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Understanding health insurance
Each year, fewer and fewer Americans are covered under traditional fee-for-service health insurance plans, in which insured individuals go to a doctor of their choosing and then submit health insurance claims. Today, more and more Americans are covered by one of the following arrangements:
Checking out a health insurance provider
- Health maintenance organization (HMO). An HMO provides health services through a network of doctors, hospitals, laboratories, etc. The health care providers may either be HMO employees or have some other contract arrangement with the HMO. HMO plans pay providers a monthly set amount (a capitation fee) regardless of the amount of services performed. When you enroll in an HMO, you choose one of the doctors as your primary care physician (PCP) to manage all of your health care. Whenever you need health care, you first consult your primary care physician. Your PCP may refer you to an HMO-approved specialist.
- Preferred provider organization (PPO). A PPO is a group of doctors, hospitals, and other health care providers (preferred providers) who have agreed to provide services to members of a health plan for discounted fees. Some employers combine the PPO with a traditional major medical plan so you can use providers who are not on the PPO's preferred list. But to encourage you to use a provider who is on the PPO list, you will usually have lower out-of-pocket expenses than if you use a provider who is not on the list.
- Point of Service Plans. These plans are essentially HMOs that allow members to use services provided outside of the network without prior approval from a network doctor. Point of service plans offer lower deductibles and no coinsurance for visits to doctors inside the network. Visits outside the network normally require the payment of deductibles and coinsurance the same as a standard insurance policy.
Before you buy health coverage, find out about the company selling the plan. Here are factors to consider:
Questions to ask when shopping for health insurance
- Customer service. Find out how the company services its policyholders. Does the company have a toll-free customer service number?
- Complaint history. Has the company had an unusually high number of consumer complaints?
- Licensing status. Call your state insurance department to find out if the insurance company is licensed to do business in your state.
- Cost. Premiums for health insurance will vary greatly because there are no standard plans. When you look at bids from several companies, you will also need to look carefully at the benefits offered. Also, keep in mind that the actual cost for your health coverage will be determined after you submit information about your health.
- Financial stability. Financial stability helps ensure that a company can pay its claims. Your state insurance department establishes requirements that each company must follow and continually monitors the financial stability of insurance companies operating in the state. Independent organizations also rate the financial stability of insurance companies. Keep in mind that these ratings are opinions only and do not guarantee that a company is financially sound. Your public library may also have published ratings from these sources.
- What does the plan pay for?
- What does the plan not pay for/exclude?
- What are the limits on pre-existing medical conditions?Will the plan pay for preventive care, immunizations, well-baby care, substance abuse, organ transplants, vision care, dental care, infertility treatment, durable medical equipment or chiropractic care?
- Will the plan pay for prescriptions?
- Does the plan have mental health benefits?
- Will the plan pay for long term physical therapy?
About customer service
- Do rates increase as you age?
- How often can rates be changed?
- How much do you have to pay when you receive health care services (copayments and deductibles)?
- Are there any limits on how much you must pay for health care services you receive (out-of-pocket maximums)?
- Are there any limits on the number of times you may receive a service (lifetime maximums or annual benefit caps)?
The scope of state insurance regulation
- Has the company had an unusually high number of consumer complaints?
- What happens when you call the company's consumer complaint number?
- How long does it take to reach a real person?
State insurance regulation of health insurance covers an estimated 77 million Americans, roughly three out of five (62 percent) of those with private coverage. The health insurance regulatory structure in the U.S. is as follows:
- State regulation. Some employer or employee groups purchase health insurance coverage from an insurance company. Others may purchase group health coverage from a health maintenance organization. Both are called fully insured health benefit plans. Insurers of such plans are regulated by state insurance commissions.
- Federal regulation. Some employer or employee groups, however, provide what are called self-funded health benefit plans. This means your employer or employee group may set aside funds and employee premiums each month to pay health coverage claims submitted to the plan. If the plan is self-funded and offered by a private sector employer or bona fide union, the designated regulatory authority is the U.S. Department of Labor's Pension and Welfare Benefits Administration. States are not permitted to regulate most valid self-funded plans authorized by Congress under terms of the Employee Retirement Income Security Act (ERISA). In most cases, this means: (1) state insurance departments have no authority to investigate complaints that involve valid single-employer or union-sponsored self-funded ERISA plans; (2) certain other group health plans provided by governments, churches, some school districts and out-of-state Blue Cross organizations also are exempt from most state regulations; and (3) state laws requiring specific benefits in health care plans seldom apply to valid self-funded ERISA plans.
Click here for information on filing a consumer complaint.
If you have questions about this information, contact:
North Dakota Insurance Department
State Capitol, fifth floor
600 E. Boulevard Ave.
Bismarck, ND 58505-0320
800.247.0560 toll free