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Consumers: Health Plan Definitions 

 

Guide provided by http://www.insurance.ca.gov/  Link here

Below are a series of definitions of various health insurance plans and programs available to Arizonans.  As confusing as they may be, we have tried to provide simple definitions.  Where relevant, we have also tried to provide links and additional frequently asked questions (FAQs) to help consumers understand these programs.

COBRA (Consolidated Omnibus Budget Reconciliation Act)

Discount Health Plans

EPO (Exclusive Provider Organization)

ERISA (Employee Retirement Income Security Act)

Evidence-based Medicine

FMLA (Family Medical Leave Act)

HIPAA (Health Insurance Portability and Accountability Act)

HMO (Health Maintenance Organization)

HSA (Health Savings Account)

Medicaid

Medicaid

Medicare

Medi-gap Insurance

MRMIP (Major Risk Medical Insurance Program)

POS (Point of Service)

PPO (Preferred Provider Organization)

 


COBRA (Consolidated Omnibus Budget Reconciliation Act)
Have you recently left your employer?  COBRA allows former employees, retirees, and their dependents to temporarily keep their health coverage at group rates.  It is more expensive than group insurance.  Why?  When you are employed, your employer usually pays some or all of the premium for your health insurance.  COBRA participants pay the entire premium themselves.  It may be less expensive than individual coverage, though.  You can collect COBRA benefits for up to 18 months which may be extended to 36 months under certain circumstances.

If your employer has 20 or more employees they must follow COBRA rules.  COBRA follows a "qualifying event," like a termination (other than for gross misconduct), layoff, or reduction in work hours (but not taking FMLA leave – see "FMLA").  You have responsibilities to make sure your COBRA coverage goes into effect and stays in effect.  You must decide to accept or reject COBRA during a certain time period (usually 60 days away notification from employer).  Your former employer's plan administrator must mail you the COBRA information and forms within 14 days after receiving notification from your former employer of the qualifying event.  If you do not ask for COBRA coverage before the deadline you may lose the right to COBRA coverage.  You must also be sure to pay your monthly premiums or you can lose your coverage.

Once you have exhausted your COBRA benefits, you may be entitled to obtain an extension of coverage under CalCOBRA.  When all COBRA/CalCOBRA extensions are exhausted, you can obtain individual health insurance under HIPAA (see "HIPAA").

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Discount Health Plans
Discount health plans are not insurance. They are simply organizations that arrange discounts for medical services, often issuing a card to you for that purpose. Note that providers are *not* obligated to accept the discount plan, so not all providers participate. Be very careful when deciding to purchase a discount health plan.

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EPO (Exclusive Provider Organization)
In an EPO you must use the providers who belong to the EPO or your expenses will not be covered.  In other words, you cannot go "outside" the network for medical care. 
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ERISA (Employee Retirement Income Security Act) The Employee Retirement Income Security Act is a Federal law that sets minimum standards for pension plans and self-insured health plans in private industry.

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Evidence-Based Medicine
In evidence-based medicine, treatment success is measured by a careful study of the outcome, using both the clinical expertise of the provider, as well as the most up-to-date research available.  EBM encourages the use of consistent, efficient, scientific guidelines for medical treatment decisions.  EBM protocols may be especially useful in preventive care and management of chronic conditions such as asthma and diabetes.

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FMLA (Family Medical Leave Act)
If your employer has 50 or more employees, you may be eligible for FMLA.  The FMLA guarantees employees up to 12 workweeks of unpaid leave during any 12 month period for reasons like the birth of a child ("maternity leave"), taking care of sick immediate family members, or for your own serious health condition.  In order to obtain FMLA leave, you must notify your employer 30 days in advance of taking the leave.  If it is an emergency, you must notify your employer as soon as possible.  You must also be an employee of your current employer for at least 12 months before taking FMLA leave.

While taking FMLA leave, your employer must continue the same group health insurance coverage for you as for similar other employees.  If you already pay a premium, though, you must continue to pay it.  Your employer can help you to make arrangements to do so.

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HIPAA (Health Insurance Portability and Accountability Act)
HIPAA is a Federal law that does three things:

1) it makes it easier to take your health information with you when you change employers,
2) it sets very strict rules about the privacy of your medical records, and
3) it gives you the right to purchase individual health insurance after you've used up your COBRA benefits (see "COBRA"). 

