Study: Health Overhaul To Raise Claims Cost 32 Percent MUST READ!

Study: Health overhaul to raise claims cost 32 percent

Individual policies to become more expensive as sicker people join pool

In this March 23, 2010 file photo, Marcelas Owens of Seattle, left, Rep. John Dingell, D-Mich., right, and others, look on as President Barack Obama signs the health care bill in the East Room of the White House in Washington. Medical claims costs _ the biggest driver of health insurance premiums _ will jump an average 32 percent for individual policies under President Barack Obama’s overhaul, according to a study by the nation’s leading group of financial risk analysts. Recently released to its members, the report from the Society of Actuaries could turn into a big headache for the Obama administration at a time when many parts of the country remain skeptical about the Affordable Care Act. (AP Photo/J. Scott Applewhite, File) / AP

WASHINGTON — Medical claims costs — the biggest driver of health insurance premiums — will jump an average of 32 percent for Americans’ individual policies under President Barack Obama’s overhaul, according to a study by the nation’s leading group of financial risk analysts.

The estimates were recently released by the Society of Actuaries to its members.

While some states will see medical claims costs per person decline, the report concluded the overwhelming majority will see double-digit increases in their individual health insurance markets, where people purchase coverage directly from insurers.

The disparities are striking. By 2017, the estimated increase would be 62 percent for California, about 80 percent for Ohio, more than 20 percent for Florida and 67 percent for Maryland. Much of the reason for the higher claims costs is that sicker people are expected to join the pool, the report said.

Not employer plans

Also, states have different populations and insurance rules. In the relatively small number of states where insurers were already restricted from charging higher rates to older, sicker people, the cost effect is less.

The report did not make similar estimates for employer plans, the mainstay for workers and their families. That’s because the primary effect of the Affordable Care Act is on people who don’t have coverage through their jobs.

The Obama administration questions the design of the study, saying it focused only on one piece of the puzzle and ignored cost relief strategies in the law such as tax credits to help people afford premiums and special payments to insurers who attract an outsize share of the sick. The study also doesn’t take into account the potential price-cutting effect of competition in new state insurance markets that will go live Oct. 1, administration officials said.

But a prominent national expert, recently retired Medicare chief actuary Rick Foster, said the report does “a credible job” of estimating potential enrollment and costs under the law, “without trying to tilt the answers in any particular direction.”

“Having said that,” Foster added, “actuaries tend to be financially conservative, so the various assumptions might be more inclined to consider what might go wrong than to anticipate that everything will work beautifully.”
Kristi Bohn, an actuary who worked on the study, acknowledged it did not attempt to estimate the effect of subsidies, insurer competition and other factors that could mitigate cost increases. She said the goal was to look at the underlying cost of medical care.

Good news, caveats

On the plus side, the report found the law will cover more than 32 million currently uninsured Americans when fully phased in. And some states — including New York and Massachusetts — will see double-digit declines in costs for claims in the individual market.

Larry Levitt, an insurance expert with the nonpartisan Kaiser Family Foundation, reviewed the report.
“I’d generally characterize it as providing useful background information, but I don’t think it’s complete enough to be treated as a projection,” he said, adding that the conclusion that employers with sicker workers would drop coverage is “speculative.”

Another caveat: The Society of Actuaries contracted Optum, a subsidiary of UnitedHealth Group, to do the number-crunching that drives the report. United also owns the nation’s largest health insurance company. Bohn said the study reflects the professional conclusions of the society, not Optum or its parent company.

Original Article: http://www.fdlreporter.com/viewart/20130327/SHE0101/303270299/Study-Health-overhaul-raise-claims-cost-32-percent

Humana President Says Obamacare Will Rattle The Health Care System ... MUST READ!

Jerry Ganoni, president of Humana Small Business and Specialty Benefits

DE PERE — Health care reform sticker shock is coming, a Humana Inc. executive told business leaders Tuesday.

“In 2014, the American public is going to wake up, and when they realize what Obamacare has done to them and what it’s going to cost them, there’s going to be an uproar,” said Jerry Ganoni, president of Humana Small Business and Specialty Benefits. He was speaking at the St. Norbert College CEO Breakfast and Strategy Series.

Ganoni and Humana Vice President Mark Wernicke described a change in the country’s health care system unlike any seen before.

“There were a lot of good things that came about (because of the law), a lot of bad things that came about,” Ganoni said of the Patient Protection and Affordable Care Act, also referred to as Obamacare.

The law, which begins to more fully take effect on Jan. 1, 2014, will increase accessibility for citizens, “but it did nothing, absolutely nothing, to address rising health care costs,” Ganoni said.

