Health Insurance

Health insurance

Definition

Health insurance is insurance that pays for all or part of a person's health care bills. The types of health insurance are group health plans, individual plans, workers' compensation, and government health plans such as Medicare and Medicaid.

Health insurance can be further classified into feefor-service (traditional insurance) and managed care. Both group and individual insurance plans can be either fee-for-service or managed care plans.

The following are types of managed care plans:

  • Health Maintenance Organization (HMO)
  • Preferred Provider Organization (PPO)

Purpose

The purpose of health insurance is to help people cover their health care costs. Health care costs include doctor visits, hospital stays, surgery, procedures, tests, home care, and other treatments and services.

Description

Health insurance is available to groups as well as individuals. Government plans, such as Medicare, are offered to people who meet certain criteria.

Group and individual plans can be further classified as either fee-for-service or managed care. Cancer patients may have specific concerns, such as the freedom to select specialists, that play a factor in choosing a health care plan. Fee-for-service plans traditionally offer greater freedom when choosing a health care professional. Managed care often limits a patient to health care professionals listed by the managed care insurance company.

Group health plans

A group health plan offers health care coverage for employers, student organizations, professional associations, religious organizations, and other groups. Many employers offer group health plans to employees and their dependents as a benefit of working with that particular employer (medical benefits). The employer may pay for part or all of the insurance cost (premium).

When an employee leaves a job he or she may be eligible for continued health insurance as a result of the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA). This federal law protects employees and their families in certain situations by allowing them to keep their health insurance for a specified amount of time. The individual must, however, pay a premium to keep their insurance plan in effect It is important to note that COBRA only applies under certain conditions, such as job loss, death, divorce, or other life events. The COBRA law usually applies to group health plans offered by companies with more than 20 employees. Some states have laws that require employers to offer continued health care coverage for people who do not qualify for COBRA. Each state's insurance board can provide additional information.

Individual plans

These type of health care plans are sold directly to individuals.

Fee-for-service

Fee-for-service is traditional health insurance in which the insurance company reimburses the doctor, hospital, or other health care provider for all or part of the fees charged. Fee-for-service plans may be offered to groups or individuals. This type of plan gives people the highest level of freedom to choose a doctor, hospital, or other health care provider. A person may be able to receive medical care anywhere in the United States and, often, in the world.

Under this type of insurance a premium is paid and there is usually a yearly deductible, which means benefits do not begin until this deductible is met. After the person has paid the deductible (an amount specified by the terms of the insurance policy) the insurance company pays a portion of covered medical services. For example, the deductible may be $250 so the patient pays the first $250 of yearly covered medical expenses. After that he or she may pay 20% of covered services while the insurance company pays 80%. The exact percentages and deductibles will vary with each policy. The person may have to fill out forms (claims) and send them to the insurance company to have their claims paid.

People who have cancer may be attracted to the freedom of choice that traditional fee-for-service plans offer. However, they will most likely have higher out-of-pocket costs than they would in a managed care plan.

Managed care

Managed care plans are also sold to both groups and individuals. In these plans a person's health care is managed by the insurance company. Approvals are needed for some services, including visits to specialist doctors, medical tests, or surgical procedures. In order for people to receive the highest level of coverage they must obtain services from the doctors, hospitals, labs, imaging centers, and other providers affiliated with their managed care plan.

People with cancer who are considering a managed care plan should check with the plan regarding coverage for services outside of the plan's list of participating providers. For example, if a person wants to travel to a cancer center for treatment, he or she should find out what coverage will be available. In these plans coverage is usually much less if a person receives treatment from doctors and hospitals not affiliated with the plan.

HEALTH MAINTENANCE ORGANIZATION (HMO).

An HMO is a type of managed care called a prepaid plan. This type of coverage was designed initially to help keep people healthy by covering the cost of preventive care, such as medical checkups. The patient selects a primary care doctor, such as a family physician, from an HMO list. This doctor coordinates the patient's care and determines if referrals to specialist doctors are needed. People pay a premium, usually every month, and receive their health care services (doctor visits, hospital care, lab work, emergency services, etc.) when they pay a small fee called a copayment. The HMO has arrangements with caregivers and hospitals and the copayment only applies to those caregivers and facilities affiliated with the HMO. This type of coverage offers less freedom than fee-for-service, but out-of-pocket health care costs are generally lower and more predictable. A person's out-of-pocket costs will be much higher if he or she receives care outside of the HMO unless prior approval from the HMO is received.

