Arizona health insurance guide

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

Introduction to Health Insurance

Types of Health Insurance & How Health Insurance Works

• Indemnity Plans (Traditional Fee-for-Service Insurance)

• Preferred Provider Organizations (PPOs)

• Health Maintenance Organizations (HMOs or Managed Care)

• Self-Insured Health Plans (Single Employer Self-Insured Plans)

• Multiple Employer Welfare Arrangements (MEWAs)

How Is Health Insurance Marketed in Arizona?

What Is COBRA and Cal-COBRA?

What Is the Health Insurance Portability & Accountability Act (HIPAA)?

State Sponsored or Administered Health Coverage

• Major Risk Medical Insurance Program (MRMIP)

• Healthy Families Program

• Access for Infants and Mothers Program (AIM)

Supplemental Health Insurance Policies

Resources

Health Insurance Terms

Introduction to Arizona Health Insurance
Illness or non-work related injury can be financially devastating, especially when considering the rising cost of health care over the past 20 years. Health insurance can help protect you from large out-of-pocket health care expenses that can accumulate during an acute or chronic illness. If you have a job, your employer may provide group comprehensive major medical coverage. You can also purchase individual comprehensive major medical coverage privately or through an insurance agent or broker who is licensed by the State of Arizona to sell health insurance products.

Types of Health Insurance and How Health Insurance Works
Health insurance pays for expenses incurred for diagnosis and treatment of covered medical conditions. There are many different types of health insurance plans available in Arizona. It is important if you have a choice of health insurance to choose the plan that best fits your specific needs, budget, and lifestyle. Also, make sure that you are aware of the state or federal agency that regulates the type of health insurance you have in case you experience questions or problems. Each of the different ways of receiving health care services has advantages and disadvantages. It is in your best interest to become familiar with the different types of health insurance, so you know what may be available to you.

Indemnity Policies (Traditional Fee-for-Service Insurance)
Preferred Provider Organizations (PPOs)
Health Maintenance Organizations (HMOs or Managed Care)
Self-Insured Health Plans (Single Employer Self-Insured Plans)

Indemnity Policies(Traditional Fee-for-Service Insurance)
Most indemnity policies allow you to choose any doctor and hospital that you wish when seeking health care services. The hallmark of traditional fee-for-service insurance is choice. You are given the choice of what provider to visit when seeking covered medical services with few if any geographic limitations. When purchasing an indemnity policy, you may often have a deductible. The deductible is the amount you are required to pay before policy benefits are provided. You may have a choice in the amount of your deductible. If your health care charges are covered, or eligible for payment under the policy, any applicable deductible will apply. Once the deductible has been paid, the remaining charges are reimbursed to you at a specified percentage according to the policy contract. The difference between eligible charges and the percentage paid is called a "copayment," and is normally your responsibility. The policy or an employee benefit booklet (if your indemnity policy is group coverage) will spell out the terms and conditions of what is covered and what is not covered. Read your policy or benefit booklet before you need health care services and ask your health insurance agent, insurance company, or employer to explain anything that is unclear.

The Arizona Department of Insurance regulates indemnity policies. If you have an individual or group health insurance policy that is a traditional fee-for-service policy issued by a licensed health insurance company, then you can contact the ADI for assistance. Since jurisdiction is divided between several state and federal agencies, it can be confusing to determine who regulates your health care coverage. The ADI is always available to assist consumers with health care questions or to direct consumers to the correct agency for assistance. Please see the last page of this brochure for the many ways you can contact the CDI.

Important Points to Remember About Indemnity Policies:

You have the freedom to choose your doctor, specialist, or hospital with few if any limitations.
Your options are seldom if ever limited by geographic restrictions.
You may be responsible for paying a deductible before covered medical benefits are reimbursable.
You may be required to pay a co-payment for covered medical services.
You can seek assistance from the CDI for questions regarding any indemnity policy.

Preferred Provider Organizations (PPOs)
A Preferred Provider Organization (PPO) provides a list of contracted "preferred" providers from which to choose. You receive the highest monetary benefit when you limit your health care services to those providers on the list. If you go to a doctor or hospital that is not on the preferred provider list referred to as going "out-of-network", then the plan covers a smaller percentage of your health care expenses or may cover none of your health care expenses based on the contract wording of the plan. Always check with your PPO or consult your list of preferred providers before you seek health care services to make certain your physician or hospital is a contracting provider (part of the network). Make sure that your doctor refers you to health care providers within your PPO network, if applicable.

