Answer Center > Health Insurance

Health insurance can be very complicated, so we've provided this page to answer your general questions about insurance. In order to open a Health Savings Account (HSA) you must first enroll in a qualified High Deductible Health Plan. Sometimes referred to as a "catastrophic" health insurance plan, an HDHP is an inexpensive health insurance plan that generally doesn't pay for the first several thousand dollars of health care expenses (i.e., your "deductible") but will generally cover you after that; of course, your HSA is available to help you pay for the expenses your plan does not cover. The Government wants Americans to build-up savings accounts to help pay for health insurance when we leave our employers or become unemployed, and to pay for long-term care and Medicare insurance to lessen the enormous cost burden currently on the government. You can use the money in your HSA to pay for any expense viewed as "Medically Necessary" to maintain your or your family's health. This includes all necessary medical, dental, vision & prescriptions. For a complete list of Qualified Medical Expenses click here. You can also pay for premiums for "COBRA," coverage while receiving unemployment compensation, alternative medicine, Long-Term Care Insurance, Medicare part B and other covered services tax-free.

What is COBRA continuation health coverage?

Congress passed the landmark Consolidated Omnibus Budget Reconciliation Act (COBRA) health benefit provisions in 1986. The law amends the Employee Retirement Income Security Act, the Internal Revenue Code and the Public Health Service Act to provide continuation of group health coverage that otherwise might be terminated.

Back to questions.

What does COBRA do?

COBRA provides certain former employees, retirees, spouses, former spouses, and dependent children the right to temporary continuation of health coverage at group rates. This coverage, however, is only available when coverage is lost due to certain specific events. Group health coverage for COBRA participants is usually more expensive than health coverage for active employees, since usually the employer pays a part of the premium for active employees while COBRA participants generally pay the entire premium themselves. It is ordinarily less expensive, though, than individual health coverage. For more information on COBRA, visit http://www.dol.gov/ebsa/faqs/faq_consumer_cobra.html

Back to questions.

What is HIPAA? HIPAA is for those who are exhausting COBRA/CalCOBRA programs or are losing group health coverage with no employer continuation offering, HIPAA regulations allow you to purchase guaranteed-issue health coverage under the following rules:

-COBRA or CalCOBRA benefits must be exhausted or not offered;

-You must apply for HIPAA coverage within 63 days of termination of COBRA, CalCOBRA or employment if no COBRA offered;

-You must have been covered for 18 months continuously prior to HIPAA effective date with the most recent coverage being employer-sponsored group health insurance with no gaps greater than 63 days between any prior coverage;

-Must not be enrolled in nor eligible for Medicare Part A or B, Medicaid or MediCal or covered by another group health insurance plan.

If you qualify and are not medically able to obtain a private underwritten health insurance plan (which would be less costly), you can choose a guaranteed issue health plan.

Important Notes About HIPAA in California:

Be aware that in California, under HIPAA guaranteed-issue coverage, you are only permitted to make one plan election and enrollment. This means that once an insurer has enrolled you in their HIPAA plan, you cannot change carriers or even make plan changes with that carrier after the fact. It is important to be careful when electing coverage under HIPAA as it is a one-time choice as long as you remain under a HIPAA guaranteed-issue health plan.

Many have asked the reason for this rule. According to the health insurers, it is because once you have been enrolled under a HIPAA plan, you are considered to be under individual & family coverage and not group coverage. HIPAA eligibility requires that your last coverage be group coverage. Therefore, by enrolling under a HIPAA plan in California, you lose you further eligibility under HIPAA and cannot enroll in another plan since you are, technically, no longer eligible for HIPAA.

Back to questions.

How does my health affect whether I can get insurance?

Your health determines whether you can buy individual insurance and the price you'll pay. In the majority of states, insurers consider your current health status, medical history, age, gender, residence and occupation before they decide whether to offer you a policy. If you have or had a serious health condition — cancer or diabetes, for example — an insurer can reject you based on pre-existing conditions. If you suffer from less severe conditions, such as hypertension or knee problems, an insurer may offer you a policy with a temporary or permanent exclusion rider, meaning your specific condition won't be covered. Some insurers may cover the condition but boost the price of the policy. Generally, the young and healthy find the best deals on individual coverage, while older and sicker individuals pay much more.

Back to questions.

What does "guaranteed renewable" mean?

"Guaranteed renewable" means that you have the right to renew the policy annually. If a policy is not guaranteed renewable, you could lose coverage at the end of the policy year if you get sick or get in an accident. Some policies sold in the individual market, such as short-tem policies, are not guaranteed renewable. These non-comprehensive policies are written for short durations, such as six months, and are designed to provide minimal protection during life's transitions, between college graduation and a first job, for example. If you get sick, don't expect to get renewed. You'll also find it harder to obtain permanent coverage.

Even if a policy is guaranteed renewable in the individual market — and many are — expect your costs to rise each year. In some years, you'll find the price jump significantly, depending on a policy's renewal rules. Some plans will increase rates annually based on the how long you've held the policy, or on their experience with the group of people who bought the policy when you did. If that group of people is sicker than average, the health plan will raise its premiums to cover those costs. HSAs tend to be more stable in their premium increases from year to year. For more information, check out the financial benefits (LINK) section of our site.

Back to questions.

What is a pre-existing condition and can it be excluded from my health coverage?

A pre-existing condition is any condition for which a person received treatment or treatment was recommended within the preceding six months.

Back to questions.

I have some medical history. How do I know if I will qualify for a high deductible insurance plan?

When you apply for HSA-qualified plan, an underwriter will review your application to determine your eligibility. If you have pre-existing health concerns, it may take longer for the insurance carrier to issue a policy. If you are concerned about having to submit your initial payment with your application and then having to wait for an answer, Time Insurance and a couple other companies allow you to submit your application C.O.D., meaning that you can receive an approval before making your first monthly payment.

Underwriting guidelines for HSA-qualified plans are normally similar to the company's underwriting guidelines for any of the other policies they may offer.

Back to questions.

What health conditions will cause a health plan to automatically refuse or deny my application for insurance?

There are many medical conditions that may cause a health plan to automatically deny or not approve your application. These may include the following:
health problems for which you have not seen a doctor;
health problems that a doctor can not explain;
health problems for which you have not completed treatment.
A health plan may also automatically deny your application for the health conditions below. There may be other health conditions that are not on this list.

• AIDS
• Cancer, under treatment
• Cirrhosis
• Current infertility treatment
• Diabetes with complications
• Heart disease
• Hemochromatosis
• Hepatitis
• History of transplant
• Lymphedema
• Multiple Sclerosis
• Muscular Dystrophy
• Pregnancy, pregnancy of your spouse or significant other, planned surrogacy or adoption in process
• Renal failure or Kidney Dialysis
• Severe mental disorders, such as major depression, bipolar disorder, schizophrenia or psychopathic personalities
• Sleep Apnea
• Systemic Lupus Erythematous

Back to questions.

Will a health plan look at my height and weight when I apply for insurance?

Yes. Health plans usually look at your height and weight when they decide to offer insurance. They may offer you insurance at a higher premium rate or refuse to insure you if you are overweight or obese.

Back to questions.

What if I buy an insurance plan that I don't particularly like? Am I obligated to keep it for a certain length of time?

No. At no time are you under any obligation to keep a plan you don't like. When you receive a copy of your policy through the mail, in most states you are entitled to what's called a 10-day free look period. During this time, your policy can be cancelled with a complete refund of whatever premium you submitted. After this point, you can still return your policy. In some cases where the insurance company does not require prior notice as written in the contract, you will be refunded any "unearned" premium. So if you make your payment at the beginning of the month for a full month, and then decide to cancel your policy two weeks later, your insurance company will refund approximately two weeks worth of premium. Other insurance companies may require a 30 day notice to be sent.

Back to questions.

Criteria for Selecting Insurance

1. Start the Quote process
2. Compare premiums and think of the difference on an annual basis
3. Check to see if the hospitals and doctors that you would want to go or "in network" - you will save significantly if you have services from in-network providers versus non-network providers
4. Compare deductibles - this is what you will pay before for the insurance company pays
5. Review the key coverage levels such as preventive, prescriptions, and out-of-network coverage and decide which are the most important to you
6. Compare "out-of-pocket" limits - this is often overlooked but this one of the most important areas to pay attention to since this is the amount that you could pay if you had a major accident or illness

Back to questions.

What is a ´network´ plan type?

The definitions used to describe plan types may vary from state to state. In some areas, insurers define preferred provider organization (PPO) plans as "network" plans. This is because the plan operates under a PPO network. A PPO plan gives you with a large list of pre-selected healthcare providers that deliver services at pre-negotiated rates.

Back to questions.

What is an individual or family health insurance plan?

An individual or family health insurance plan is one designed specifically for individuals and families rather than for groups: usually employers and their employees. If health coverage is not available to you from your place of work, family plans might provide a viable option for you.

Back to questions.

What types of individual or family health insurance plans do I have to choose from?

There are three major types of plans: indemnity, preferred provider organization (PPO) and health maintenance organization (HMO). Indemnity plans pay a share of your healthcare costs upon receipt of a bill from a health care provider. Sometimes you might have to pay your provider (doctor or hospital) immediately when they provide service, then wait for reimbursement from your insurance company. PPOs, on the other hand, use healthcare provider networks. Doctors and hospitals within this network agree to provide services to you, the patient, at pre-negotiated rates and submit their bill directly to your insurance company. HMOs require you to visit a designated primary care physician first before seeing other specialists within their network. HMOs and PPOs can be lighter on the paperwork, but indemnity plans usually give you greater choice in selecting doctors.

Back to questions.

How do PPO plans operate?

A preferred provider organization (PPO) is a type of managed care plan. It gives you a large list of pre-selected healthcare providers that have agreed to deliver services to you, the patient, at pre-negotiated rates. You will likely need to make a small co-payment every time you visit a doctor within the network. Most PPOs allow you to see doctors outside of the network if you pay a higher percentage of the bill.

Back to questions.

How do HMO plans operate?

A health maintenance organization (HMO) offers the lowest out-of-pocket expenses but also the least amount of flexibility for patients compared to PPO or indemnity insurance plans. In an HMO, you usually are required to see a primary physician first before you are allowed to see more expensive specialists within the network, even if you are fairly certain of what is ailing you. HMOs exert a lot of control over what doctors you can see and what treatments you can get but they often offer better prices than other types of plans.

Back to questions.

What is the difference between an HMO and a PPO? Which one is better?

Health maintenance organizations (HMOs) and preferred provider organizations (PPOs) are both types of managed health-care systems. There are differences between the corporate structures of each, but they are typically not important to the average consumer. However, several other important distinctions exist, including the following:

HMO members must choose a primary care physician (PCP) from among the HMO member physicians. The PCP provides general medical care and must be consulted before you can see a specialist, who must also be part of the HMO. PPO members do not choose a primary care physician and can refer themselves to specialists.

HMOs typically provide no coverage for care received from non-network physicians (with exceptions for emergency care while traveling, etc.). PPO members are not required to stay within the PPO network, but there is usually a strong financial incentive to do so. For example, the PPO may reimburse 90 percent of costs for care received within the network, but only 70 percent of costs for non-network care.

HMOs typically do not set deductibles that must be met before insurance benefits begin (e.g., $5 or $10). Instead, HMO members often pay a nominal co-payment for care. In contrast, PPOs sometimes require members to meet a deductible (especially for hospitalization) and may have larger co-payments than HMOs.

So, which is better? Of course, there isn't one right answer; the best choice depends on your particular needs. For example, if you are considering an HMO, it's important to make sure that your physician is part of the HMO network (unless you are willing to see another physician). If not, a PPO might be a better choice, because you can still receive at least partial coverage regardless of network affiliation. You might also prefer a PPO if you have a medical condition that requires specialized care, because PPO members do not need a referral before seeing a specialist. However, if ongoing out-of-pocket costs are a major concern, an HMO is often a better choice, because there are no deductibles and co-payments are typically lower.

If you are fortunate enough to have a choice between HMO and PPO coverage, you will need to take some time to evaluate the coverage offered by each and determine which one best suits the needs of yourself and your family.

When choosing a health plan, there are several important questions you should ask your human resources department (if it's a group plan you're considering) or health insurance agent. These are just some of the questions that will help you understand your choices and choose the plan that is best for you.

Does the plan cover you for the specific doctor or hospital that you would like to use?

How does the referral system work with each plan?

What pre-existing conditions would affect coverage?

How will each plan handle care if you or a family member is away from home?

What are each plan's monthly premium, deductible and coinsurance and would they fit within your budget?

Are there other fees, such as copayments and out-of-network fees?

Is there a maximum amount each plan will pay over a year or lifetime?

What types of benefits are specific to this plan?

Back to questions.

What types of HMO models can I choose from?

In a "staff model" health maintenance organization (HMO) plans, doctors have their offices in HMO buildings and are direct employees of the HMO. "Group model" HMOs do not pay doctors directly, but instead pay groups of physicians. "Network model" HMOs will pay doctors in a network of groups. The network model is the most common.

Back to questions.

How do point of service (POS) plans operate?

Combining the features of both preferred provider organization (PPO) and health maintenance organization (HMO) plans, a POS plan requires you to select a primary care physician from its network of doctors. You won't have to pay upfront for services provided within the network, and you can still get services out-of-network, though you'll have to submit a claim, and the percentage of reimbursement will vary from plan to plan.

Back to questions.

How do indemnity plans operate?

Indemnity plans sometimes involve more paperwork but almost always offer more flexibility in choosing healthcare providers. You are able to see any doctor and are not required to have a primary care physician. Before your plan kicks in, though, you'll have to pay your own medical bills until the annual deductible is met. You may be required to pay upfront for health services before submitting a claim.

Back to questions.

If I purchase a plan, when will coverage start?