PREFERRED PROVIDER ORGANIZATION (PPO).

A PPO combines the benefits of fee-for-service with the features of an HMO. If patients use health care providers (doctors, hospitals, etc.) who are part of the PPO network, they will receive coverage for most of their bills after a deductible and, perhaps a copayment, is met. Some PPOs require people to choose a primary care physician who will coordinate care and arrange referrals to specialists when needed. Other PPOs allow patients to choose specialists on their own. A PPO may offer lower levels of coverage for care given by doctors and other professionals not affiliated with the PPO. In these cases the patient may have to fill out claim forms to receive coverage.

Government health plans

Medicare and Medicaid are two health plans offered by the U.S. government. They are available to individuals who meet certain age, income, or disability criteria. TRI-CARE Standard, formerly called CHAMPUS, is the health plan for U.S. military personnel.

MEDICARE.

Medicare, created in 1965 under Title 18 of the Social Security Act, is available to people who meet certain age and disability criteria. Eligible people include:

  • those who are age 65 years and older
  • some younger individuals who have disabilities
  • those who have end-stage renal disease (permanent kidney failure)

Medicare has two parts: Part A and Part B. Part A is hospital insurance and helps cover the costs of inpatient hospital stays, skilled nursing centers, home health services , and hospice care . Part B helps cover medical services such as doctors' bills, ambulances, outpatient therapy, and a host of other services, supplies, and equipment that Part A does not cover.

MEDICAID. Medicaid, created in 1965 under Title 19 of the Social Security Act, is designed for people receiving federal government aid such as Aid to Families with Dependent Children. This program covers hospitalization, doctors' visits, lab tests, and x rays. Some other services may be partially covered.

TRICARE. Eligible military families may enroll in TRICARE Prime, which is an HMO; TRICARE Extra, which offers an expanded choice of providers; or TRI-CARE Standard, which is the new name for CHAMPUS.

Supplemental insurance

Supplemental insurance covers expenses that are not paid for by a person's health insurance. Cancer insurance is a specific form of supplemental insurance that covers expenses that are not normally covered by health insurance but are specifically related to cancer treatments.

Workers' compensation

Workers' compensation covers health care costs for an injury or illness related to a person's job. Medical conditions that are unrelated to work are not covered under this plan. In some cases an evaluation is done to determine whether or not the medical condition is truly related to a person's employment.

Special concerns

There are a variety of special concerns that people with cancer have regarding health insurance.

Waiting period

Insurance may not take effect immediately upon signing up for a policy. Sometimes a waiting period exists, during which time premiums are not paid and benefits are not available. Health care services received during this period are not covered.

Preexisting condition

A preexisting condition, such as cancer, is a concern when choosing insurance. If a person received medical advice or treatment for a medical problem within six months of enrolling in new insurance, this condition is called preexisting, and it can be excluded from the new coverage. The six-month time lapse before a person enrolls in a new health insurance policy is called the look-back period. If a person received medical advice, recommendations, prescription drugs, diagnosis, or treatment for a health problem during the look-back period, he or she is considered to have a preexisting condition. People should check with their state insurance boards to determine preexisting condition rules.

Coverage renewal

Some people with diseases such as cancer worry about group health plans renewing their coverage. As long as the person meets the plan's eligibility requirements and the plan covers similar cases, the coverage must be offered. Coverage cannot be cancelled for health reasons.

Experimental/investigational treatments

Experimental/investigational treatments are often a concern for people with cancer. These treatments may or may not be covered by a person's health insurance. Some states mandate coverage for investigational treatments. People should check with their insurance plan and state insurance board to determine if coverage is available.

A clinical trial is a type of investigational treatment. Costs involved include patient care costs and research costs. Usual patient care costs that may be covered by insurance are visits to the doctor, stays in the hospital, tests, and other procedures that occur whether a person is part of an experiment or is receiving traditional care. Extra patient care costs that may or may not be covered by insurance are the special tests required as part of the research study.

Health insurance plans have policies regarding coverage for clinical trials . People should determine their level of health insurance coverage for clinical trials, and they should learn about the costs associated with a particular study.