Important Points to Remember About Preferred Provider Organizations:

You receive the highest monetary benefit when staying within the PPO network.
You may have the option to go outside the PPO network at a higher monetary cost to you.
You should consider checking if your doctor or any specialist referred to you is part of the PPO network before utilizing covered services.
You can seek the assistance of the Arizona Department of Insurance on all Blue Cross/Blue Shield PPO health plans.
You can contact either the Arizona Department of Insurance for clarification regarding PPO issues.

Health Maintenance Organizations (HMOs or Managed Care)
Membership in a Health Maintenance Organization (HMO) requires plan members to obtain their health care services from doctors and hospitals affiliated with the HMO. It is common practice in HMOs for the plan member to choose a primary care physician who treats and directs health care decisions and who coordinates referrals to specialties within the HMO network. The doctors and hospital personnel may be employees of the HMO or contracted providers. Since HMOs operate in restricted geographic regions, this may limit coverage for plan members if medical treatment is obtained outside the HMO network or coverage area. Arizona HMOs are required to cover medically necessary emergency services even when outside of their coverage area. The intent of managed care products is to create less costly delivery of health care services while maintaining quality health care by specifying provider choice. HMOs offer access to a comprehensive package of covered health care services in return for a prepaid monthly amount (premium). Most HMOs charge a small copayment depending upon the type of service provided.

Important Points to Remember About Health Maintenance Organizations:

You must obtain health care services from HMO providers, except in certain emergency situations.
Your choice of primary care physician is important because he/she directs your care. Also, your primary care physician often coordinates referrals to specialties within the HMO.
Your options may be limited by the geographic restrictions of the HMO network.
You may be charged a small copayment each time you utilize an HMO covered service.

Self-Insured Health Plans (Single Employer Self-Insured Plans)
Self-Insured Health Plans have gained in popularity among large employers and many labor unions as well as school districts and other municipalities. These groups provide a pool of money and then proceed to pay for the health care services of their members (employees) from this pool. It is common for self-insured plans to turn over the administration of their health plans to a Third Party Administrator (TPA). The TPA handles all administrative tasks including claims processing and payments. Often the employer can contract with an insurance company to act as a TPA for all health care claims.

Most self-insured health plans fall under the Employee Retirement Income Security Act (ERISA). ERISA is federal law that is enforced by the U.S. Department of Labor, Employee Benefits Security Administration (DOL-EBSA). If you are a member of a self-insured health plan through your employer security or union, then you can contact the DOL-EBSA for assistance. However, the DOL-EBSA does not regulate self-insured health plans that are sponsored through school districts, other municipalities, and churches. If you are a member of this type of plan, you can file a complaint with the plan directly or you may seek a legal remedy through a court of law. The DOL-EBSA is available to answer questions about self-insured employer plans that come under ERISA regulation. You can gain information on the type of plan that you participate in by contacting your employer or union. If there is still some question, then you can contact the DOL-EBSA for clarification. Please see the "Resources" section of this brochure.

Important Points to Remember About Self-Insured Health Plans:

If you work for a large employer, have a union affiliation, work for a school district, or work for a municipality, the health plan offered to you may be a self-insured entity.
An insurance company or a TPA may administrate a self-insured health plan.
Self-Insured health plans are most likely subject to federal ERISA law.
If your self-insured health plan is not a school district, other municipality, or a church, you can seek help from the DOL-EBSA.
If your self-insured health plan is a school district, other municipality, or a church, you may seek assistance from the plan directly or from the courts.

How Is Health Insurance Marketed in Arizona?
Arizona health insurance coverage is marketed to consumers through individual policies or group policies. Individual health insurance coverage should be pursued when your employer does not offer health insurance as a benefit of employment, when you cannot be named as the dependent on another person’s insurance policy, or when you are not a member of a professional or trade association that offers group coverage. Many consumers are self-employed, contract employees, or work for small employers and do not have access to a group policy secured by an employer. Individual coverage can be obtained by contacting a licensed health insurance agent or broker. You will need to complete an application that includes your medical history, which will be reviewed by a medical underwriter at the health insurance company. If you meet the underwriting qualifications and are issued a policy, the company may not cover preexisting conditions up to one year after the effective date of the policy. Individual health insurance companies may reject your application based on your medical history.