Employers and employees, as well as uninsured people, will have important choices to make in the coming months. Employers should engage their attorneys and tax consultants to figure out the impacts their decisions will have, Ganoni said, and “employees are going to get a lot more knowledgeable about health care than they ever have before.”

A survey by the Towers Watson consulting firm indicated about 45 percent of employers plan to offer health care plans much as they have, 5 percent will drop health care and rest are somewhere in between, he said.

Increasingly, employers are paying defined contributions — a set amount — toward employee health insurance premiums instead of a percentage of those premiums. States, the federal government and insurance companies are developing insurance exchanges — marketplaces where people can buy insurance on their own.

“We believe we are moving toward this retail world,” Ganoni said.

The implementation of community rating means that younger, healthier people will pay higher premiums than they do now, while some older, less healthy people will pay less than they do now. Under community rating, the ratio from highest to lowest premium costs based on age can be no more than 3 to 1.

A number of taxes will go into effect as well, most of which will be passed on to consumers. They include:

• A health insurance premium tax of about 3 percent in 2014. According to America’s Health Insurance Plans, a trade organization, the amount of the tax will be $8 billion in 2014, increasing to $14.3 billion in 2018, and increase based on premium trend thereafter. The Congressional Budget Office has said that this tax will be “largely passed through to consumers in the form of higher premiums.”

• A reinsurance tax of $5.25 per health plan member per month.

• A Comparative Effectiveness Research Fee of $2 per person.

There will be many more rules and changes. Federal regulators are moving through them slowly. Employers and consumers will have to remain flexible and open to change to keep up.

“The majority of you are going to be affected by this law in some way,” Ganoni said. “It’s going to cause a lot of chaos.”

 

Original Article: http://www.fdlreporter.com/article/20130327/FON0101/130327015/Humana-president-says-Obamacare-will-rattle-health-care-system

Think Your HealthCare Dollars Are Flying Out of The Window Now...Just Wait!

 Obamacare Is Around The Corner - Where Will You Buy Health Insurance And What Will It Cost?

The Affordable Care Act has been the “law of the land” for almost three years. Time really flies. Despite the many resources available, most of the general population has no clue how “Obamacare” is supposed to work. With the insurance provisions finally kicking in January 1, 2014 and the realization that the law is not going away, people need to brush up quickly on their basic knowledge. Where will you get your health insurance and how much will it cost? Today I share with you information about the “Health Insurance Marketplace.”

Health insurance will be available through the same avenues where insurance is currently purchased:

1. Group insurance through employers
2. Individual insurance
3. Public programs such as Medicare or Medicaid

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Employer Based Coverage

Companieswith more than fifty employees are required to offer health insurance or pay a fine. One advantage I have of speaking at numerous financial planning conferences is the opportunity to attend sessions about tax planning. And what is one of the favorite topics of tax planners? Instructing companies on how they can get around the rules of providing health insurance under Obamacare. In a previous post, I discussed a few concepts on how this can be accomplished. I predicted from the outset that Obamacare would push employers out of the business of providing health insurance. In fact, the conspiracy theorist in me thinks this was one intention of the law.

For people who purchase their insurance for the entire family through their employer, there will be another change. An employer is required to provide insurance only for the employee and their dependents. Is your spouse a dependent? No. Therefore, employers may choose to not provide insurance to the spouse.

The Individual Market

What do you do if your employer no longer provides health insurance coverage or your spouse cannot obtain coverage through your employer? The good news: the individual market policies will provide the same coverage as the group policy purchased through your employer. The bad news: the insurance will cost a bit more than group insurance for two reasons I’ll discuss shortly.

Individual insurance has historically been a crap shoot – policies may have sub-standard benefits such as no mental health or maternity coverage, insurance companies can turn you down because of health factors, or the policies can be hugely expensive because of medical underwriting. Individual insurance is regulated by the states, and each state is very different on how well it looks out for its constituents. With Obamacare, policies will still be regulated by the states, but the policies are required to provide minimal essential benefits, such as mental health and maternity coverage. Also, insurance is “guaranteed issue,” meaning you cannot be turned down no matter what illness you have in your past. Finally, price is determined only by four criteria:

1. Age – older people will not pay more than three times the amount younger people pay.
2. Premium rating area – high cost health areas will have more expensive insurance than low cost areas.
3. Number of family members getting coverage.
4. Tobacco use – this is the only lifestyle factor that is allowed to be considered.

Starting October 1, 2013, you will have the ability to shop for these new individual policies on a health insurance exchange. What is the exchange? In a nutshell, you will go to a website, put in your information, and pick from policies provided by private insurance providers. And guess what? You can try the website now. The exchange is accessed through the healthcare.gov website that has been in operation since the ACA passed into law. The policies there now are not the same policies that will be available starting in 2014, but the general site setup will essentially be the same.

