Several types of supplemen­tal health insurance

Understanding benefit options for prescription drugsFinding out about mental health coverageBridging the gap with short-term insuranceGetting the picture on Medicare and Medicaid fundamentalsSupporting children’s health insurance programs

This post gives you a look at several types of supplemen­tal health insurance — prescription drug programs, mental health coverage, short-term coverage, Medicare, Medicaid, and CHIP.

As the cost of prescription drugs continues to rise, health insurance companies put much effort into finding ways to keep these costs in check. This section describes three prac­tices that work toward accomplishing the goal of minimiz­ing drug expenses.

Insurers save money with prescription drug formularies. A for­mulary is a list of drugs that the health insurance plan approves. In a closed formulary, the insurer pays only for certain, approved drugs. If the drug you need isn’t on the approved list, you pay the entire cost. An open formulary offers most drugs, but the prices of the drugs vary.

More and more, HMOs are using a three-stage format to set prices for prescription drugs. For example, you pay a copay­ment of $5 for a generic (no brand name) drug, $10 to $15 for a brand-name drug in the formulary, and around $30 for a brand-name drug outside the formulary.

If your plan has a closed formulary, and that formulary doesn’t include your drug, check your plan carefully: It may have a provision that lets you request approval for benefit coverage of your drug.

Health insurance plans also limit the high cost of drugs through step therapy. Step therapy requires plan members to follow a specific progression of prescriptions. You start with the least-expensive medication and then move one prescrip­tion at a time toward the most expensive prescription, stop­ping when your condition is under control.

If you already know which prescription drug is successful for you, take action before you join a new plan. Call the new plan’s member services department to see whether it restricts the drug you’re taking. If the plan puts your medication in the Step 3 category, explain that you already take this med­ication. Ask whether you can leave out Steps 1 and 2. If the insurer denies your request, look for another plan.

Your health insurance plan may offer a prescription drug card program. Prescription drug card programs are a way to give members discounts on prescription drugs when they fill their prescriptions at a pharmacy that is a member of a pharmacy network. You also save money when you get an FDA (Food and Drug Administration) approved, generic equivalent drug instead of the brand-name drug.

If you go outside the pharmacy network to purchase a generic or brand-name prescription, you pay the deductible and coin­surance. The plan pays only the amount it would pay if you bought the medication at a member pharmacy.

Mental illnesses are brain disorders that frequently make cop­ing with life’s daily tasks difficult. Mental illnesses may affect thinking, emotions, moods, and a person’s ability to relate to other people.

Many health insurance plans provide some mental health coverage for psychological services that mental health prac­titioners, such as psychiatrists and licensed clinical social workers, provide. Coverage varies greatly from plan to plan. Some plans offer a fixed dollar amount for mental health services for each day of a hospital stay and limit the number of days covered. For outpatient services, plans may pay a fixed amount for each visit and limit the number of visits they cover for each year. With just a few examples, Table 6-1 shows how widely mental health insurance coverage can vary.

Table 6-1: Examples of Mental Health Insurance Coverage in Three HMOs

HMO 1           HMO 2             HMO 3

Inpatient     Covered at $50 per day. $240 per admission.

services       100%. Limit Limit of 15              Limit of 30 days

of 45 days       days per year. per year.

per year.          No lifetime         Detoxification

maximum.         days do not count

toward inpatient rehabilitation days.

Table 6-1: Examples of Mental Health Insurance Coverage in Three HMOs (continued)

HMO 1                HMO 2               HMO 3

Outpatient $20 (individual) $20 (individual) $10 per visit.

services       or $10 (group)      or $10 (group) Limit of 60 visits

per visit. Limit       per visit. Limit per year.

of 20 visits           of 30 visits

per year.              per year.

No lifetime maximum.

The Mental Health Parity Act (MHPA) of 1996 went into effect in January 1998. This law requires that the annual and lifetime benefit limits for mental illnesses be equal to the annual and lifetime benefit limits that health insurance plans offer for other illnesses and injuries. The requirements of this act don’t apply to employers with fewer than 51 employees or to a group health plan whose costs increase 1 percent or more as a result of implementing MHPA’s requirements.

Some states have passed their own, stricter parity (equality) laws for mental health coverage. The Consumer Insurance Guide, www.insure. com/health, describes each state’s mental illness parity laws.

Hospital indemnity insurance pays a specified daily, weekly, or monthly amount to an insured person during a hospital stay. You choose the amount of coverage when you buy the plan, so the money you receive isn’t based on the actual cost of the hospitalization. You can spend the amount you receive in any way you choose.

Some policies have an elimination period provision that pays benefits only after you’ve been in the hospital for a specific number of days. You can reduce your premiums by choosing a longer elimination period, but remember that hospitaliza­tions are usually for relatively brief periods.

Short-term insurance plans are designed to provide coverage for hospitalization and/or medical services for individuals and families when you find yourself temporarily out of health insurance.

Short-term policies do not cover pre-existing conditions.

With short-term policies, you get to choose the length of the policy. In many cases, coverage can begin immediately after you apply. Short-term plans are not renewable, but you can reapply for a second policy. However, the second coverage won’t continue the coverage you had under the first plan; the second plan is brand-new. Consequently, the second plan considers any condition that occurred while you were cov­ered under the first plan to be a pre-existing condition and doesn’t cover it. The combined total coverage of both the first and second short-term policies usually can’t exceed 365 days.

Eligibility requirements for short-term health insurance vary from plan to plan, so check the requirements of the plan you’re considering carefully.

Short-term plans for students are specially designed to remain in effect during a student’s full-time enrollment in an accred­ited college or university. Short-term health insurance poli­cies are available in most states. For information on student plans, call your school or an insurance company or agent. For student and short-term plans in general, check with your state’s insurance department for companies that sell short-term plans.

The Health Care Financing Administration (HCFA) of the U.S. Department of Health and Human Services adminis­ters Medicare, the nation’s largest health insurance program. Medicare (Title XVIII of the Social Security Act) covers peo­ple who are 65 years and older and are citizens or perma­nent residents of the United States, certain people who are disabled, and people with End-Stage Renal Disease.

If you reach the age of 65 and are still working, you may end up with health insurance through Medicare as well as through your employer-sponsored health plan. In this case, your employer-sponsored group health plan is the primary insurer (pays first) and Medicare is the secondary insurer (pays after the primary insurer pays). See this post for more about pri­mary and secondary insurers and coordination of benefits.

HCFA, which administers Medicaid as well as Medicare, pro­vides toll-free telephone numbers for information about your health plan benefits, rights, and options. It also provides information on the quality of managed care plans, Medigap insurance, and the Medicare + Choice program. (Later, this post discusses these programs in more detail.)

Call 800-MEDICARE, or 800-633-4227 (877-486-2048 if you have a TDD or TTY) 8:00 a.m. to 4:30 p.m., local time, weekdays. Talk to a customer service representative in English or Spanish for

General information about Medicare and Medigap insuranceGeneral information about Medicare health plan options in your communitySpecific quality and satisfaction information about man­aged care plansTelephone numbers for help with billing questions about Medicare claims or other issues

After hours, use the automated options to

Order Medicare & You handbooks or audiotapes in English or SpanishRequest updated information about health plans in your areaHear recorded answers to frequently asked questions Determining eligibility

If you’re eligible for Social Security retirement payments, you’re usually eligible for Medicare coverage. You (or your spouse) accumulate earnings credits on your annual Social Security wages. One earnings credit equals one calendar quar­ter. You need 40 quarters (ten years) of Social Security credit to enroll in Medicare Part A without cost and in Part B for $45.50 per month (1999 amount). (Look for more infor­mation on Medicare later in this post.)