What Is COBRA?
The Consolidated Omnibus Budget Reconciliation Act (COBRA) is federal law that extends your current group health insurance when you experience a qualifying event such as termination of employment or reduction of hours to part-time status. The extension period is 18 months and some people with special qualifying events may be eligible for a longer extension. To be eligible for COBRA, your group policy must be in force with 20 or more employees covered on more than 50 percent of its typical business days in the previous calendar year.

Indemnity policies, PPOs, HMOs, and self-insured plans are all eligible for COBRA extension; however, federal government employee plans and church plans are exempt from COBRA. Individual health insurance is also exempt from COBRA extension, which may be another reason to pursue participation in group health plans, if possible.

Important Points to Remember About COBRA:

COBRA is federal law that extends your current group health coverage after a qualifying event. Individual policies do not qualify for COBRA.
COBRA law applies to group policies in force with 20 or more employees covered on more than 50 percent of its typical business days in the previous calendar year.
Indemnity policies, HMOs, PPOs, and self-insured plans are COBRA eligible. Federal government employee plans and church plans are COBRA exempt.
You can contact the DOL-EBSA for questions regarding COBRA law.

What Is the Health Insurance Portability and Accountability Act (HIPAA)?
In 1996 the federal government passed into law the Health Insurance Portability and Accountability Act (HIPAA). HIPAA law provides eligible individuals who have recently lost their employer sponsored group health plan the opportunity to purchase health insurance coverage even if they have a preexisting health condition. If you meet the definition of an eligible individual, all health insurance companies who sell individual plans must offer you health insurance regardless of your medical history. This requirement to issue insurance is called "guaranteed issue." You may not be declined coverage based on medical reasons. In order to qualify as an eligible individual you must meet the following conditions:

Your last health care coverage must have been under an employer sponsored group health plan, which includes COBRA continuation coverage, for at least 18 months. This prior 18-month coverage is referred to as "creditable coverage."
All available COBRA continuation coverage has been elected and exhausted. If you qualify for COBRA you are required to accept the coverage and continue the coverage for the maximum time period allowed. (When an employer terminates its existing group health plan entirely, COBRA coverage ends and is considered exhausted.)
You are not eligible under a group health plan, Medicare, Medicaid, and/or do not have other health insurance coverage.
You did not lose your most recent health coverage due to nonpayment of premium or fraud.

Once COBRA has been exhausted, you have 63 days to file an application to purchase a guaranteed issue HIPAA policy with an insurance company or health plan. All carriers that sell individual health care policies must offer their two most marketed individual plans to HIPAA eligible individuals regardless of your health status. If you accept a conversion policy or a short-term policy after exhausting COBRA, you give up your HIPAA eligibility. It is important to understand that a conversion policy is not a HIPAA policy.

When applying for a HIPAA policy you can present a Certificate of Creditable Coverage from your insurance company or health plan as part of the application process. The Certificate of Creditable Coverage is a written statement from your insurance company or health plan showing the length of time you have been covered. The Certificate can be used as proof of your 18 months continuous creditable coverage when applying for a HIPAA policy.

Important Points to Remember About HIPAA:

HIPAA gives eligible individuals who have lost group coverage the opportunity to purchase individual health coverage.
HIPAA eligible individuals are not subject to medical underwriting.
HIPAA policies must be issued to eligible individuals on a guaranteed issue basis regardless of any preexisting medical condition.
You have only 63 days after COBRA has been exhausted to file an application to purchase a HIPAA policy.
HIPAA policies are not conversion policies. Accepting a conversion or short-term policy terminates your HIPAA eligibility.