So what about cost?

Let’s discuss employer based coverage first. Employees have a delusional disorder when it comes to the cost of health insurance. They know their employer pays some of the cost but have little idea how much the employer pays. Even when an employee quits their job and goes on COBRA, they are under the impression that COBRA is a different insurance and it is much more expensive than their previous employer coverage. Folks, COBRA is your employer coverage, except now you pay 100% of the cost instead of just a portion of the premium. There can be an additional 2% charge for “administrative expenses,” but that is pretty much it. Your employer has been providing a great benefit.

Compared to individual insurance, employer based insurance has been traditionally more expensive because it has mandated benefits and it must be guaranteed issue. No one who works in a group can be turned down for health insurance, even if they’ve had cancer or any other serious disease. In Florida, I could easily buy an individual policy for $250 per month in premiums, but I cannot get pregnancy coverage and the insurance company can deny coverage if I’m not a good risk for them. My current group policy costs about $500 per month with the same deductible, but I’m guaranteed coverage and have great pregnancy benefits. The bad news for me? At age 48, I am past my pregnancy prime but don’t have the choice to turn that coverage down.

Back to the individual market costs… now that individual coverage will have the same benefits and be guaranteed issue like group coverage, the costs will theoretically equal group insurance. However, there are two factors that will make individual insurance more expensive than group insurance: the taxation of health insurance and overhead allowances to insurance companies.

The taxation of health insurance:

Employers get a tax break for providing health insurance, and the employee is allowed to pay their part of the premium on a pre-tax basis, so they get a tax break too. If a person is self-employed and earns income through a business or receives a 1099, they can also deduct 100% of their health insurance premiums.

Who gets the short end of the stick? Employees who receive a W-2 tax form and purchase their own health insurance. They can deduct the premium as an itemized medical expense only above 10% of their adjusted gross income and they must itemize – this will knock most people out of the running for any tax deduction and it will only be a partial deduction. Basically, the employee will pay more for the same insurance because they will pay for it with after tax dollars. This is an inequity for which a fix is long overdue. If employers leave the market, the government will get a nice bump up in revenue from the extra income. Until a fix comes around, one way to get a tax break is to get a side job that pays 1099 income – most of that income will be tax free up to the cost of the insurance premiums.

Overhead allowances to insurance companies:

One part of Obamacare I applaud is the requirement that insurance companies reduce their overhead. Previously, overhead in the small group and individual market could be as high as 30% of premiums. Of course, generous CEO paychecks are part of that overhead, along with a lot of waste such as advertising. With Obamacare, overhead for large group insurance cannot be greater than 15% of premiums. For the small group and individual market, overhead cannot be more than 20% of premiums. If overhead is higher than the target, the insurance company must provide a rebate of premiums.

So how does this affect insurance premiums in the individual market? Since overhead can be up to 20% of premiums, you can be darn certain the insurance company will allow the overhead to stay as high as allowed. This is more money in their paycheck. Will it be 5% higher than large group coverage since that is the difference in overhead allowances? That remains to be seen.

Article Written by: Carolyn McClanahan. Original Article can be viewed at: http://www.forbes.com/sites/carolynmcclanahan/2013/03/03/obamacare-is-around-the-corner-where-will-you-buy-health-insurance-and-what-will-it-cost/

FORBES Reports: Aetna CEO Says "Get Ready For Doubled Health Insurance Premiums For 2014" VIDEO LINK

Aetna CEO Bertolini: Get Ready for 'Rate Shock' as Some Health Insurance Premiums to Double in 2014

 

Mark Bertolini, CEO of Aetna, at the annual meeting of the New Champions 2011. (Photo credit: World Economic Forum)

 

Last week, Aetna, the third-largest private health insurer in the U.S., held its annual investor conference in New York, in which company executives laid out their detailed assessment of the post-election environment for health insurance. Aetna’s comments, and those of its peers in similar settings, illustrate how Obamacare will dramatically drive up the cost of health insurance in the United States. “In some markets,” said Aetna CEO Mark Bertolini, increases in premiums could “go as high as 100 percent. And we’ve done all that math. We’ve shared it with all the regulators. We’ve shared it with all the people in Washington that need to see it. And I think it’s a big concern.”
Bertolini made his comments in response to a question from Scott Fidel, the managed-care analyst at Deutsche Bank. Fidel noted that Frank McCauley, Aetna’s executive vice president of commercial (non-government) business, had earlier noted that Aetna did not expect many small businesses to participate in the exchanges, because the cost of insurance on the exchanges would be quite high.