Federal government workers, nonprofit-organization employ­ees, and certain other workers may qualify with fewer than 40 quarters. You may also qualify if you have a disability or a chronic kidney disease.

Check with your local Social Security office for more infor­mation or to enroll in Medicare, or call the Social Security Administration at 800-772-1213. (The TTY-TDD number for the hearing- and speech-impaired is 800-325-0778.)

If you’re under 65 and receive Social Security or Railroad Retirement benefits, you’re automatically enrolled in Medicare Part A and Part B. About three months before your 65th birthday, HCFA mails your Medicare card to you. If you decide to reject Part B after you receive your Medicare card, follow the instructions that accompany the card.

If you’re disabled, you are automatically enrolled in Part A and Part B of Medicare beginning in your 25th month of dis­ability. HCFA mails your card to you about three months before you are entitled to Medicare.

Part A and Part B each cover a different set of expenses. The next two sections explain the benefits and costs for each part. All dollar amounts shown are for 1999; figures may change from year to year.

Medicare’s Part A (hospital insurance) covers hospital services, care in skilled nursing facilities, and home health and hospice care services after you’re discharged from the hospital. Members of Medicare Part A pay the following premiums:

Eligible individuals (with 40 quarters of Social Security coverage) pay no premium.Individuals with 30 to 39 quarters of Social Security coverage pay $170 per month ($187.00 if you’re a late enrollee).Ineligible individuals (with fewer than 30 quarters of Social Security coverage) pay $309 per month ($339.90 if you’re a late enrollee).

You are a late enrollee if you enroll in Part B after your eligi­bility period expires. The seven-month eligibility period includes the three months before your 65th birthday, the month of your 65th birthday, and the three months after the month of your 65th birthday. The next opportunity for you to enroll in Part B is during the general enrollment period, from January 1 to March 31 of each year, with coverage beginning July 1. If you wait more than 12 months after the initial enrollment period, you pay an additional 10 percent of the premium. This surcharge applies for a period that is twice as long as enrollment was delayed.

Medicare determines benefits based on a benefit period. A benefit period starts the day you’re admitted to a hospital or skilled nursing facility. It ends after 60 consecutive days (including the day you’re discharged) without hospital inpa­tient or skilled nursing facility care. If you stay in a skilled nursing facility, a benefit period ends after 60 consecutive days without skilled nursing care.

In each benefit period, Medicare limits the number of days it will help pay for inpatient hospital and skilled nursing facil­ity care. After you exceed the benefit period limit, you must pay for all charges for each additional day of care. After you end a benefit period, a new one begins, with renewed hospi­tal and skilled nursing facility benefits. The number of ben­efit periods you can have is unlimited.

You are entitled to 60 nonrenewable reserve days. You may use reserve days to help pay the bill if you are in the hospital for more than 90 days in a benefit period.

Part A’s benefits for inpatient hospital insurance include:

Days 1-60: You pay a deductible of $768 per benefit period; Medicare pays the rest. Note: For days 21-100, Part A also pays coinsurance of $96 a day in a skilled nursing facility.Days 61-90: You pay coinsurance of $192 a day; Medicare pays the rest.Days 91-150: You pay $384 a day for each nonrenew­able, lifetime reserve day; Medicare pays the rest. (You have a maximum of 60 reserve days, and you may use them only once.)Days 151 and beyond: You pay all costs; Medicare pays nothing.

Check the Medicaid section later in this post for infor­mation on additional sources of medical cost reimbursement.

When you enter the hospital for covered care, the hospital must give you a document called An Important Message from Medicare, which explains your rights as a Medicare hospital patient. If you don’t get a copy, be sure to ask for one. Also ask the billing department for assistance in getting the most benefit from your health insurance coverage.

Medicare’s Part B (medical insurance) covers medical serv­ices other than hospitalization. It helps pay doctors and out­patient hospital care. Part B also pays for some other medical services that Part A doesn’t cover, including the following:

Physical and occupational therapyFlu, pneumonia, and hepatitis B shotsX rays and laboratory testsMammograms, and Pap smears to screen for cervical cancerOutpatient mental health servicesArtificial limbs and eyesDurable medical equipment, including wheelchairs, walkers, hospital beds, and oxygen equipment prescribed for home use by a doctorKidney dialysis and kidney transplants; under limited circumstances, heart, lung, and liver transplants in a Medicare-approved facilityMedical supplies and items such as ostomy bags, surgi­cal dressings, splints, and casts

Medicare Part B doesn’t cover several medical services and items, such as routine physicals, most dental care, dentures, hearing aids, and most prescription drugs. Part B covers eye­glasses only for corrective lenses after cataract surgery.

Members of Medicare Part B pay a monthly premium of $45.50. If you enrolled late (see previous explanation), your premium goes up by 10 percent for each 12-month period you could have been enrolled but weren’t.

Part B’s members pay an annual deductible of $100. After you pay the $100 deductible, Medicare pays 80 percent of the approved charges for covered services for the rest of the year. (An approved charge is the amount that Medicare decides the service is worth. This amount may differ from the actual amount on your bill.) You pay the balance of the hospital’s charges. Medicare pays 50 percent for approved outpatient mental health services, and members pay the balance. Mem­bers also pay for all charges for services and supplies that Medicare doesn’t cover.

The Balanced Budget Act of 1997 changed the Medicare pro­gram. This law, effective in 1999, includes Medicare + Choice, which expands the Medicare health plan options to include a broader range of plans. You can choose between Original Medicare — a fee-for-service program available to all Medicare beneficiaries — and a managed care organization that has a contract with Medicare. Medicare HMOs are available in many parts of the United States. With Medicare + Choice, Medicare pays the managed care organ­ization to provide medical services to you. In addition, Medicare + Choice offers some preventive care services to help you stay healthy, at no extra cost.

In many ways, the Medicare + Choice managed care plan is like the Original Medicare with an attached Medigap policy (see the next section). Some of these Medicare managed care plans offer services that a Medigap policy doesn’t cover. The downside is that generally you can see only doctors and hos­pitals that belong to the HMO.

To enroll in Medicare + Choice health plan options:

You must have Medicare Parts A and B.You must not have end-stage renal disease.

Whether you remain in the Original Medicare plan or choose a Medicare HMO, you’re still in the Medicare program and will receive all the Medicare covered services.

Original Medicare doesn’t pay every medical expense you incur. So, you may want to consider private supplemental insurance policies, such as Medigap policies or Medicare SELECT, to add the extra coverage you need.

Although both state and federal governments regulate Medi­gap insurance policies, Medigap is not government spon­sored. Private insurance companies and consumer groups, such as the AARP (American Association of Retired Persons), sell Medigap policies to fill the gaps in the Original Medicare plan coverage. Premiums for Medigap policies are kept to a minimum because the policies cover only the gaps left by Medicare. (Sticking with a Medigap policy makes good sense. Otherwise, you buy another supplemental policy that may cover more than you need and may be more expensive.)

