of assistance.
If you prefer, you may also write the agency including your complaint information as outlined below. No special form is needed, however submitting all of the requested information will avoid delays in processing your complaint. Send your letter to:
Texas Department of Insurance Consumer Protection Program (111-1A) P.O. Box 149091 Austin, TX 78714-9091
Be sure to provide a complete description of your complaint, as well as the following:
- Names of family members insured under your health care plan.
- Your name and address.
- The full name of the insurance company or HMO.
- The full name of the insurance agent.
- Your policy number.
- A concise but complete description of your complaint and the date of your disputed health care service.
- Copies (not originals) of any supporting documents, including letters, notes, invoices, canceled checks or advertising material.
When you file a complaint with TDI, we will acknowledge your letter. A complaints specialist will work to resolve the complaint within the limits of TDI's authority and keep you informed of its status.
If a company insists your complaint or claim is not valid, TDI cannot compel payment except in cases where state insurance law is clearly violated. In some cases, mediation or legal action is necessary to resolve a dispute over fact issues and legal obligations. You may want to talk to a mediator, lawyer, the Legal Aid Society, or other organization if your complaint cannot be resolved and it involves a significant amount of money. State law prohibits TDI from providing legal advice or opinions or acting as your private attorney.
For more information contact: