|
9.1.0 Private Health Insurance |
|
|
Louisiana Statewide Transition Project and Louisiana: Healthy and Ready to Work Fact Sheet Series |
|
|
|
6/25/99 |
I. WHY IS THIS IMPORTANT?
The transition to adulthood is a time of many
changes for all young adults. As they get older, some of the services and
supports that were available to them as children are not available to them as
adults. Some young adults are insured via a parent's private health insurance
policy (such as those offered by employers). However, they will not be able to
stay insured on this policy forever, and will need to make decisions about
continued health care coverage. Young adults may purchase private health
insurance themselves, or their employer may provide it as a benefit. Because
young adults will need to make important decisions relating to health insurance
coverage, it is important for them to understand terminology used by insurance
companies, and know the various types of insurance.
II. KEY POINTS
The term health insurance refers to a wide
variety of insurance policies, ranging from policies that cover the costs of
health care professionals and hospitals to those that meet a specific need,
such as paying for long-term care. However, when people talk about health
insurance, they usually mean the kind of insurance that covers medical bills,
surgery, and hospital expenses (HIAA, 1999). Concepts relating to this type of
private health insurance are discussed below:
Common Terms and Practices of Various
Private Health Insurance Policies and Plans:
·
Waiting Period: An amount of time that must go by after the policy
takes effect and before coverage begins.
·
Elimination Period: The number of days at the start of a disability or
confinement that the policy will not cover.
·
Pre-existing
Condition: A health condition the
policyholder already had when enrolling in the policy. According to Louisiana
law, individuals cannot be denied coverage for treatment of a pre-existing
condition after 12 months following the effective date of the policy (LDOI,
1999).
·
Pre-authorization
Rules: Rules that may require
policyholders to get authorization from their insurance company before
admission to a hospital or before other medical procedures are conducted.
·
Premium: The regular fee that the policyholder pays for health
insurance coverage. This is usually paid monthly, quarterly, or yearly.
·
Deductible: The amount of the covered expenses that policyholders
must pay each year before the insurance company starts to reimburse them.
Generally, the higher the deductible, the lower the premiums.
·
Co-insurance: The percentage of the charge that the policyholder is
required to pay after the deductible is met.
·
Co-payment: A flat fee that a member of a Managed Care Plan must
pay for services rendered (e.g., $10 for office visits, $5 for prescriptions).
Types of Private Health Insurance
Plans:
Fee-for-Service Policies: These
policies may also be called comprehensive or major medical policies. When
insured by a Fee-for-Service policy, policyholders go to the health care
professional of their choice. Afterwards, a claim for reimbursement is
submitted either by the policyholder or by the health care professional or
hospital that rendered the service. When the service is covered by the
insurance policy, policyholders generally receive reimbursement for part of the
charges. How much reimbursement is received is based on the deductibles and/or
co-insurance of the particular policy.
Managed Care Plans: There are three major types of Managed Care Plans:
Health Maintenance Organizations (HMOs); Preferred Provider Organizations
(PPOs); and Point-of-Service (POS) plans. Managed Care Plans generally provide
health services to their policyholders (called members), and offer
financial incentives for members to use the health care professionals and
hospitals that belong to the plan (called providers). In Managed Care
Plans, instead of paying for each service separately, a fee for coverage (or
premium) is paid in advance to providers. For example, when belonging to a
Health Maintenance Organization (HMO), the member pays a monthly, quarterly, or
annual premium. That premium is the same--whether the member uses the plan's
services or not. The plan may also charge a co-payment for certain
services, but will not have deductibles or co-insurance requirements.
III. ROLES/NEXT STEPS
Students/Young Adults:
When planning for the transition to
adulthood, young adults think about their health insurance needs. Young adults
should know what health insurance options are available. If they are currently
covered under a parent's plan, they should find out how long they will be able
to remain covered by this plan. They can talk to their parents, teachers, and
other adults about their options, and how best to ensure that their health
needs are addressed during transition planning activities.
Young adults should shop for private health
insurance with caution, comparing coverage and prices of a few different
companies. They should not just buy the cheapest policy they can find without
weighing other factors, such as the credibility of the company.
When enrolling in an insurance program, young
adults should:
·
fill out the application
completely and accurately. If this is not done, claims may be denied or the
policy cancelled.
·
read the renewal
provisions of the policy closely. Check for a renewal guarantee, what the age
limits are for renewal, and what right the company has to change the premium.
·
carefully review the
exclusions and limitations sections.
Young adults should be aware that all
individual and certain group health policies give policyholders an opportunity
to look over the policy for 10 days, during which they may decide to keep it or
return it and get a premium refund.
Young adults should be careful about changing
policies. A new policy may have waiting periods and pre-existing condition
exclusions that could leave them without needed coverage.
Families:
When helping their son/daughter plan for the
transition to adulthood, families should make sure to consider health insurance
needs. Families should find out how long their son/daughter may continue to be
covered under their insurance policy.
Families should help their son/daughter
investigate the options available for health insurance. By discussing the pros
and cons of each option, families can help young adults make informed choices.
In order to help their sons/daughters learn
how to manage their own health insurance policy, families can get them involved
in activities relating to the policy, such as filing claims. Experience is
often the best teacher!
Agencies:
Local Education Agencies (LEAs) can help
young adults learn about various forms of health insurance by including this
topic in courses such as Consumer Science or Consumer Economics (formerly Home
Economics).
It may be helpful to invite the family's
insurance representative to the Individualized Education Program (IEP) meeting
at which the transition to adulthood is discussed. By providing information on
what coverage is available to the young adult through the family's existing
plan, as well as other available options, the representative can help the young
adult plan for his/her insurance needs.
IV. RESOURCES/CONTACTS
The Louisiana Department of Insurance
950 N. Fifth Street
Baton Rouge, LA 70804-9214
(800) 259-5300 or (225) 342-5900
Website: wwwldi.ldi.state.la.us/
V. REFEERENCES
Health Insurance Association of America
(1999). Guide to Health Insurance. [Available via Internet at
http://www.hiaa.org/cons/guidehi.html].
Louisiana Department of Insurance (LDOI)
(1999). Consumer's Guide to Health and Life Insurance. Baton Rouge, LA:
Louisiana Department of Insurance. [Available via Internet at
http://wwwldi.ldi.state.la.us/consumers.htm]