Call the Medicare hotline at 800-638-6833 (TTY/TDD 800-820-1202 for the hearing or speech impaired) for more information on supplemental insurance policies (Medigap). Call your state insurance office for the names of companies that are licensed to sell Medigap policies in your state. To find your state health insurance contact, check with the National Association of Insurance Commissioners (see the Resource Center for contact information).

The federal government has authorized ten standardized Medigap policies — labeled Plans A through J — which means that the insurance coverage for a specific plan, such as Plan D, is the same from one company to another and from one state to another. Plans A through J represent a wide range in coverage. Plan A offers the most basic supplement to Medicare coverage. Plan B (not to be confused with Medicare Part B) offers the same provisions as in Plan A, along with additional specified provisions, and so on through Plan J. Plan J offers the most coverage of the Medigap plans and is usually the most expensive.

The availability of these plans depends on where you live: Your state may offer all or just a few of the standard policies. If an insurance company wants to sell Medigap policies, it must sell at least Plan A.

An insurance company cannot legally sell you more than one Medigap policy. Because Medigap policies are designed to fill in the gaps left by Medicare coverage, you don’t need more than one Medigap policy.

Medigap policies normally pay most or all of the Medicare coinsurance amounts. They may also cover Medicare deductibles. Some plans pay part or all of the following:

Outpatient prescription drugs (plans H, I, and J)Preventive care (plans E and J)Emergency medical care in a foreign country (plans C through J)Limited coverage for home health care (plans D, G, I, and J)

Medigap policies don’t cover long-term care. When your financial resources are depleted, you may meet your state’s eligibility requirements for Medicaid. If so, Medicaid helps pay for long-term care.

Signing up for Medigap benefits while you’re enrolled in a Medicare HMO is duplicate coverage. Medigap policies are designed to pay benefits associated with fee-for-service plans.

Certain consumer protection regulations, including a 30-day money-back guarantee and a guarantee of renewability, gov­ern the insurance companies that sell Medigap policies. The Health Insurance Portability and Accountability Act (HIPAA) regulations apply to Medigap to govern pre-existing condition waiting periods.

Insurance companies and managed care plans throughout the country can sell Medicare SELECT, another type of Medicare supplemental health insurance plan. A Medicare SELECT policy must meet all of the same requirements that a Medi­gap policy must meet, and it must be one of the ten stan­dardized benefit packages (A through J). The only difference is that with Medicare SELECT, you must use hospitals and doctors within a network to be eligible for full benefits. (Emergencies are an exception.) Medicare SELECT policy premiums are usually lower because of this restriction.

Medicaid — Title XIX of the Social Security Act — is a program that provides medical assistance for certain indi­viduals, such as children, the aged, the blind, the disabled, and people who are eligible to receive other federal assistance. It is a joint federal and state health insurance program, devel­oped to assist states in providing adequate medical care to eli­gible needy persons. The federal government set broad national guidelines for states to use in designing their Med­icaid programs. Each state, however, can do the following:

Establish its own requirements for eligibilityDecide on the type, amount, length, and range of servicesSet the rate of payment for servicesAdminister its own Medicaid program

With the states’ flexibility in setting up the details of their own Medicaid plans, plans vary a great deal from state to state, as well as within each state over time. So if you move to another state, don’t assume that you automatically meet the new state’s Medicaid eligibility requirements. You may have to reapply for Medicaid coverage; acceptance may take two or three months. If you have a gap in coverage between the old and new plans, you are responsible for any expenses that you incur.

If you qualify for both Medicare and Medicaid, Medicaid covers most of your health care costs.

Always send your medical bills to Medicare first. Medicare sends the unpaid part of the bill to your state Medicaid pro­gram for additional payment.

States determine eligibility for Medicaid by examining a per­son’s disability or age and financial need. You may have to reduce your assets to the allowable limits, which is called spending down. Because Medicaid is based on financial need, Medicare is considered a resource that you must use before Medicaid kicks in.

When you apply for Medicaid, be ready to reveal all your assets and sources of income. Not telling the state about all your assets is fraud, which is subject to criminal penalties.

If your income is limited — as defined by your state — Med­icaid may help pay for Medicare premiums, deductibles, and coinsurance.

Medicaid offers some assistance in various categories of dual eligibles. Dual eligibles are individuals who are entitled to Medicare Part A and/or Part B and are eligible for some form of Medicaid benefit.

Medicaid has eight categories of dual eligibles, defined by cri­teria such as Medicare eligibility, income level, and the dol­lar amount of resources in relation to Supplemental Security Income (SSI). (SSI is a social assistance program that pays monthly cash benefits to individuals who are at least 65, or who are blind or disabled, and who have limited income and resources.)

If you receive Supplemental Security Income (SSI) payments from Social Security, you are eligible for Medicaid. Contact your state Medicaid office for application information. In addition, contact your state or local welfare, social service, or Medicaid agency for more information about whether you qualify for financial help. You may find the appropriate tele­phone numbers in a “government” section of your local tele­phone directory under “Health and Human Services”; if not, call directory assistance. State Medicaid toll-free numbers are listed on the Web at www.hcfa .gov/MEDICAID/ obs5.htm.

Parents whose income is too large to be eligible for Medic­aid and yet too small to afford private health insurance can turn to their state’s Children’s Health Insurance Program (CHIP) to cover their uninsured children. (CHIP, or SCHIP — State Children’s Health Insurance Program — is also known as Title XXI, part of the federal Balanced Bud­get Act of 1997.) Every state and five U.S. territories have CHIP programs. Each runs its own federally funded CHIP program, so the programs vary.

States must ensure that CHIP funds only cover children who are currently uninsured.

Find out how CHIP affects you. Call the toll-free number, 877-543-7669, to find your state’s toll-free CHIP phone number, or look for your state’s number at www.hcfa.gov/ init/chipinfo.htm.

How to Choose a Health Insurance Plan

In this post you’ll learn about:

Deciding what’s important to you in selecting an insurance planUsing a health insurance checklist to sift through the options

The vast number of choices and decisions involved in select­ing a health insurance plan makes the task complicated and confusing. This post replaces confusion with under­standing and clarity by examing some of the major factors that you will eventually rely on to make your choice. The Checklist in Table 10-1 at the end of this post gives you a way to track your priorities and needs as you learn about health insurance plans.

Refer to the Checklist often and change your rankings as needed.

If you’re employed and married or have a domestic partner, you may have some flexibility in choosing secondary cover­age under a spouse’s or partner’s plan. For example, two adults who each have individual coverage may pay less in premiums than if both are covered under one policy with a family plan.

If you and your spouse are each covered by a group plan, you may be able to get secondary (additional) coverage under the other’s plan, or you may decide to forego secondary coverage and stick with one plan per person. Or one spouse may drop his or her employer’s insurance altogether and obtain cover­age under the other’s policy. (Be sure that neither plan has provisions that prohibit this choice.) Weigh the cost of each option against the coverage you get before making a decision.

Some families include unmarried domestic partners. Check out your plan’s policies regarding coverage for domestic part­ners, but don’t be surprised if coverage isn’t available.

The issue of health insurance for domestic partners has no national legislation, nor does any state have regulations cov­ering its employees’ domestic partners.