WATCH VIDEO BELOW





 

2014 non-group premiums to increase 20-50 percent on average

“Premium rate shock for 2014,” responded Bertolini, “absent subsidies and everything else, is going to be in the neighborhood of 20 percent to 50 percent. And we’re going to see some markets [and] in sub-segments in some markets go as high as 100 percent.”

As I’ve noted before, there are a number of ways in which Obamacare drives up the cost of insurance in the individual market—the market for people who buy insurance for themselves, instead of getting it through the government or their employer.

Most important of these are: (1) the “minimum actuarial value” requirement that forces insurers to provide more financially generous coverage with fewer co-pays and deductibles; (2) the “community rating” provision that forces younger beneficiaries to pay far more for insurance in order to partially subsidize older beneficiaries; (3) the “guaranteed issue” provision that forces insurers to take all comers, even if they are already sick; and (4) the “essential health benefits” mandate that forces insurers to cover health-care services that many customers wouldn’t otherwise want to pay for.
“Just one piece alone, more than half of the U.S. public [in the individual insurance market] is in a plan at 50 percent or lower actuarial benefit. If you go up to 60 percent, as required by law, you’ve got a huge bump already,” Bertolini noted. “And this is the reason why you’re seeing such pressure between the states and the federal government on exchanges. Whose exchange do you want to show that price increase on? And surely, the federal government doesn’t want to show that. So I think this is going to be a big debate. And as Frank mentioned earlier, we’re putting these things through into rate increases and we’re getting them through the regulators. So I think that is going to be the big story for 2014, as these rates start going to the market, probably the latter part of this year, 2013.”

Will Democrats water down Obamacare’s costly mandates? Unlikely

Bertolini expressed hope that the fiscal cliff negotiations in Washington would yield “some interesting ways to try and address that rate shock issue.” Good luck with that. Democrats have plenty of incentive to install Obamacare’s blizzard of mandates and regulations, and then try to blame greedy insurers for the resultant premium hikes, so as to increase the political viability of single-payer health care.

Congress could delay the rollout of the exchanges by a year or two, which would save some money within the ten-year budget window, but Democrats will not want to do that either, because it will make the law more vulnerable during the 2016 election. Remember that, under the projections of the Congressional Budget Office, 25 million Americans are to be enrolled in the exchanges by 2021.
Without a delay, it’s quite possible that private insurers will choose not to participate in Obamacare’s exchanges in many parts of the country. Aetna said that it plans to participate in exchanges in “up to” 15 states in 2014, representing 65 to 70 percent of the exchange-eligible population, but that the company would “approach exchanges with caution” until it is “confident they represent a rational and stable marketplace…After a transition period, if Aetna cannot earn its cost of capital on exchanges, we will exit market areas.”

The big concern for the insurers is whether or not the state and federal exchange bureaucracies will regulate the insurance markets in a competent manner. “What are the regulators going to allow for rates when you file them?” asked Bertolini. “How are the ‘three R’s’ [the risk adjustment, reinsurance, and risk corridor programs] actually going to work?”

Believe it or not, Aetna’s involvement in the exchanges is more aggressive than its peers. UnitedHealth Group stated that it would only get involved in a “few” states; Humana said that it would get involved in ten.

 

Obamacare’s exchanges may underpay doctors and hospitals

Bertolini also elaborated on the type of insurance that Aetna would provide on Obamacare’s exchanges. “It’s about having the right products at the right cost structure, [with] narrow networks, low-cost networks,” he said. That is to say, Aetna’s exchange products will aggressively steer patients to low-cost doctors and hospitals so as to keep premiums low. That’s, indeed, what insurers are rightly incentivized to do when individual consumers are shopping for their own insurance.
Within its exchange products, Aetna expects to reimburse hospitals and doctors at rates akin to government programs, rather than the much higher rates reserved for traditional commercial insurance. “We’re contracting…at a rate normally between Medicare and Medicaid for the exchange population,” said Frank McCauley.

WATCH VIDEO BELOW

McCauley’s counterparts at Humana don’t think that insurers will be able to get away with ultra-low Medicaid rates on the exchanges. “If you go down to Nashville and you ask [hospital chain] HCA about that, they’ll laugh you out of the room,” said Humana executive Bruce Perkins at Humana’s November analyst meeting. “This idea that it’s going to be Medicaid rates—that’s a joke.”