In 2000, Medicare began covering certain clinical trials. The trials must meet specific criteria in order to be covered. In eligible trials treatments and services such as tests, procedures, and doctor visits that are normally covered by Medicare are covered. Some items may not be covered including investigational items like the experimental drug itself or items that are used only for data collection in the clinical trial. Patients should check to see if the clinical trial sponsor is providing the investigational drug at no charge.

Complementary therapies

Complementary cancer therapies are another coverage consideration. A cancer patient undergoing this type of therapy should check with his or her insurance policy regarding coverage.

Cancer screening coverage

Cancer screening coverage is an important consideration. As of 2000, 44 states mandate insurance coverage of screenings for at least one of these cancers: breast, cervical, prostate, and colorectal. Breast cancer screening coverage is most commonly mandated. Most mandates refer to screenings that follow the American Cancer Society guidelines. A Women's Health Initiative Observational Study investigated the use of cancer screenings by more than 55, 000 women between September 1994 and February 1997. The study found that the type of insurance a woman had was linked with the number of cancer screenings she reported. Women age 65 years and older who had Medicare plus prepaid insurance were more likely to report that they had screenings than those who had Medicare alone.

Health care regulations

The Health Insurance Portability and Accountability Act (HIPAA), passed by the U.S. Congress in 1996, offers people rights and protections regarding their health care plans. Because of HIPAA there are limits on preexisting condition exclusions, people cannot be discriminated because of health factors, there are special enrollment requirements for people who lose other group plans or have new dependents, small employers are guaranteed group health plan availability, and all group plans have guaranteed renewal if the employer wishes to renew. In summary these rights and protections include:

  • Portability. This is the ability for a person to get new health insurance if a change is desired or needed.
  • Availability. This refers to whether or not health insurance must be offered to a person and his or her dependents.
  • Renewability. This refers to whether or not a person is able to renew his or her health plan.

The Women's Health and Cancer Rights Act of 1998 requires health insurance plans to cover breast reconstruction related to a mastectomy if the patient chooses to have reconstruction and if the health plan covered the mastectomy. The law became effective for different health plans on different dates, with the earliest date of effect being October 21, 1998.

Resources

BOOKS

Schwartz, Alan N. Getting the best from your doctor. Minneapolis, MN: Chronimed Publishing, 1998.

PERIODICALS

Hsia, Judith et al., "The Importance of Health Insurance as aDeterminant of Cancer Screening: Evidence from the Women's Health Initiative." Preventive Medicine (September 2000): 261-70

Rathore, Saif S. et al., "Mandated Coverage for Cancer-Screening Services: Whose Guidelines Do States Follow?" American Journal of Preventive Medicine (August 2000): 71-8

ORGANIZATIONS

Agency for Health Care Research and Quality, Checkup on Health Insurance Choices 27 March 2001 <http://www.ahcpr.gov/consumer/insuranc.htm>

National Cancer Institute, Cancer Trials and Insurance Coverage:A Resource Guide 4 May 2001 <http://cancertrials.nci.nih.gov/understanding/indepth/insurance>

Health Care Choices Our Newsletter: Better Health Choices (January 1999) 9 May 2001 <http://www.healthcarechoices.org/newslet/news199brreconst.htm>

Health Care Financing Administration HIPAA Online 27March 2001 <http://www.hcfa.gov>

TRICARE The History of CHAMPUS and its Evolving Role 9May 2001 <http://www.tricare.osd.mil/factsheets/history.pdf>

OTHER

"Supplemental Insurance Policies May Be Offered Under aFlex Plan, IRS Says" In Flex Plan Handbook: November 1999 9 May 2001 5 July 2001 <http://207.226.10.52/tpg/pen_ben/flex/flexnov99.html>

Rhonda Cloos, R.N.

KEY TERMS

Clinical trial

A study to determine the efficacy and safety of a drug or medical procedure. This type of study is often called an experimental or investigational procedure.

Health care provider

A doctor, hospital, lab, or other professional person or facility offering health care services.

Health insurance claim

A bill for health care services that is turned in to the health insurance company for payment.

QUESTIONS TO ASK THE DOCTOR

  • What types of insurance do you accept?
  • Does your office file claims for patients?
  • Will your office get pre-authorization for procedures where it is required?
  • Do you have a list of providers for my type of insurance in case a referral is necessary?
  • If an experimental procedure is recommended, what costs will be involved?