To cover a person under your health insurance plan, that per­son must be considered a dependent. The definition of dependent is based on your plan’s legal requirements con­cerning financial support. (In an employer-sponsored plan, the employer may also have input into the definition of dependent.) Some plans consider a child a dependent only if the child meets all of the following very specific criteria:

The child is your responsibility by birth or legal adop­tion, or the child is a stepchild or a foster child.The policyholder provides more than 50 percent of financial support and maintenance for this child.The policyholder can claim the child as an exemption on his or her federal income tax return.

A child is considered a dependent if a legal court order man­dates that the policyholder must provide coverage for the child. Other individuals may be considered dependents if they satisfy IRS requirements.

Health insurance plans’ regulations regarding coverage for children and/or other dependents may vary greatly, so check out the plans carefully. To make administration simple and consistent, some companies use some variation of the birth­day rule, in which the primary coverage for eligible children is through the plan of the parent whose birthday falls in the earlier month of the year. For example, a parent born in May 1954 would assume coverage for the children, even though the spouse born in September 1950 is older.

Many health insurance plans have an arrangement between the insurer and a selected group (or network) of doctors and hospitals and other health care providers. Such plans offer significant financial incentives to policyholders to use the providers in that network, including reducing your benefits when you use doctors and hospitals outside the network.

Before you decide to buy a particular health insurance plan, find out which doctors and hospitals are included in the plan’s network. Use this section to evaluate those doctors and hospitals. If they don’t satisfy your needs, evaluate other doc­tors and hospitals with this section and then look for a plan that uses the doctors and hospitals of your choice.

Location of doctors and hospitals: If you prefer to deal with a nearby doctor or hospital, check to see whether these providers are part of the network of the plan you’re considering. If you travel much, find out what the plan’s benefits are if you need to consult doctors or visit hos­pitals outside the plan’s provider network.

Doctors are usually associated with a particular hospital. When selecting a doctor, keep in mind that you usually end up using the services of the hospital with which that doctor is affiliated.

Primary care physician (PCP): A primary care physi­cian is a doctor who provides or authorizes all care for a patient. Most HMOs and PPOs (see this post about How to Evaluate Your Health Insurance Plan Options for more information) require their members to choose a primary care physician.

If freedom of choice in selecting your primary care physi­cian isn’t that important to you, an HMO or PPO may be a good choice for you.

If you’re already happy with a doctor who isn’t part of a plan network, a fee-for-service plan (also known as an indemnity plan) may be a good choice for you. This type of plan allows you the greatest choice of doctors and hos­pitals. You can also ask your out-of-network provider to consider joining a network — check with your benefits administrator for the forms.

Some doctors require payment at the time of service. Others offer a grace period for payment. Still other doc­tors file your insurance claim for you or file directly with the insurer. If you prefer not to pay the doctor and wait for your insurance company to reimburse you, find out what the doctor’s policies are and whether you can make special arrangements for payment.

Specialists: Some plans require that you get a referral from your primary care physician prior to each time you see a specialist. Getting a referral usually involves a visit to the primary care physician for diagnosis and perhaps treatment to see whether the more expensive visit to the specialist is necessary. Check to see whether your pre­ferred specialist is in the plan’s network or whether the network has a specialist who deals with your particular condition. Using an out-of-network specialist may cost you more.Hospitals’ quality of care: Most hospitals participate in an accreditation program that the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) administers. This organization surveys hospitals every three years to assure that they meet specific quality stan­dards for staff and equipment, as well as for their success in treating and curing patients. Make sure that the hos­pitals within your plan’s network are accredited.

Be sure that you know exactly when your coverage begins. Insurance companies may sometimes impose a waiting period between the time you apply for or enroll in a plan and the date your coverage takes effect. The waiting period — some­times due to a pre-existing condition — may apply to some or all of a plan’s benefits.

If you enroll in a group plan when you begin a new job or when your employer offers an open enrollment period, you usually don’t have a waiting period. Individual plans are usu­ally stricter and most likely will impose a waiting period. Generally, you don’t begin paying premiums until your wait­ing period is over.

Keep in mind the kinds of medical care you may need when you’re switching insurance companies or plans and be sure that you remain covered, perhaps by extending your current plan and overlapping it with a new one.

You can check on the quality of the health insurance plan you’re considering through your state’s department of health or insurance commission or through consumer publications.

Investigate the insurance company itself by checking your library for insurance company ratings by organizations such as The A.M. Best Company, Standard & Poor’s, and Moody’s. These organizations base their evaluations on the insurance companies’ financial records, which may give you an idea of a company’s stability. A highly-rated insurance company generally won’t go out of business overnight and disappear without paying your claims.

Also check for accreditation, which indicates that a plan meets certain national standards set by independent organizations such as the Joint Commission on Accreditation of Health­care Organizations (JCAHO). An insurance company’s deci­sion not to participate in an accreditation program does not reflect one way or another on its quality. To find out whether the plan you’re interested in is accredited, ask your employer’s benefits manager or call the insurance company itself.

One company that offers accreditation of health insurance plans is the National Committee for Quality Assurance (NCQA). This company evaluates a health plan’s organiza­tion, structure, and quality improvement process. NCQA also uses the Health Plan Employer Data and Information Set (HEDIS), a group of about 50 factors, to measure plans’ quality of care.

Use the Checklist in Table 10-1 to track what’s important to you in a health insurance plan. As you work through the Checklist, keep in mind current medical conditions, as well as the possibility of accidents, serious illnesses, and other sur­prises that life may throw your way. For now, leave blank the areas that you’re unsure about. By the end of the list, you should have a clear and fairly comprehensive picture of what your needs are and what type of health insurance plan will satisfy those needs.

Check one of the boxes to indicate how important each serv­ice is to you. The Checklist indicates importance on a scale of 0 to 5 — 0 is for the services that you don’t need at all; 5 indicates those that you think you’ll need the most.

Use a pencil to fill out the Checklist; as you learn more, your priorities may change. Use the blank lines at the end of the Checklist to add items of special concern to you.

Table 10-1: Checklist for Determining Your Health Insurance Needs

0 1 2 3 4 5

Choice of doctors     q q q q q q

Nearby doctors and hospitals q q q q q q

Out-of-town doctors and hospitals q q q q q q

Costs              q q q q q q

Ease of getting an appointment   q q q q q q

Minimal paperwork    q q q q q q

Waiting period before coverage   q q q q q q

Covered medical services     q q q q q q

Adult day care         q q q q q q

Alternative treatments such as    q q q q q q

acupuncture, spiritual care, and so on

Ambulance          q q q q q q

Cancer screening (colorectal cancer tests, mammograms, Pap smears, and so on) q q q q q q

Chiropractic         q q q q q q

Cholesterol screening  q q q q q q

Dental care, braces, and teeth cleaning q q q q q q

Diabetes supplies       q q q q q q

Drug and alcohol abuse treatment q q q q q q

Family planning       q q q q q q

Hearing examinations, hearing aids q q q q q q

Home health care     q q q q q q

Hospice care         q q q q q q

Hospital care          q q q q q q

Immunizations         q q q q q q

Infertility treatment    q q q q q q

Inpatient hospital       q q q q q q

Maternity care         q q q q q q

Medical equipment for home use q q q q q q

Medical tests and X rays q q q q q q

Mental health care      q q q q q q

Nursing home care      q q q q q q

Office visits to your doctor   q q q q q q

Other covered services q q q q q q

Outpatient surgery      q q q q q q

Pediatric care         q q q q q q

Physical therapy      q q q q q q

Pre-existing condition care   q q q q q q

Prenatal care          q q q q q q

Prescription drugs      q q q q q q

Preventive care and checkups     q q q q q q

Rehabilitation facility care   q q q q q q

Skilled nursing care    q q q q q q

Smoking cessation counseling     q q q q q q

Speech therapy        q q q q q q

Surgery (inpatient and outpatient) q q q q q q

Vision care (eyeglasses, contact lenses, examinations, and so on) q q q q q q

Well-baby care        q q q q q q

Other needs

Understanding Individual Dental Insurance and Vision Insurance

Understanding dental insurance optionsChecking out the benefits in dental insurance plansLooking into insurance coverage of vision care

Taking care of your teeth is as important as taking care of the rest of your health. If you visit the dentist regularly, you’re more likely to catch disease in its early stages and avoid expensive treatments, making the cost of dental care much less than medical care.