It depends upon the plan, but coverage usually starts within 90 days of receipt of your first payment to the insurance company.

Back to questions.

Once I join an insurance plan, how do I pay?

You generally provide a check or credit card number with your application. If your application is rejected, your credit card will not be processed, you will be refunded the money, or the mailed check will simply be returned to you. If you are approved, payments will be expected monthly, either by check, credit card or automatic bank drafts.

Back to questions.

What is the value of a short-term health insurance plan?

If you are between jobs (or just left school) you might be uninsured. This is risky in the United States, because one bad accident or sudden illness could leave you with tens of thousands of dollars in hospital bills. The answer is short-term health insurance. You can buy short-term plans that will cover you for a specific chunk of time say one to six months. The catch is they're usually more expensive than longer-term plans. Also, if you've got a serious pre-existing medical condition, you might be out of luck: Many short-term carriers won't cover you. Coverage for short-term plans can start just 24 hours after an application is submitted.

Back to questions.

Are there many different kinds of health insurance plans for small business?

Group health insurance plans fall into two broad categories: indemnity plans and managed care plans. Indemnity plans involve more paperwork for your employees, but offer more flexibility in the choice of healthcare providers. Your employees are able to see most any doctor and are not required to have a primary care physician. There is an annual deductible and your employees may be required to pay upfront for health services before submitting a claim. Managed care plans (HMOs and PPOs), on the other hand, use healthcare provider networks. Doctors and hospitals within this network agree to provide services to your employees at pre-negotiated rates and submit their bill directly to the insurance company. A managed care plan is easier because it requires less paperwork, but an indemnity plan can give your employees greater choice in selecting a doctor.

Back to questions.

How do preferred provider organization (PPO) plans operate?

A preferred provider organization (PPO) plan will push for patients to use the insurance company's network of healthcare providers, who have come to an arrangement with the insurance company to provide services to patients at pre-negotiated rates. A patient will likely need to make a small co-payment every time he or she visits a doctor within the network. A patient is usually allowed to visit any doctor they like but if that doctor is out-of-network, the patient might be stuck with a substantial portion of the bill.

Back to questions.

How do health maintenance organization (HMO) plans operate?

A health maintenance organization (HMO) offers the lowest out-of-pocket expenses for consumers but is much less flexible than a PPO or indemnity insurance plan. In an HMO, a patient selects a primary care physician. The patient must then get approval from that primary care physician before being allowed to visit a specialist. HMO's traditionally focus on preventive care, and have a reputation for not covering newer (especially more expensive) medical procedures, arguing that they are experimental. That being said, HMOs often deliver excellent care much more efficiently than their PPO or Indemnity brethren.

Back to questions.

What types of HMO models can I choose from?

There are three major models. In a staff model HMO, doctors have their offices in HMO buildings and are direct employees of the HMO. Group model HMOs don't pay doctors directly but pay a group of physicians, who are then responsible for distributing payments to their members. Network model HMOs pay doctors in a network of groups. The network model is the most common.

Back to questions.

How do point of service (POS) plans operate?

Combining the features of both preferred provider organization (PPO) and health maintenance organization (HMO) plans, a POS plan provides cost incentives to encourage patients to select primary care physicians from its network of doctors. The patient won't have to pay upfront for services provided within the network, but still will be able to submit a claim for services provided outside the network. Ultimately, this plan offers the greatest choice, enabling the member to choose the type of service they are receiving once they begin receiving care for a problem. POS plan members have three choices to make at their "point of service": 1. Go through the POS' primary physician and receive coverage like that of an HMO. 2. Elect to receive care through the plan's PPO provider and receive coverage under "in-network" guidelines. 3. Opt to go with healthcare both outside the primary physician or the PPO network and receive care under "out-of-network" guidelines. In short, a POS acts like a PPO, HMO and indemnity plan all at once, and the member can choose which approach to take at the time he or she begins receiving care at the point of service. A POS plan offers maximum flexibility, but requires deductibles and high co-payments for non-network care.

Back to questions.

How do indemnity plans operate?

Indemnity plans sometimes involve more paperwork but almost always offer more flexibility in choosing healthcare providers. You are able to see any doctor and are not required to have a primary care physician. Before your plan kicks in, though, you'll have to pay your own medical bills until the annual deductible is met. You may be required to pay upfront for health services before submitting a claim.

Back to questions.

Are HSAs allowed under a cafeteria plan?

If an high deductible plan is offered as part of a cafeteria plan, it can be used to establish your eligibility fort an HSA. (A cafeteria plan or flexible benefit plan is an employee benefit plan that permits employees to choose from a variety of benefits, including health and accident insurance cash, tax advantages and retirement plan contributions.)

Back to questions.