Before HIPAA it was often hard to move your medical information from one insurer to another, and there were few safeguards for your privacy.  It was also very difficult to obtain insurance after COBRA benefits ran out.  HIPAA improved these shortcomings.

If you have been covered by health insurance including COBRA and have exhausted all COBRA/CalCOBRA benefits with no break longer than 63 days, HIPAA gives you the right to buy individual health coverage with few or no limits on pre-existing conditions.

You may visit the U.S. Department of Health and Human Services provides additional information related to HIPAA.

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HMO (Health Maintenance Organization)
An HMO is a collection of hospitals, doctors, and other health services all organized under one network.  By managing care and contracting with the providers, HMOs keep costs down while providing a full range of health services.  You usually pay only small co-pays when using services, no matter how many or what kind of services you use.  In return, though, you must usually use the hospital(s), doctors, and other health providers in the HMO's network.  In an HMO, you select a primary care physician.  If you need a specialist, the primary care physician must first refer you to that specialist before you can see them.  HMOs in Arizona are regulated by Department of Insurance

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HSA (Health Savings Account)
In an HSA, you contribute money to a special bank account to be used for medical bills. You get a Federal tax deduction on the money you contribute to your HSA, and if you use the money for medical expenses, you pay no Federal tax or penalty on it. 

The HSA account can also earn Federal tax-free interest.  Note:  there is no Arizona tax exemption for your HSA contribution, or for the interest the account earns.

HSA's always go along with a high-deductible health insurance plan -- a $1,500 deductible, for example.  This means that if you need medical treatment, you must first pay the deductible, which you can do with money from the HSA.  There are limits on how much you can contribute each year.  In 2006 you can contribute up to $2,700 per year for yourself (with a $3,000 deductible plan), or $5,450 per year for yourself and your family (with a $6,000 deductible plan).

HSA's "roll-over," that is:  money you saved doesn't disappear at the end of the year if you haven't used it.  You simply continue contributing to the HSA.  There is no limit to how much you can have saved in your HSA. 

The HSA is also "portable," so you can move or change jobs and take the HSA with you.  Some employers may also make contributions to your HSA for you as a job benefit.

Who is eligible for an HSA?  Once on Medicare, you can not obtain a new HSA.  If you already had one before joining Medicare, however, you can keep that HSA and use it, but you can not continue contributing to it.  You can be eligible for an HSA even if you have already have a high-deductible health plan, but not if you already have traditional health insurance.  You can also still be eligible if you have disease-specific insurance (like a plan to cover just your diabetes). 

HSA money can be used for preventive medical services and drugs (both prescription and over-the-counter) without Federal tax or penalty.  You can use money from your HSA for non-medical expenses, but you'll usually have to pay a tax and a penalty.

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Medicare
A Federal program that mainly insures the elderly and disabled people.  There are four parts to Medicare.  Part A and B comprise the original fee-for-service Medicare plan.  Part "A" covers hospitalization.  Part "B" covers doctors' and other outpatient services.  Part "C" also known as Medicare Advantage, is Medicare offered through a network of providers such as HMO (Health Maintenance Organization) or PPO (Preferred Provider Organization).  Part "D" covers prescription drugs.  You can also pay for private supplemental programs to give you more coverage than Medicare offers (see "Medi-gap insurance").  Medi-gap policies exist for many health care services, but not prescription drugs.

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Medi-gap Insurance
Supplemental insurance policies that you can purchase to pay for things that Medicare does not.  The insurance "closes the gap" between what's paid for and what isn't.

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POS (Point of Service)
Plans that allow you to go outside your network are called POS plans.  Charges for services outside your network can be much higher, though.

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PPO (Preferred Provider Organization)
In a PPO, insurance companies contract with doctors, hospitals, and other providers to form a "network." 

Depending upon your plan, you can sometimes get health care outside the network (someone or someplace not included in the network) but you will have to pay more.  Unlike an HMO, you also have to pay a deductible and coinsurance. 

Also unlike an HMO, you usually can see a specialist without first being referred by your primary care physician, and you have much more freedom in choosing a doctor or hospital.  PPOs in Arizona are regulated by the Arizona Department of Insurance

 

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