Dental insurance plans encourage patients to get regular pre­ventive care. This post looks at insurance coverage for var­ious aspects of preventive care as well as coverage for treatment of dental conditions.

Preventing eye disease is just as important to your total health picture as dental care is. Vision care coverage encourages you to take preventive measures, such as having regular eye exam­inations, to keep your eyes healthy and diagnose problems at an early stage. This post closes with examples of what vision care plans may offer.

Although many health insurance plans exclude dental care, some plans may cover routine office visits or orthodontia (straightening of the teeth). When a plan doesn’t cover den­tal care, it may offer an option to buy separate dental insur­ance to add to your health insurance policy. Dental insurance plans may use a network of dental care providers, similar to health care networks.

To control costs, a dental insurance plan may impose a dol­lar limit (cap) on the amount of benefits the plan pays. Plans may also restrict — or even exclude — the number and/or types of services that are covered to keep costs down.

Dental care coverage varies and may include the following:

Crowns and bridgesEndodontics (root tips, nerves)Oral surgery, periodontics (gums, bone)Orthodontia (braces)Prosthetics (bridges, dentures, partials)Restorative services, such as fillingsRoutine diagnostic and preventive services, such as exam­inations, X rays, and cleaning

If you use dentists within a network of dental care providers, you may receive full coverage for routine exams and clean­ings, and you may pay lower prices for other treatments. Dental networks usually require you to file a claim.

Another way to control costs is with a dental discount card program, which is often offered in conjunction with — but separately from — your health insurance plan. Dentists who participate in a dental discount card network provide discounts on several of the most common dental services such as examinations, fillings, and gum treatments. If you’re a member of a dental discount card program, just show your card each time you visit the dentist.

If you choose a dental insurance plan that uses deductibles and coinsurance (as opposed to the discounts that a dental discount card program provides), look for a plan that covers diagnostic and preventive services, such as those shown in Table 4-1, at 100 percent.

Table 4-1: Dental Diagnostic and Preventive Services

Service                                Frequency

Initial oral examination           Once per dentist

Teeth cleaning                     Twice per year

Complete X rays                   Once every three years

Bitewing X rays (crowns Once per year of top and bottom molars to show decay between teeth and under fillings)

Fluoride treatment                Twice per year

Routine restorative care is a fancy way to refer to dental fillings. Check to see what types of services your plan considers rou­tine restorative care and what benefits the plan pays for these services. In the examples in Table 4-2, Plan 1 covers 80 per­cent of restorative treatment, and Plan 2 covers 100 percent.

Oral surgery embodies a variety of procedures, including the following:

Endodontics (treating root canals for diseases of the pulp and bone, removing tooth nerves, bleaching discolored teeth, managing traumatic injuries to the teeth, and per­forming related surgery to help preserve the natural teeth in a healthy state)Periodontics (treating complicated periodontal disease involving bone grafts or underlying tissues)Placing or restoring dental implantsRemoving impacted teeth, tissue biopsy, and draining minor oral infections

Because many dental insurance plans emphasize and encour­age preventive care, some plans may pay only 50 percent of expenses for oral surgery. Other plans, as Table 4-2 shows, may pay 80 to 100 percent. Examine your plan in detail to learn what the oral surgery benefits are.

Orthodontia involves straightening teeth and treating prob­lems related to the growth and development of the jaws. The sample plans in Table 4-2 cover orthodontia at 50 percent, with no deductible, and impose a $1,000 lifetime maximum.

Treatments for temporomandibular joint (TMJ) syndrome, which affects the joints at the jaw, is usually covered under medical, rather than dental, insurance.

Your dental insurance plan may pay benefits for oral sur­gery and/or orthodontia procedures based on reasonable and customary fees.

Some insurers may write plans to include a separate deductible for dental care and an annual maximum on pay­ments. You may have a waiting period after the policy takes effect for some major dental procedures.

If your plan has a provision that sets an annual maximum benefit for dental care, think about dividing up and receiv­ing treatment over several years, if feasible. Watch for life­time maximums on certain types of dental care, such as orthodontia.

Table 4-2 shows two examples of dental coverage in a dental insurance plan. Plan 2 has lower deductibles and a higher annual maximum benefit than in Plan 1, but Plan 2 restricts its members to using services from providers within the network.

Table 4-2: Examples of Dental Coverage

Plan 1                       Plan 2

Annual deductible $50 per person,         $25 per person,

$150 per family         $75 per family

Annual maximum $1,750 per person $2,500 per person benefit

Diagnostic, teeth        Covered at 90 to         Covered at 100%.

cleaning, X rays,        100% if patient           No deductible.

fluoride treatment uses PPO dentist.

No deductible.

The following percentages of coverage are payable after the patient meets the deductible.

Restorative                Covered at 80%          Covered at 100%

treatment

Crowns and caps Covered at 50%                Covered at 80%

Oral surgery               Covered at 80%          Covered at 100%

(simple and

surgical extractions, excluding

impacted teeth)

Plan 1                       Plan 2

Other oral surgery Covered at 80%               Covered at 50%

(including impacted teeth)

Endodontics/              Covered at 80%          Covered at 80%

apicoectomy

(removal of root

abscess), root canal

Periodontics               Covered at 80%          Covered at 80%

Mouth-prop                 Covered at 80%          Covered at 100%

devices, space maintainers, and sealants

Prosthodontics           Covered at 50%          Covered at 50%

(replacement of missing teeth)

Crowns when             Covered at 50%          Covered at 50%

inserted to affix bridges

Orthodontia                Covered at 50%,         $1,000 lifetime

$1,000 lifetime            maximum benefits.
maximum benefit No deductible.

Coverage for vision care through employer-sponsored health insurance plans may vary widely. Vision care plans most often cover examinations, lenses, and frames on a scheduled basis, paying a fixed dollar amount for each benefit and perhaps discounted fees for eyeglasses and contact lenses. Some plans spell out the procedures and services that they exclude, such as the following:

Corneal modulation (changing the shape of the cornea through surgery or with corrective contact lenses)Eye exams for corrective lenses, including contact lenses, eyeglasses, and their fittingRadial keratotomy (a surgical procedure to correct near­sightedness)Refractive keratoplasty (corneal grafting)

A group health insurance plan may not provide vision care coverage at all, in which case you may opt to buy separate vision care insurance to add to your health insurance policy. A separate vision care insurance plan may use a network of vision care providers, similar to the networks in health insur­ance and dental insurance plans.