Obamacare’s exchanges need serious reforms in order to function

If exchange rates do end up in between Medicare and Medicaid, Americans who enroll in the exchanges will have the worst of both worlds: a costly insurance product that doesn’t grant them access to a wide range of doctors and hospitals, making it difficult to get access to needed care.
There’s plenty of evidence that Obamacare’s exchanges are set up for failure. The Obama administration will do itself a huge favor if it certifies Utah’s more market-oriented exchange as an alternative to the ACA exchanges. “I respectfully request that you instruct HHS to declare the Utah exchange model as the minimum federal standard,” wrote Utah Gov. Bob Herbert in a December 10 letter to the President. “I am confident that if you make this change, several other states will join Utah and request certification for ‘state-based exchanges’ based on our model.”

Ideology may blind the President to this more flexible approach. But if he wants his signature health law to succeed, it would behoove him to see if Utah’s health insurance clearinghouse could help him achieve it.

SEE VIDEO HERE:
http://www.youtube.com/watch?feature=player_embedded&v=9dzwMYDxsdo#!
Article by: Avik Roy via: http://www.forbes.com/sites/aroy/2012/12/18/aetna-ceo-bertolini-get-ready-for-rate-shock-as-some-health-insurance-premiums-to-double-in-2014/

FORBES Reports Obama Care Health Insurance Update - MUST READ

CMS on Obamacare's Health Insurance Exchanges: 'Let's Just Make Sure It's Not a Third-World Experience'

 

Henry Chao, deputy chief information officer at the Centers for Medicare and Medicaid Services. Photo from CMS.

Obamacare’s reorganization of the U.S. health care system is slated to go on-line on January 1, 2014. That’s when the law’s key provisions go into effect: its individual mandate; its rules requiring higher premiums for young people; and its expansion of insurance coverage through Medicaid and the law’s subsidized private insurance exchanges. Increasingly, officials in the Obama administration are worried that the rollout of the exchanges will be chaotic, given the law’s complexity and unrealistic deadlines. “We are under 200 days from open enrollment” on the exchanges, noted Henry Chao, deputy chief information officer at the Centers for Medicare and Medicaid Services, at a recent conference. “I’m pretty nervous—I don’t know about you.”

Jane Norman of Congressional Quarterly reported Chao’s comments, which took place alongside those of Gary Cohen, another CMS official involved in exchange implementation, at a national policy forum sponsored by an insurer trade group. “It’s only prudent to not assume everything is going to work perfectly on day one,” said Cohen. “As we move closer to October, my hopes are the range of things that could go wrong gets narrower and narrower.”

 

Chao said that he’d once held high hopes that the exchanges would run smoothly from the beginning, but that those hopes had been dashed. “The time for debating about the size of the text on the screen, or the color, or is it a world-class user experience, that’s what we used to talk about two years ago,” said Chao. “Let’s just make sure it’s not a third-world experience.” Both Chao and Cohen said that it’s likely that some of the state-based exchanges might not be ready on time, in which case the federal government would step in as a backstop.

 

Rate shock is a bigger danger than implementation

It’s almost certain that the rollout of the exchanges will be choppy, in terms of the user experience, the Byzantine application process, and the degree to which insurance plans are capable of formulating their products on time, given how late HHS has been at giving regulatory guidance to carriers. But while exchanges are complicated to set up, it’s not an impossible task; after all, Massachusetts has had an Obamacare-like exchange for years.

The real problem is that the blizzard of mandates and regulations that accompany Obamacare’s exchanges will force many people to buy far costlier insurance than they’ve had to in the past. “In some markets,” said Aetna’s CEO, Mark Bertolini, insurance premiums could increase “as high as 100 percent. And we’ve done all that math. We’ve shared it with all the regulators. We’ve shared it with all the people in Washington that need to see it. And I think it’s a big concern.” Privately and publicly, most of Bertolini’s peers at UnitedHealth, WellPoint, Humana, and Cigna have said the same thing.

What will cause the rate shock? A number of things. First, Obamacare forces young people to pay far more for health insurance, in order to mildly subsidize premiums for those in their early 60s, using a provision called “community rating.” Second, the law forces insurance plans to have a higher “minimum actuarial value,” which makes plans more financially generous but also more expensive.
Third, the law’s famous “guaranteed issue” provision forces insurers to take all comers, even if they are already sick: a great deal for the sick, but not for the healthy. Fourth, the law gives HHS the power to force insurance plans to contain all sorts of extra benefits that customers wouldn’t otherwise pay for, driving up the cost of those plans.

Fifth, the law contains an utterly nonsensical premium tax that insurers will be forced to pay, and pass on to their customers in the form of higher premiums. It also contains taxes on pharmaceuticals and medical devices that will also be passed on in the form of higher premiums.