Supplemental Health Insurance Policies
Most supplemental health insurance policies are designed to pay in addition to your comprehensive major medical coverage. These supplemental policies should not be used as a substitute or replacement for a traditional health insurance policy or a health plan. Supplemental health insurance can pay limited benefits such as a daily dollar amount if you are hospitalized (hospital income policy) or a lump sum dollar amount if you are diagnosed with a specified or named disease, such as cancer. This type of supplemental policy can also be structured to pay expenses incurred in the treatment of the specified disease. Sometimes this insurance provides payment over and above your medical expenses. It is important that you understand the limitations and exclusions of supplemental health insurance policies and how the policies coordinate benefits, so that you can make the best decision based on your needs and your budget.

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Health Insurance Terms
Assignment of Benefits - Your signed authorization to your doctor or hospital (medical provider) assigning payment to be made directly to them for your medical treatment.

Business Day - Every day that insurance companies are open for business, which excludes Saturday, Sunday, and state and federal holidays.

Calendar Day - Every day of the calendar month, which includes Saturday, Sunday, and state and federal holidays. However, if any action tied to a time frame in an insurance policy or regulation or code falls on a Saturday, Sunday, or state or federal holiday; then the action is postponed to the next calendar day that does not fall on a Saturday, Sunday, or state or federal holiday.

Certificate of Coverage - A document issued to a member of a group health insurance plan showing evidence of participation in the insurance.

Certificate of Creditable Coverage - A written statement from your prior insurance company or health plan documenting the length of time you were covered.

Creditable Coverage or Prior Qualifying Coverage - The number of months you had health insurance in place before your current or new policy became effective. Creditable coverage must be counted towards any preexisting condition exclusion in either an individual or group policy.

Claim - A notification to your insurance company that payment is due under the policy provisions.

Copayment - The portion of charges you pay to your provider for covered health care services in addition to any deductible.

Coverage - The scope of protection provided by an insurance contract which includes any of the listed benefits in an insurance policy.

Denial - An insurance company decision to withhold a claim payment or preauthorization. A denial may be made because the medical service is not covered, not medically necessary, or experimental or investigational.

Deductible - A fixed amount which is deducted from eligible expenses before benefits from the insurance company are payable.

ERISA - Stands for the Employee Retirement Income Security Act (1974). Administered by the U.S. Department of Labor, Employee Benefits Security Administration. ERISA regulates employer sponsored pension and insurance plans (self-insured plans) for employees.

Exclusions and/or Limitations - Conditions or circumstances spelled out in an insurance policy which limit or exclude coverage benefits. It is important to read all exclusion, limitation, and reduction clauses in your health insurance policy or certificate of coverage to determine which expenses are not covered.

Experimental and/or Investigational Medical Services - A drug, device, procedure, treatment plan, or other therapy which is currently not within the accepted standards of medical care.

Grace Period - A specified period immediately following the premium due date during which a payment can be made to continue a policy in force without interruption. This applies only to Life and Health policies. Check your policy to be sure that a grace period is offered and how many days, if any, are allowed.

Guaranteed Issue - A health insurance policy that must be issued regardless of any preexisting medical condition. The present and past physical condition of a health insurance applicant is not considered as a part of underwriting. No physical examination is required. The insurance company cannot decline coverage to an applicant of a guaranteed issue policy based on medical history.

Independent Medical Review - A process where expert medical professionals who have no relationship to your health insurance company or health plan review specific medical decisions made by the insurance company. Arizona law provides for an Independent Medical Review Program, which is administered by the CDI and the DMHC depending upon what type of coverage you have (indemnity or HMO).

Medically Necessary - A drug, device, procedure, treatment plan, or other therapy that is covered under your health insurance policy and that your doctor, hospital, or provider has determined essential for your medical well-being, specific illness, or underlying condition.

Policy - The written contract between an individual or group policyholder and an insurance company. The policy outlines the duties, obligations, and responsibilities of both the policyholder and the insurance company. A policy may include any application, endorsement, certificate, or any other document that can describe, limit, or exclude coverage benefits under the policy.

Preexisting Condition - Any illness or health condition for which you have received medical advice or treatment during the six months prior to obtaining health insurance.

Usual, Reasonable, and Customary - The amount that your insurance company determines is the normal payment range for a specific medical procedure performed within a given geographic area. If the charges you submit to your health insurance company are higher than what is considered normal for the covered health care services, then your health insurance company may not allow the full amount charged to you.