The major medical part of a health insurance plan, rather than a vision care plan, most likely covers eye surgery.

Vision care plans may establish a percentage or a flat fee for eye exams and limit the frequency of the exams (such as once every 12 or 24 months). For example, a plan may pay 100 percent of the cost for a vision exam if you use a provider within a network, and up to $40 for an out-of-network provider. Depending on the premium you want to pay, you may be able to choose a deductible amount, such as $10 or $25: The higher the deductible, the lower the premium.

In some cases, you may have to use providers within your plan’s network to be eligible to receive coverage for eye-care services. If you need additional care, your plan may require a referral from a specific provider, such as your primary care physician, or ophthalmologist.

How to appeal a health insurance claim

Appealing claims that are rejectedDistinguishing between accidents and illnesses in the emergency room

Sometimes you may disagree with your health insurance plan’s payment of benefits. This post teaches you how to appeal and where to turn when that happens.

Some health insurance plans attempt to control costs by refusing payment for emergency room care unless you first get permission from your doctor. Sometimes emergency room staff delays treatment while they check your insurance coverage. Legislation now establishes certain rights for emer­gency room patients, which minimizes these kinds of restric­tions. This post explains your rights to emergency room treatment under these laws.

If you object to the way your insurer paid your claim, start by calling your plan’s benefits administrator, if you have one, or check with your human resources department. If your objections are still unresolved, your next step is to file an appeal — a means of objecting to the way the insurer paid your claim and requesting the insurer to reconsider the claim.

Check your health insurance policy for a section on the appeals process. Your plan may spell out each step that you must follow to appeal your claim. Be aware of deadlines that you must meet to resubmit a claim, or you may lose your right to appeal.

Follow up on the response you receive from the insurer. Read it carefully and make sure that the insurer bases its decision on the correct information. If you discover that some of the infor­mation you submitted on your original claim is incorrect or inaccurate, notify the insurer in writing of the correction.

Mail correspondence by certified mail with a return receipt to confirm that the insurer received your letter.

If the insurer continues to deny benefits, submit copies of the claim, correspondence, notes, and the relevant pages of your policy to your state’s insurance department. Remember to include your policy or claim number. Write a cover letter explaining in detail why you think the insurer did not prop­erly pay benefits for your medical expenses.

The department of insurance notifies the insurance company of your complaint. The insurer must then respond to the state insurance department within a specified period, usually 10 to 30 days. After the insurance department receives the insurer’s response, it investigates and comes up with a solu­tion, if possible. Expect this process to take at least 30 days (longer if the case is complicated).

As you work through the appeals process, keep in mind that each state has its own laws — usually referred to as the Unfair Claims Settlement Practices Act — to protect you from unfair and deceptive practices in the insurance industry.

For more information on your particular state’s laws, contact your state’s insurance department. To find your state health insurance contact, check with the National Association of Insurance Commissioners.

Although the insurance protection laws differ from state to state, most of them have the following provisions in com­mon. The laws state that insurance companies

Must not intentionally misrepresent facts or provisions relating to coverage under your policy, such as stating that a condition is covered when it isn’t.Must acknowledge your claim and act promptly in response to your communications about your claim.Must put into action standards for timely investigation and processing of claims.Must not attempt to influence payment of a claim you make under one benefit provision (such as a hospital benefit) by delaying payment under another (such as a prescription drug benefit) when the amount the com­pany owes you is clear.Must not delay an investigation or payment of claims by asking you for reports or forms that are unnecessary or contain information that you’ve already submitted.Must not force you to file a lawsuit to recover money due under an insurance policy by offering you considerably less than the money ultimately recovered in a lawsuit.Must not, as a policy, appeal arbitration awards in your favor to force you to accept a settlement amount or com­promise for less than the amount awarded in arbitration. Both sides choose one independent third party, such as a judge or lawyer, to determine the outcome (arbitrate). The decision the arbitrator makes is usually final.Must not refuse to pay your claim or delay payment without conducting a reasonable investigation and giv­ing you a valid reason.

If you think that your insurance company is violating the Unfair Claims Practices Act, talk to a claims supervisor at the company and explain your concern. If that doesn’t help resolve your problem, file a complaint with your state’s insur­ance department.

The state insurance department can help only if the insur­ance company has broken the law. It can’t force the insurer to provide a benefit that isn’t in the health insurance policy. Many state insurance departments try to resolve the com­plaint by phone before the consumer resorts to filing a for­mal complaint.

If you hire a lawyer to resolve your complaint, the state insur­ance department won’t speak with you directly. As your legal representative, your lawyer speaks for you.

If their finding is against the insurance company, state insur­ance departments have the authority to impose penalties on an insurance company, ranging from assessing a fine to revok­ing the company’s state license.

The Emergency Medical Treatment and Active Labor Act of 1998 (EMTALA) states that hospitals must give appropriate care to people regardless of their ability to pay, including peo­ple whose health insurance coverage restricts emergency room benefits. Hospital staff can’t postpone examining a patient while checking on insurance coverage or while trying to get permission from a doctor in the patient’s health plan network to examine or treat the patient.

Individual state laws may offer rights in addition to the rights in EMTALA. Some states have a regulation that requires insur­ance companies to pay for emergency room care if a prudent layperson (a person with an average knowledge of health and medicine) acting reasonably would consider the situation a medical emergency.

Emergency room staff must do a medical exam before send­ing you to a clinic or doctor’s office. The exam determines whether you need immediate care and avoids putting your health at risk. If emergency room doctors determine that you have an emergency medical condition, they must stabilize or appropriately transfer you to another medical facility.

EMTALA defines an emergency medical condition as a medical condition with symptoms so severe that you could reasonably expect the lack of immediate medical attention to result in

Seriously jeopardizing a patient’s or unborn child’s health (in the case of a pregnant woman)Seriously harming any bodily functions or parts

When a pregnant woman is having contractions, EMTALA considers it an emergency when

There isn’t enough time to safely transfer the pregnant woman to another hospital before giving birthTransferring the pregnant woman may threaten her health or safety or the health or safety of the unborn child

If your condition doesn’t meet the definition of “emergency medical condition,” the hospital emergency room doesn’t have to treat you.

Types of insurance coverage that you can choose to meet your particular health insurance needs

Finding coverage for critical illnessTaking a look at long-term careThinking ahead about disability

This post helps prepare you before an accident, the onset of serious illness, or other critical health-related situations may occur by explaining the main points about types of insurance coverage that you can choose to meet your particular health insurance needs. Having this knowledge in advance can lessen the impact of a sudden change in health status.

You may live in an area with a high incidence of a particular disease or condition. Perhaps family history raises concerns about your susceptibility to a critical illness or disease. In these situations, you may want to consider setting up a finan­cial cushion — beyond what your health insurance policy offers — in anticipation of above-average medical expenses.

Some insurance companies offer specified or dread disease policies, most commonly cancer insurance. These policies pay a cash benefit for procedures and treatments that con­ventional medical insurance may not cover. The dread dis­ease plans pay a fixed dollar amount for every day you’re in the hospital or receive treatment on an outpatient basis only if you contract the specific disease or group of diseases that the policy cites.