Republicans should advocate common-sense exchange reforms

Each of these cost-increasing provisions of Obamacare is harmful because they make health insurance less affordable to the middle class, while also driving up the cost of subsidizing insurance on the exchanges: forcing the government to extract even more money from taxpayers. By reforming and/or repealing the worst of these provisions, Republicans can make health insurance cheaper for millions, while also reducing the amount of federal spending needed to subsidize the exchanges.
In particular, Republicans should repeal the health insurance tax, along with age-based community rating. They should reform the law’s essential health benefits provisions, such that insurance plans have more flexibility to offer more affordable products. Finally, the law should give insurers more latitude to design plans with higher deductibles and co-pays, along with health savings accounts, in order to provide more cost-effective insurance.

For decades, progressives have had a more appealing argument than conservatives when it comes to health care. Progressives were in favor of expanding coverage, whereas conservatives were opposed to it on limited-government grounds. However, now that nearly everyone will have coverage, the dominant question in health care debates will be the cost of coverage, especially how much costlier coverage will be under Obamacare. This is a debate that will take place, increasingly, on conservative turf.

Article Written By: Avik Roy, via: http://www.forbes.com/sites/aroy/2013/03/22/cms-on-obamacares-health-insurance-exchanges-lets-just-make-sure-its-not-a-third-world-experience/

Understanding Your Health Insurance Coverage

You can avoid health plan disputes by learning exactly how your insurance coverage works.

If you have health insurance coverage, it's essential that you understand the details of your plan - For many Americans, it means the difference between filing bankruptcy or not. Unless you've got a grasp on, for instance, what services are covered and what procedures you must follow to get the coverage you deserve, you can count on disputes arising with your health insurance company. Besides, you might want to take maximum advantage of all the benefits the plan offers, such as support groups or classes.

This article tells you what you need to know about your health insurance plan and how to find the information you need.

The Costs of Not Understanding Your Health Insurance Coverage

Far too often, when insurance companies deny payment for medical services, it's because the consumer didn't follow the required procedures or failed to understand the limits of coverage. Here are some examples of common (and costly) mistakes:

• A consumer with an HMO visits an orthopedic surgeon. The health plan refuses to pay for the visit because the consumer needed to obtain a referral from his primary care physician first.
• A PPO participant sees a doctor who is not within the PPO network. The participant must pay 80% of the charges. The participant would have paid only 20% if the doctor had been within the network.
• A consumer has surgery without getting the required pre-authorization from the health insurer. None of the costs of the surgery are covered -- it would have been covered in full if the consumer had gotten the pre-authorization.
• A consumer appeals her health plan's decision to deny coverage for a certain procedure. The consumer fails to file the internal appeal within the time limit required and, as a result, automatically loses the appeal.

In order to avoid these and other pricey mistakes, here's what you need to know about your health plan.

What Type of Health Plan Do You Have?

Most plans are one of the following:
Preferred Provider Organization (PPO). In a PPO, the plan contracts with physicians and hospitals to provide services at reduced cost. If you use these in-network medical providers, the plan pays all or most of the cost of treatment. Participants can use out-of-network health care providers, but must pay a larger portion of the cost.
Health Maintenance Organization (HMO). An HMO is a group plan in which members prepay a flat fee and are given access to the services of participating doctors, hospitals, and clinics. Members typically make copayments, but do not need to pay deductibles.
Fee-for-Service (traditional indemnity). This is the traditional plan in which the participant can visit any doctor or health facility (for the most part). The participant pays for the service, and then submits a claim to the insurance company for reimbursement.

Is Your Plan Self-Insured or Employer-Sponsored?

Whether you are self-insured or participate in an employer-sponsored health plan is also important. The type of plan you have determines your rights to appeal a denial of coverage or other negative decision by the health plan.

Self-Insured or Individually Purchased

If you enrolled in a health plan on your own (not through an employer) and pay the premiums entirely yourself, then you are self-insured.

Employer-Sponsored Health Insurance

If you are enrolled in a health plan through work, you have employer-sponsored health insurance.
There are two types of employer-sponsored plans. The type you have is key to your appeal rights if you disagree with a health plan decision to deny coverage. (To learn more about your right to appeal a health plan decision, see Nolo's article Health Plan Disputes: An Overview.) The two types of employer-sponsored plans are:

• Insured plans. Your employer has an insured plan if it buys health coverage from an insurance company (such as Blue Cross) or from an HMO.
• Self-funded plans. Your health plan is self-funded if the employer pays for the health care costs of its employees directly, rather than by purchasing insurance from an insurance company.

