Arizona Health Insurance Guide

Health insurance is one of those things that, like trips to the dentist or doing tax returns,  people would rather not think about and put off doing as long as possible. Unfortunately, insurance is one of those things you don't appreciate until you really need it. Most people realize in the abstract that an illness or serious accident can be enormously expensive and devastating to  the individual's personal finances, but too often the reaction is that "it's never going to happen to me."  Usually it's a major medical event that makes them change their mind, and by that time it is too late.  Far too many people have lost everything - their houses, their savings, personal property - because the didn't get the insurance up front.

People usually get health insurance one of two ways, either through their employer or individually for themselves or their families. Health insurance is also offered through state assistant programs (AHCC in Arizona, which is income-based), through the federal government (Medicare for someone who is disabled) through some associations or groupings of professionals, and through self-insurance, which is how some organizations provide insurance for their employees).

Our focus will be on individual/, family and group insurance. Health insurance pays for all or part of predetermined illnesses and medical procedures incurred during a calendar year. Not every medical cost is included, however.   From company to company and even from one type of policy to the next, what is covered can vary. Some plans cover chiropractic treatment while others do not. Some form of treatment are rarely covered. For example, aromatherapy is unlikely to be a covered cost.

Recently a client found an immunization done through a pharmacy was not covered, while it would have been covered had he done it through a doctor's office.

Because ultimately you must make the choice about safeguarding your health, and because the choices you make can have long-range repercussions, it is important to familiarize yourself with the different types of insurance so you can choose a plan best suited to meet  your needs and budget.

 

TYPES OF HEALTH INSURANCE

The most popular type of insurance plan is the PPO (preferred provider organization).  This type of plan gives you a list of providers that the carrier has contracted with and negotiated the best pricing with as part of a "provider network." You're going to get the best deal  by utilizing this network.  You have the option of going outside the network, but keep in mind that it is going to cost you more. By choosing one of  the national carriers you find through arizonaplans.com, you should have a large number of providers, both doctors and hospitals,  to choose from.

If you have a doctor that  you've established a relationship with, and you want to continue to see him or her, make sure the physician is part of the network of the carrier you choose, otherwise you will be paying a higher co-pay (the percentage of a bill you are responsible for) because you will be going "out of network." .

Under the PPO plan, you generally are allowed to have some costs paid at a fixed price (the office visit co-pay, for example, usually runs $30-$50 no matter what the physician would charge someone who "walks in off the street") and a prescription benefit, which typically has a set price (or tiered pricing) for prescription drugs.

This plan may be especially attractive for families with small children who may need to see a doctor more often than an adult typically does. 

Another standard component of these plans is the deductible. This is the amount that you must pay before the insurance pays anything ("wellness" visits under most plans, and prescription benefits  and office visits on many others, are usually covered). The deductible can range from $500 all the way up to $10,000, with many stops in between.  For any major medical event, you will be responsible for all of the deductible before insurance pays anything. Once you meet the deductible, you will be responsible for meeting a percentage of the bill (the co-pay) until you reach a maximum amount (the out- of-pocket maximum), after which the insurance pays 100 percent.

Health Maintenance Organizations (HMOs)

With the HMO, you have to use the provider network, and typically have to go through a general physician (the gatekeeper) before seeing a specialist. Many people chaff at this requirement, particularly since you are limited to only seeing the specialist who belongs to  the HMO network. At one time, HMOs were less expensive than PPOs, but this is no longer the case. They also were one of the few sources for maternity coverage, but most plans have dropped maternity. (Maternity will back into play if the Affordable Health Care Act goes through in 2014, though; it will be much more readily available in Arizona and elsewhere, since it should be one of the basic benefits that carriers are mandated by the federal government to offer.)

HSAs (health savings accounts)

An HSA is a health insurance plan attached to a savings account. You're allowed to deposit a maximum amount of money into the account each calendar year (currently $3100 for individuals and $6250 for families). As long as the money remains in the account, it is tax deductible, tax deferred and generates interest). Funds can be used to pay medical expenses, as well vision and dental expensese, without any tax penalty but cannot be used to pay the insurance premiums without being counted  income.

Typically HSAs have higher deductibles (compared to the PPOs) and have fewer benefits until the deductible is met. However, the plans do offer a wide range of deductibles and co-pays, and for someone looking for another savings vehicle, they are worth considering.