Don’t think of a dread disease policy as a replacement for gen­eral medical coverage: The policy may limit the amount of benefits it pays. In fact, some states regard dread disease poli­cies as offering little value or protection to the policyholder and have banned or restricted such policies. The cost of a dread disease policy may not be very high because it covers very specific conditions. Even so, weigh the cost of the pol­icy carefully compared to the benefits it pays before you buy.

Think about your family history and lifestyle as you shop for a dread disease policy: These factors may help you get a sense of whether you’re at risk for a particular disease. Start by examining plans carefully, because they often exclude cover­age for problems resulting from the specified disease itself, such as infections, diabetes, and pneumonia. In some cases, you have to wait several years after you buy a policy before the plan will pay for treatments. Always check the fine print for the following:

All-inclusiveness: Benefits should include expenses for items such as hospital stays, medicine, surgery, doctors’ visits, radiation treatment, chemotherapy, and recon­structive surgery after a mastectomy.Additional benefits during a hospital stay: You may find a policy that offers additional benefits after you’ve been in the hospital for more than 90 days. Be warned, however, that research states that the average hospital stay for cancer is only 13 days.Travel expenses: When treatments mean traveling long distances to a hospital, you definitely want a policy that covers your travel expenses — and perhaps travel expenses for a companion.Double coverage pay: Keep an eye out for whether the dread disease insurance plan will pay benefits even though you’re covered under another policy. Also check whether the other policy will pay benefits if you have a dread disease policy.

Most dread disease insurance policies exclude people who have already been diagnosed with the disease.

Insurance companies often pay for bone marrow transplants and stem cell transplants to treat leukemia and lymphoma. However, insurers may not pay for these types of transplants when they’re used to treat other types of cancer, where they’re still considered experimental.

When you’re evaluating a dread disease insurance plan, ask about how the plan pays for experimental procedures.

Some dread disease insurance plans do one or more of the following:

Adjust premium payments based on your lifestyle or family historyPay an initial lump sum and then pay for various costsPay a single lump sum at the time of initial diagnosis and then end the coverage (which helps to lower their premiums)Increase premiums as you age

People are living longer, so they’re more apt to experience serious illnesses or injuries that can temporarily put them out of commission. A critical illness plan covers more than just one condition. When you don’t need disability insurance (because you expect to be back on your feet), critical illness insurance steps in to fill the void.

In general, although benefits vary from plan to plan, critical illness insurance pays you a lump-sum benefit if you suffer one of the covered critical illnesses or injuries.

Catastrophic limit is another way to refer to maximum out-of-pocket. In fact, major medical insurance is sometimes called catastrophic insurance. Major medical insurance may pay over an extended period for hospitalization costs and other health services that exceed the maximums your basic plan provides. See this post about How to Evaluate Your Health Insurance Plan Options  for more information on major medical insurance.

Most insurance plans, whether public or private, don’t cover home health care at all. If they do, the services they cover may be very limited. Some plans, for example, won’t pay for a care provider who is a member of the immediate family.

One way to enhance coverage for catastrophic illness is to pur­chase a catastrophic coverage policy. These policies are designed to pay for hospital and medical expenses that exceed a very high deductible, perhaps $20,000 or more. Such policies may also provide for a fairly high maximum lifetime limit.

Another approach is to add a living insurance rider to a life insurance policy. A living insurance rider provides benefits to the insured — while the insured is still living — in case of a catastrophic illness.

Long-term care insurance policies are special policies that pro­vide coverage for nursing home stays and home health care for a period established when you buy your policy. These policies are also called convalescent care or nursing home insur­ance. The policies are usually indemnity-type policies, mean­ing that they pay an established amount for each day of coverage you spend in a nursing home, regardless of the actual cost you incur.

The goal of home health care can be to maintain, improve, or restore a person’s health. Usually, a doctor orders home health care and writes a plan of care, or instructions for the patient and the caretakers. In addition to registered nurses and licensed practical nurses, many other kinds of care providers may play a role, including the following:

Home health aides and visiting nursesHomemakers from an outside service (housekeeping duties; no medical-related duties)NutritionistsPersonal care attendants (PCAs — meal preparation, bathing, laundry, light housekeeping, and so on)Physical, speech, and occupational therapistsSocial workers

Patients may also need certain pieces of equipment at home, such as hospital beds and accessories, respirators and oxygen tanks, wheelchairs, and walkers. Major medical policies usu­ally cover these expenses.

Nursing homes are characterized by the type of services they provide:

Custodial care homes: These facilities are intended to maintain and support the individual’s current level of health, while trying to prevent any further decline. Peo­ple in custodial care homes usually need a place to live and help with activities of daily living, which non-medically trained professionals can provide. This type of nursing home is the lowest level and least expensive of the three.Intermediate care facilities: These facilities provide planned, continuous programs of nursing care for resi­dents who can’t live alone. These programs are preven­tive and rehabilitative.Skilled nursing facilities (SNFs): A doctor must pre­scribe care for people in these facilities. Registered nurses and other medical personnel provide specialized medical care 24 hours a day.

Major medical coverage may cover the cost of a skilled nurs­ing facility, but not the cost of a custodial care facility.

See the Medicare and Medicaid sections in a later post for more information about catastrophic coverage and long-term care.

Beyond the challenges of suffering pain or discomfort and undergoing treatment, disability may also mean loss of income. To replace this loss, you may be able to draw on var­ious sources of financial compensation, such as the following:

Social Security: For those who are severely disabled and unable to work at allWorkers’ compensation: For work-related illness or injuryCivil service disability: For federal and state govern­ment workersAutomobile insurance: For disability due to an auto­mobile accident

Check with your state insurance department to see whether your state mandates and monitors disability plans. In states that do, your employer automatically deducts premiums from your paycheck. You file claims directly with the state.

If you aren’t eligible for one of these sources, you probably won’t receive compensation for lost income (other than sick-leave benefits from your employer), which is where disabil­ity insurance comes in.

Short-term disability insurance covers only loss from illness or disease; it excludes loss from accident or injury. Employer-sponsored plans may include STD insurance as part of a health insurance plan. Benefits generally pay a certain per­centage of your salary for a certain number of weeks, based on your years of employment.

For short-term disability, experts advise that you not rely on disability insurance — the cost of an STD policy may out­weigh the benefits. In addition to any sick-leave benefits your employer pays, live on your savings or the sale of an invest­ment for a couple of months.

Long-term disability insurance kicks in when short-term disability ends, usually after 52 weeks. Its goal is to lessen the threat of financial disaster. LTD plans pay monthly benefits — from periods of one year up to a lifetime, depending on your plan — when disability prevents you from returning to work. Your plan also specifies when your benefits begin, how much you will receive, and any coverage limitations.

Check with your employer to see whether a group long-term disability policy is available. Some LTD plans offered through employers may be more cost-effective than in individual plans.

Disability insurance replaces only a percentage of your lost wages, usually about 60 percent of your income at the time you buy the plan. This insurance doesn’t cover the cost of reha­bilitation, which is a medical expense. Medicare benefits, which cover medical expenses, take effect in your 25th month of disability.