Ask your employer's benefits administrator which type of plan you have, since it's not always obvious from the plan's title. Some employers with self-funded plans use a health insurance company to serve as a third party administrator. So, for example, if your plan documents say "Aetna," your plan may be insured through Aetna or it may self-funded by your employer and merely administered by Aetna.


Once you determine the basic type of plan, it's time to delve into the details. You need to understand what is covered, what procedures must be followed, how payment works, and your appeal rights if you have a dispute.
The best place to get this information is from the insurance policy itself. Don't just read the glossy brochure! Carefully read the Summary Plan Description. In addition, read the Evidence of Coverage -- this is the detailed description of the plan (not just the summary) that lays everything out. If you have purchased your own insurance policy, the company will have already provided you with this document. If you have an employer-sponsored plan, ask your employer for a copy. The Evidence of Coverage may be available online as well.

Covered Services

Read your policy to find out what services, treatments, and procedures are covered. Even more important, take note of what is not covered. Excluded services might include infertility treatments, acupuncture, cosmetic treatments, treatment of obesity, mental health care, nursing home care, and substance abuse treatment. Here's a look at some common coverage limitations:

• Preexisting conditions. Self-insured plans often exclude preexisting conditions.
• Service limits per calendar year. Health plans may also limit certain services in a calendar year. For example, your plan may cover only eight mental health visits or up to $400 for speech therapy per year.
• Lifetime maximums. Some plans limit the total amount of money the insurance company will pay for the entire time you have coverage under that plan. Once you reach that limit, your plan will not pay for any more of your medical expenses. Lifetime maximums often range between $1 million and $5 million.

Required Procedures

Many health plans require the consumer to follow certain steps in order to get coverage for services. If you don't follow the health plan's requirements to a "T," you can be sure it will deny coverage. Here are some things to look out for:

• Referral Procedures (HMO). Most HMOs do not cover services from specialists unless the patient first receives a referral to that specialist from the patient's primary care doctor. For example, if you have allergies, you must see your primary care doctor and get a referral to see an allergist (who is part of your HMO network of doctors). Only when your health plan approves the referral can you see the allergist and get the services covered.
• Payment for Out-of-Network Services (PPO). PPOs give consumers more flexibility in choosing doctors. But PPO participants usually pay more if they visit a doctor who is not part of the plan's network of health care providers. For example, some plans will cover 80% of services performed by an in-network physician, but only 20% of services performed by an out-of-network physician. Always check to see if a doctor is part of your health plan's network, to avoid surprises. If you use an out-of-network provider, there may be another hidden cost. PPO plans determine the rates they will pay to in-network providers for certain services. This is usually called the "allowable" or "approved" charge. Even if an in-network provider generally charges $100 for a service, if your PPO's allowable charge for that service is $80, your portion is based on $80, not $100. So, if you must pay 20%, you pay 20% of $80 (or $40). However, out-of-network providers are not subject to allowable charges, so your percentage would be based on the entire fee of $100.
• Pre-Authorization for Certain Services. Many plans require patients to get pre-authorization from the health plan before receiving certain kinds of medical treatment. If you fail to get pre-authorization, your plan may deny coverage for an otherwise covered service.
• Using Emergency Services. Most health plans allow you to use out-of-network doctors or hospitals in an emergency, assuming you follow certain procedures. Become familiar with those procedures ahead of time. For example, if you are out of town and must visit the emergency room, you may have to contact your health plan within 24 hours of the visit. It's often wise to write down the steps you must take, phone numbers you must call, and deadlines to make those calls, and then keep this information where you can access it quickly in an emergency (for example, by the kitchen phone or in your wallet).

Payment

A key to understanding your health plan -- and avoiding surprises when the bill comes -- is knowing what your payment obligations are, including:

• Copayments. These are often between $10 and $50 per office visit. Copayments for hospital visits, surgery, and other procedures are often higher.
• Deductibles. Some PPOs require participants to pay the full cost of medical services until they reach a certain dollar figure (say, $500). This is called the deductible. Once you have spent the amount of the deductible in any given calendar year, the health plan coverage kicks in.

It's wise to keep track of your deductible status, especially if your deductible is high. If you meet the deductible amount in a given calendar year, think about getting other costly procedures or treatments done within the same year rather than waiting until the next year when you have to meet your deductible all over again.

Your Rights If You Have a Dispute

If you disagree with a decision or action by your health plan -- a denial of coverage, refusal to authorize treatment by a specialist, or any other adverse action -- you may have the right to a review of that decision. Most states and most health plans allow a plan participant to ask for an internal review. That means that you make a formal request to have the health plan reconsider a decision related to your coverage. You may also have the right to an external review (an appeal that's heard by an organization or panel that's not affiliated with the health plan).