Indemnity Plans

These plans  may be an option for someone who is having trouble getting  family/individual coverage. Underwriters for these plans tend to be more flexible in considering preconditions because they will only pay a fixed, predetermined amount on medical bills, limiting the carriers' liability. (In contrast, a PPO plan will pay 100 percent of a bill, no matter how large, once the deductible and the co-pay amount has been met).  You can choose almost any doctor because the network is not an issue. Some conditions that would be declined under a PPO will be accepted under an indemnity plan (because the carrier knows its liability is limited to a fixed amount).

Like more standard insurance plans, some of the indemnity plan have a deductible you have to meet first and even co-pays on some of the charges.          

Self-insurance Plans

This topic may not be relevant to most of the visitors to the arizonaplans.com website, but you should be aware of them, particularly if you are an employee of a big company, such as a factory that employs hundreds of people , or a member of labor union, school district and other municipality employee.  In this case, the entity establishes a pool of money which it uses to pay out the claims of its employees. Often the funds are managed by a TPA, or third party administrator. The TPA is contracted to manage all administrative tasks including  processing of claims and payments. Many times it is an  insurance company to that acts as a TPA for all health care claims.

Multiple Employer Welfare Arrangements (MEWAs) 

MEWAs  are set up  to permit members of trade, industry, professional, and other associations to create trust funds for the purpose of offering and providing health care benefits to their members. Professional Realtors, for example, is one group that offers this type of coverage to its professional members.

BUYING HEALTH INSURANCE IN ARIZONA

Health insurance is sold either as part of a group plan, typically through an employer, or an individual basis, including family coverage.  Consumers shop for individual/family coverage when group coverage is not available to them, either because they are unemployed, their employer does not offer it, or the consumer deems it is too expensive to buy for her or his dependents. Sometimes an employee will buy a short term plan to bridge the gap between the start of his or her employment and the end of the waiting period before the group plan kicks in.

Individual/family coverage can be purchased directly through the carrier or from a licensed health insurance broker or agent.  The cost is the same, but the advantage in going through an agent is that she or he usually represents more than one carrier, and can offer a variety of plans to choose from, giving the consumer more opportunity to chose a plan that provides the price and benefits wanted.

Once you find the right plan, you will have to fill out an application and sent it in, usually with the first month's estimated premium payment included. A key part of an application is your medical history. It is the information in this medical history that will largely determined if you are accepted for coverage, or if your monthly premium will be rated up as part of that acceptance (carriers are moving away from waiving so-called preconditions to rate ups to meet the future requirements of health reform legislation).                

The carrier may not cover the preconditions for a set period of time, usually for a maximum of one year, unless you have been previously insured under an individual or group plan without a break in coverage of more than 62 days (then the "prior credible coverage" rule applies).

There are certain conditions that currently can result in a decline, although this issue is supposed to be voided once all provisions of the Affordable Health Care Act goes into effect. Conditions like rheumatoid arthritis, most kinds of cancer and HIV/AIDs will result in a decline under current regulations.

COBRA

Called the Consolidated Omnibus Budget Reconciliation Act (COBRA), this federal law extends your group health insurance coverage after a qualifying event such as being terminated from employment or reduction of hours to part-time. Eighteen months is the standard extension period, although some people with certain qualifying events can see it extended even longer. Your group plan must be in force with 20 or more employees covered on more than 50 percent of its typical business days for the prior calendar year at the time you were terminated.  

Falling under the COBRA rule are PPOs, HMOs, self-insured and indemnity plans, while federal government and church plans are exempt. Not eligible are individual health insurance plans.

HIPAA or Portability Plans

The Health Insurance Portability and Accountability Act (HIPPA) provides the possibility of coverage for people who have recently lost their employer-sponsored group health plan , even if they have a preexisting condition. The carriers have to offer coverage to anyone who meets the eligibility requirements (the "guaranteed issue" rule), even if she or he has a medical condition that would result in denial under a regular application.

To be eligible, the application must have had an employer-sponsored group health plan  as his or her last form of coverage. If the old group plan  had an 18-month COBRA extension provision, the applicant must have exhausted the COBRA extension before applying for a portability plan. (If the group plan has been  terminated by the old employer, this provision no longer applies).

You are not eligible under another group plan, under Medicare and do not have other health insurance coverage. Also, you must not have lost your most recent health coverage due to nonpayment of premium or fraud. Once COBRA is exhausted, the consumer has 63 days to file an application to enroll in a portability plan.  If more than 63 days have passed, and you have not filed, you will no longer be eligible for a HIPPA plan.

Portability plans are guaranteed issue and not subject to underwriting, but typically are much more expensive than regular  individual or family plans.

As you can see, there are a wealth of choices when shopping for health insurance in Arizona. We recommend that you contact a professional health insurance broker to make sure you are making the best choice in this important decision.