Deciding whether to buy disability insurance depends on your individual situation. You need to consider several fac­tors, including the following:

How much financial risk are you willing to assume if you’re unable to work for an extended period?How long can you live on your savings and investments?What will it take, in terms of time and effort, to rebuild your savings and investments and recoup lost interest?Can your spouse’s income can make up for your lost wages?

If you decide to buy a disability insurance policy, think about the following:

How the insurer defines “disability”: One insurer may define “disability” as being unable to perform the duties of your customary occupation. Another insurer’s defini­tion may mean that you can engage in no gainful employment at all.When benefits begin: Benefits may begin from one to six months or more after the start of disability. If you can afford the lost income, lower your premiums by choos­ing a later starting date.Whether the policy covers both accident and illness.

Benefits may be taxable depending on who pays the premiums for the disability policy. The following parameters usually hold true, but you should consult your tax professional with any questions:

If you pay the premiums for an individual policy, the benefits you receive aren’t subject to income tax.If your employer pays some or all of the premiums under a group policy, some or all of the benefits may be taxable.

How to recognize, avoid and report insurance fraud

Your Are Here: Health tips ? Legal ? Health Insurance ? How to recognize, avoid and report insurance fraud

In this post you’ll learn

Protecting the privacy of your medical recordsRecognizing and avoiding insurance fraud

In these days of lightning-quick transfer of information and boundless computer storage capacity, doctors, employers, insurance companies, and others can gain access to your med­ical records quite easily. Concern arises when these entities use your personal information to deny you health insurance coverage or even employment. This post discusses ways to keep abuses like these in check.

Insurance fraud costs everyone more and more, both in dol­lars and in inadequate medical treatment. Keep reading to find out how to recognize, avoid, and report insurance fraud.

Medical records may contain information about your family history, substance abuse, sexual behavior, and mental illness. You depend on these records being kept confidential. But think about the number of people who might have access to your medical records, just in the course of one visit to a health care provider: doctor, nurse, receptionist, billing office, phar­macist, health insurer. If you’re hospitalized or you visit the emergency room, the number of people increases. If your employer administers your benefits, human resource staff members may also have access to your medical records. What’s more, the Department of Health and Human Services plans to set up a “unique health identifier” number to link all your health records to one, universal number ID.

All of this probably doesn’t sound as though your records are “confidential.” They’re not.

The Medical Information Bureau (MIB), a clearinghouse for information on individual medical records, provides medical information about individuals to approximately 600 life insurance companies, many of which also offer health and disability coverage. When an individual applies for life, health, or disability insurance, the applicant’s med­ical records are likely to become part of MIB’s database. Sometimes members of small groups, late enrollees, and applicants requesting additional coverage may end up in the database as well.

Insurers pay a membership fee to MIB and a fee each time they verify applicants’ information. Insurers also report individuals’ medical conditions to MIB to add to its data­base. When you apply for an insurance policy and the insurer checks with MIB, you may end up paying higher premiums because of information MIB reports to the insurer. In an extreme case, you may not be hired for a job or you may lose a job because of a condition that shows up on your medical record.

Insurance companies are supposed to notify you if they intend to check your record at MIB when you apply for insurance. Ask your agent when you apply whether the com­pany uses MIB.

You can take steps to protect the confidentiality of your medical records:

Ask your health care providers, in writing, for a copy of your medical records. Correct any errors. Find out to whom these providers give access to your records.Instead of signing a blanket release waiver, give permis­sion to release only records that relate to a specific treat­ment or condition.Be stingy with the information — including your Social Security number — that you give out on surveys and questionnaires, especially over the phone.Check whether MIB has a record on you and make sure that the record is accurate, which is your right under the Fair Credit Reporting Act. You can write to MIB at P.O. Box 105, Essex Station, Boston, MA 02112; phone 617-426-3660; Web site www.mib .comTell MIB in writing not to release your information with­out your notarized consent. Withdraw all prior consent.Get copies of company policies covering medical records if your employer is self-insured and therefore subject to ERISA regulations. Storing medical records in person­nel files is illegal — make sure that the company policies specify that.Giving your doctor all the information necessary for your treatment is important. However, consider holding back information that isn’t relevant to your health.Call or write your congressional representative. Ask for a medical privacy law that limits medical information to health care providers and insurers and doesn’t include a universal “health identification number.”

Federal law states that medical records are confidential. Under the Americans with Disabilities Act, companies must not use medical records to make employment decisions.

Employers can find out even more from credit records that reflect billing for health care services and from bankruptcy records.

Genetic testing, which can indicate predisposition to inher­ited diseases, may become another area of concern in the pri­vacy issue. If your insurers pay for genetic testing, their records will include the results.

Insurance fraud by policyholders and others is on the upswing, and people aren’t very outraged about it. Some peo­ple think they’re just getting even with a large company, rather than committing a crime, when they defraud an insur­ance company. But everyone ends up paying for losses due to fraud through increased insurance premiums, higher taxes for government-sponsored programs such as Medicare, more expensive doctor visits, and more expensive prescription drugs.

Both patients and providers can commit fraud. Insurance frauds include

Adding to claims expenses for services not delivered or inflating the cost of services.Lying on applications or withholding material information.Submitting false claims.Faking injuries and illnesses.Medical quackery (pretending to practice medicine).Obtaining the same prescription drugs from several doctors.False coverage schemes, such as when an “insurance company” accepts your premiums but doesn’t pay your claims.Substituting a covered diagnosis for a routine checkup.

Insurance companies are fighting back to a greater and greater extent. Insurers are diligently pursuing perpetrators of fraud in every way possible, including using special investigative units and high-tech data tracking. The Department of Health and Human Services (HHS) asks that Medicare recipients review their Medicare statements. If Medicare recipients find a suspicious charge, they should call their doctor or the HHS fraud watchdog line at 800-447-8477.

Don’t be a victim of fraud. Keep your eyes open and watch for the following:

Free testing or screening offers that involve showing your health insurance ID card or Medicare cardDoctors or other providers who want you to sign a claim form before providing a serviceDoctors or other providers who explain that they can prepare a bill so a charge that an insurance company doesn’t usually cover will be coveredMedical laboratories or health clinics that bill for tests or other services that they didn’t provideDoctors who bill for inpatient hospital services on dates you weren’t in the hospital

Keep fraud at a minimum with these measures:

Ask your doctor and other providers whether the treat­ments and services they prescribe are medically necessary and what options are available.Always check carefully the Explanation of Benefits (EOB) that you receive from your insurance company or from Medicare. Look for charges for services that you didn’t receive, treatments that were more complex than the ones you received, and multiple charges for a service that you received only once.When you buy health insurance coverage from an agent or company you’re not familiar with, contact your state’s department of insurance to verify that the company is licensed to operate in your state. Don’t buy insurance from an agent who offers you a kickback. Report these types of fraud to your state insurance department.Read the fine print in mail promotions. Report decep­tive mail promotions to your local postmaster.Don’t trust a company that wants you to pay your pre­miums in cash or pay a full year’s worth of premiums at one time.Don’t give in to “last chance” opportunities to buy a policy.Never sign a blank insurance form.Have someone you trust — perhaps a knowledgeable friend, accountant, or attorney — review any policy you’re unsure of.

Seniors may be especially vulnerable to fraud. When seniors buy Medigap policies, they sometimes fall prey to crooked salespeople who try to sell policies with too little or improper coverage or to people who don’t need coverage.