Review is often limited to certain types of health plan disputes. Be sure to know the time limits within which you must file for review as well as any forms and documents you must submit.

Original article at http://www.nolo.com/legal-encyclopedia/understanding-health-insurance-coverage-32245.html and written by: Kathleen Michon, J.D.

ObamaCare - Health Insurance For Uninsurable BUT What Does That Costs The Rest Of American Consumers

'Obamacare' may make coverage more affordable for the ill --- but at what cost to the rest of American consumers??

Wendell Potter Reports

Former CIGNA executive-turned-whistleblower Wendell Potter is writing about the health care industry and the ongoing battle for health reform. His columns are published every Monday.
Potter is the author of Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR is Killing Health Care and Deceiving Americans.

Wendell Potter Began - Recently I was one of three witnesses to testify before a House committee hearing on whether the cost of health insurance will be higher or lower for people who cannot obtain it through their employer when important provisions of the Affordable Care Act go into effect in a few months.

I cited studies that indicate the overall cost of coverage — premiums plus out-of-pocket obligations — will be lower. The others on the panel — Douglas Holtz-Eakin, who was director of the Congressional Budget Office during the Bush Administration, and Christopher Carlson of the actuarial firm Oliver Wyman, cited their own studies that indicate costs could be higher for some young adults who have benefited over the years from the prevalent insurance industry practice of charging older people up to 10 times as much as they charge younger folks.

Insurers will not be able to do that much longer. Beginning January 1, they’ll be prohibited from charging someone more than three times as much for insurance as anyone else for the same policy.
Congress would have been better served, in my opinion, if the witness list had included Jim Elder, a retired small business owner from Florida who I interviewed last week as I was preparing for my testimony and this column.

He would have been a better witness than all three of us combined, hands down. That’s because his story would have served as a real-world reminder of just how unaffordable — and even unavailable — health insurance has become for average middle-class Americans who have done nothing wrong other than get sick.

Jim Elder might not be a widower today had premiums for the health insurance coverage he was providing for his family and his employees not become so unaffordable after his wife was diagnosed with breast cancer that he had no option but to drop coverage for everybody.

Elder became a victim of a common but little known practice in the health insurance business called purging. That’s a term insurance executives use behind closed doors (and during conversations with shareholders and Wall Street financial analysts) to describe what they do to small businesses after an employee or dependent gets sick: jack premiums up so high that the employer either has to shift far more of the cost of coverage to workers or stop offering coverage altogether. In many cases, they are not offered a policy at any price.

Purging explains why far fewer small businesses offer health insurance to employees than a decade ago. And it’s one of the reasons I decided to leave my insurance company job. I couldn’t in good conscience continue working for an industry in which coverage for life-saving medical care was priced beyond the ability of millions of Americans to pay for no reason other than to meet profit goals.

Jim Elder’s wife, Leslie, died an untimely death at age 63 last summer, uninsured and facing foreclosure because no insurance company was willing to sell the Elders an affordable policy because of her age and, ultimately, her serious but treatable illness, Hodgkin’s lymphoma.

I learned of the Elders from a CNN report that described the nightmarish roller coaster they were on. Until Leslie got sick, they had what they thought was good medical coverage with stable premiums. Soon after her initial cancer treatments, they had no coverage at all because Elder Auto Repair was purged by Jim’s insurer. And in between: skyrocketing insurance premiums, high deductibles and stacks of unpaid medical bills. The Elders had to deplete their IRA and savings account to pay for Leslie’s care and were ultimately forced into foreclosure.

The Elders could not find affordable health insurance, and from the industry’s perspective, it’s easy to see why: insuring Leslie would not have been profitable. This is the dilemma we face as Americans, as we try to balance the demands of a health insurance industry driven by money against the needs of friends, family and loved ones who require insurance to survive and be productive citizens.

I know firsthand that insurers are eager to avoid the expense of providing coverage for people who, because of their age and health status, might need costly medical care. In a 2009 policy paper, America’s Health Insurance Plans, the industry’s biggest trade group, acknowledged that almost a third of people in Leslie’s age group were denied coverage every year.

One of the reasons for the congressional hearing was the industry’s massive PR and lobbying campaign to try to get Congress to change Obamacare so that states can decide how much insurers can charge people based on age. That would enable them to maintain the very profitable status quo. By restricting the amount insurers can charge older Americans, however, the Affordable Care Act will foil their attempts to deny coverage to people they want to avoid by charging exorbitant premiums. People who need medical care the most. People like Leslie Elder.

This new restriction is one of the most important consumer protections in the reform law. It would be a tragedy if Congress gets it.