Wednesday, August 12, 2009

Tips on Health Care Plans

Are you getting the most from your health insurance? Beyond the obvious (deductibles, co-pays, etc.) there are things you should be looking for in the fine print that can save money. So, what are they?

Steve Trattner, a 25-year healthcare industry veteran and President & Chief Marketing Officer of Cinergy Health (, has provided us with advice on ways to put cash back in your pocket and get the most out of your current health benefits, as well as tips for folks looking for alternative health options.

As with any contract, there are always things to be aware of. Steve reminds us “to thoroughly read the “limitations and exclusions” section of the health plan. This list will inform you of which treatments are not considered eligible expenses and may have a big impact on your decision process. It might also provide necessary guidance to ensure certain services are eligible for coverage.”

Steve also cautions, “There are new ways that some plans enforce waiting periods on pre-existing medical conditions for people purchasing private health insurance. The standard procedure would be to withhold coverage for treatment related to a pre-existing condition for 12 months. Lately, we’ve seen some plans add a new twist to the waiting period so that if within the first 12 months of coverage the patient received any care for that same pre-existing condition, the insurance company would extend the waiting period to 24 months from the effective date. Cinergy Health has only a six-month waiting period for pre-existing conditions, and this is waived if the person has prior creditable coverage.”

Confused about all those terms used on Health Insurance forms? Steve gives us an easy-to-follow list of insurance jargon with easy-to-understand definitions:

COBRA – The Consolidated Omnibus Budget Reconciliation Act, which provides terminated employees (whether voluntarily or involuntarily and within companies with 20 or more employees) the ability to continue their health insurance through the employer for up to 18 months.

Coinsurance – The percentage of medical expenses the insured person must pay after and in addition to the deductible amount.

Co-payment – The fixed dollar amount the insured person must pay when a particular medical service is received. The co-payment may be in addition to any applicable deductible.

Deductible – The fixed dollar amount that the insured person must pay out-of-pocket each year before the insurance company begins covering medical services. Plans may require both individual and family deductibles and separate deductibles for certain services. Deductibles may also vary by in-network vs. out-of-network providers.

Flexible Spending Accounts (FSA) – Accounts offered and administered by employers that provide a way for employees to set aside funds, on a pre-tax basis, to pay for their share of insurance premiums or medical expenses not covered by the employer’s health plan. The employer may also contribute to the FSA. The funds in the FSA must be used within the benefit year, or the participant loses the money. Flexible spending accounts can also be used to pay for childcare expenses, but those accounts must be established separately from medical FSAs.

Formulary – A listing of covered medications that are considered preferred drugs. The list is classified by therapeutic or disease class and is to be used as a guide for providers in prescribing medications.

Gatekeeper – A gatekeeper is typically the patient’s primary care provider and is responsible for coordinating and authorizing all medical services, laboratory studies, specialty referrals, and hospitalizations.

Health Reimbursement Accounts (HRAs) – Similar to FSAs, HRAs enable employers to contribute to the account to help cover medical expenses. Employers may permit the remaining balance to carry over to the next benefit year.
Health Savings Accounts (HSAs) – An HSA is an account that accompanies a “high-deductible health plan” and permits the insured person to contribute pre-tax dollars from his or her paycheck to pay for medical expenses, save for future medical expenses, and grow for retirement savings. The account is owned by the employee.
High-deductible Health Plan (HDHP) – HDHPs are required for the establishment of an HSA. For 2009 the IRS has established the minimum deductible to be $1,150 for an individual and $2,300 for a family. The maximum deductible is $5,800 for individuals and $11,600 for families.
Managed Care Plans – Managed care plans generally provide comprehensive health services to their members and offer financial incentives for patients to use the providers who belong to the plan. Examples include:

· Health Maintenance Organizations (HMOs)

· Preferred Provider Organizations (PPOs)

· Exclusive Provider Organizations (EPOs)

· Point of Service Plans (POSs)

Preadmission Certification – Authorization for hospital admission in non-emergency situations given by the physician or the health plan and required to ensure full coverage of services.

Preadmission Testing – A requirement designed to encourage patients to obtain required diagnostic services on an outpatient basis prior to non-emergency hospital admissions. The testing is designed to reduce the length of a hospital stay.

HIPAA – The Health Insurance Portability and Accountability Act provides certain rights for employees for portability of health benefits when switching plans.

Lifetime Maximum Benefit – The maximum dollar amount a health plan will pay for the insured person’s healthcare costs during his or her lifetime.

Maximum Out-of-Pocket Expense – The maximum dollar amount the insured person is required to pay out-of-pocket during a year. After the insured person reaches this maximum, the insurance carrier pays all covered expenses, often up to a lifetime maximum.

Medical Savings Accounts (MSA) – Often combined with a high deductible or catastrophic health insurance plan (though not necessarily), MSAs are set up to help pay out-of-pocket medical expenses. In an MSA, employers and individuals are allowed to contribute to the account on a pre-tax basis and carry over the unused funds at the end of the year.

Premium – The monthly fee paid for coverage of medical benefits for a defined benefit period. Premiums can be paid by employers, employees, or both on a shared basis.

Primary Care Physician (PCP) – A PCP is the physician who serves as the insured person’s primary contact within the health plan. In a managed care plan, the primary care physician provides routine medical services, coordinates care, and, if required by the plan, authorizes referrals to specialists and hospitals.

Usual, Customary, and Reasonable (UCR) Charges – Some plans refer to UCR as the physician’s charge that is usual for a medical service that does not exceed the customary fee in that geographic area and is reasonable based on the circumstances. This is the amount that an insurer may use as the starting point from which to determine the amount covered for medical services.

Not sure what type of plan is right for you and your family? Here’s a list of what’s out there:

Types of Health Plans

· Indemnity Plan – A type of medical plan that reimburses the patient and/or provider as expenses are incurred and allows the insured person the choice of any provider without having an effect on reimbursement. These plans reimburse the patient and/or provider as expenses are incurred. Cinergy Health offers this type of plan.

· Preferred Provider Organization (PPO) – An indemnity plan in which coverage is provided to participants through a network of healthcare providers that includes physicians and hospitals. The enrolees may go outside the network for medical services but will incur larger costs in the form of higher deductibles and higher coinsurance rates as well as higher billed charges from the providers.

· Exclusive Provider Organization (EPO) – A more restrictive type of PPO plan under which participants must use providers from the specified network of physicians and hospitals to receive coverage; there is no coverage for care received from a non-network provider except in an emergency or pre-authorized situation.

· Health Maintenance Organization (HMO) – A health plan that assumes greater financial risk for providing comprehensive medical services and the responsibility for healthcare delivery in a particular geographic area to HMO members in return for a fixed, prepaid fee. Financial risk may be shared with the providers participating in the HMO.

· Point-of-Service (POS) – A POS plan is an “HMO/PPO” hybrid; sometimes referred to as an “open-ended” HMO. POS plans resemble HMOs for in-network services. Services received outside of the network are usually reimbursed in a manner similar to conventional indemnity plans.

To find out more about Steve Trattner of Cinergy Health, check out the website at

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