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Health Insurance FAQ

What is health insurance?
Health insurance is a contract in which the insured and the insurer share risk. The insured pays a premium to the insurer who pays a predetermined amount of money toward health care expenses.

What are the types of health insurance?
There are two main categories of heath insurance. The first case - Indemnity Plan - you are reimbursed for medical expenses regardless of which provider you use meaning you have the freedom to choose doctors and hospitals. These plans also allow the insured to use any hospital in any part of the country. In the second case - Managed Care - there is an arrangement between an insurance company and a network of selected health care providers, and the insured is offered financial incentives to encourage the use of the providers in the network. The basic types of managed care plans are Health Maintenance Organizations (HM0s), Preferred Provider Organizations (PPOs), and Point-of-Service (POS) plans.

What is the difference between a HMO and a PPO?
An HMO (Health Maintenance Organization) and a PPO (Preferred Provider Organization) are both managed care organizations that use certain procedures to manage the accessibility, cost and quality of healthcare. HMOs provide treatment on a prepaid basis, and in most cases members have to receive their medical treatment from providers in the network. With PPOs it is possible to use doctors who are not part of the plan and still receive some coverage. That is why PPO plans are suited for individuals who want an HMO style prepaid plan, while keeping the freedom to use a doctor that is not part of the network.

What is a deductible?
A deductible is an amount of money that an insured person pays out-of-pocket before the insurance company becomes responsible for any benefit payments.

What is the difference in a copayment and coinsurance?
Coinsurance is the portion of costs that are shared between the insured and the insurer. The usual ratio is 80% paid by the insurer and 20% paid by the insured. A copayment is cost sharing arrangement in which a person pays a specific charge for a specific medical service.

Are copayments counted as part of the annual deductible?
No, most insurance policies that have copayments and deductibles handle doctor's visits and hospital stays separately. You have to read the terms of your policy to be sure, but in most cases, a copayment applies to the doctor's visit and the deductible applies to hospitalization or other healthcare services.

Can I buy an individual policy?
Yes. If you are unemployed, return to school or are self-employed, you may want to buy an individual health insurance policy. You should consider various options such as whether your insurance company can convert its group policy to an individual policy. If you are married, ask if spouse's employer will add you to its group plan. You may also try to join a group health plan through a trade association or alumni group or professional association may offer reasonable rates. Even some credit card companies offer health insurance coverage. The most expensive option will usually be to buy an individual policy but it is important that you be protected against financial disaster if you, or your family, suffer a serious illness or injury. If you are self-employed, most of the health insurance premium will be tax-deductible.

If I change jobs or become unemployed, can I bring my coverage with me?
If you move to a new job, you have the right to carry your group health insurance coverage with you for up to 18 months under the Congressional Budget Reconciliation Act (COBRA). You must pay the full premium, but at group rates that are far cheaper than the individual rates you would pay for similar coverage. Health insurance under COBRA is available if you are in these situations: you leave a company and become unemployed or self-employed for up to 18 months; you are a widow or widower or child of an employee who dies while working for the same company for three years or more; you are the divorced spouse or child of an employee who has left the company he or she was employed at for at least three years; you are the child of an employee who left a job and have not yet reached age 23. Please, remember that If you need COBRA benefits, you must fill out the appropriate forms from your employer's benefits department within 60 days of leaving your job. If you do not act within that time, you may be denied coverage.

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