Consumer's guide to health insurance

              A Message from the Commissioner
Table of Contents
○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○
○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○
○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○
○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○
○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○
○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○
○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○
○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○
○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○
○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○
○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○
○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○
Types of Policies
Individual Coverage Versus Group Coverage
Small Employer Group Health Coverage Reform Act
North Carolina’s Small Employer Group Health
Coverage Reform Act was enacted in 1992.
The purpose of the Act is to promote the availability
of accident and health insurance to small
employers, eliminate abusive rating and
underwriting practices and improve fairness in the
marketplace.
All insurers who market or offer small group health
insurance in North Carolina must offer all their
plans to small employers who have two to 50
employees, provided they reside within the insurer’s
service area. Self-employed individuals do not have
guaranteed access to all plans, but they must be
offered two standardized plans established by state
law (know as the Standard and Basic health plans)
regardless of their health status.
North Carolina General Statutes define a “small
employer” as any individual actively engaged in
business that, on at least 50 percent of its working
days during the preceding calendar year employed
no more than 50 eligible employees, the majority of
whom are employed within this state and is not
formed primarily for purposes of buying health
insurance and in which a bona fide employer-employee
relationship exists.
A self-employed individual is defined as an
individual or sole proprietor who derives a
majority of his or her income from a trade or
business carried on by the individual or sole
proprietor which results in taxable income as
indicated on IRS form 1040, Schedule C or F,
and which generated taxable income in one of
the two previous years.
Insurers have the right to verify whether small
employer applicants and self-employed
applicants meet the above stated definitions.
Insurers will most likely request tax and business
documents during the application process and
may refuse to issue coverage if proper proof is
not provided. Additionally, those documents may
be requested periodically after coverage is issued
to verify continued eligibility.
No insurer may single out a small group for
termination or non-renewal if it will continue to
serve other small groups in the same geographic
area.
The Small Employer Group Health Coverage
Reform Act also establishes limits on how much
insurers can vary premiums from one small
employer to another.
Full Insured versus Self-funded Group Health Plans
Fully Insured
Fully insured group health insurance programs are
offered by licensed insurance companies. Such
health insurance plans purchased in North Carolina
are regulated by the North Carolina Department of
Insurance. In the event a licensed insurance
company becomes insolvent and must be liqui-dated,
fully insured policyholders have protection
under the Life and Health Guaranty Association of
up to $300,000 per person on covered claims and
guaranteed policy values.
Self-Funded/Self-Insured
Some employers and labor unions provide group
health benefits coverage for their employees or
members through self-funded plan arrangements.
Employers who choose to self-insure their employee
health plan benefits are responsible for payment of
claim liabilities and performing certain administra-tive
functions ordinarily transferred to an insurance
company under fully insured health insurance
plans. Most often, self-funded plan sponsors
contract with insurance companies or third party
administrators (TPAs) to provide administrative
services; however, the employer or plan sponsor is
ultimately responsible for seeing that claims are paid
in accordance with plan provisions and ensuring the
plan is properly administered.
The North Carolina Department of Insurance does
not regulate self-insured, single-employer plans as
they are not subject to state insurance laws. In
addition, the North Carolina Life and Health Insur-ance
Guaranty Association does not cover self-insured
plan liabilities in the event of plan insolvency.
Single employer and union sponsored self-funded
health plans are regulated by the U.S. Department of
Labor’s Pension and Welfare Benefits Administration
under the guidelines of the Employees’ Retirement
Income Security Act (ERISA) of 1974.
As noted on the previous page, self-insured MEWAs,
which cover multiple employers, are licensed and
regulated by the North Carolina Department of
Insurance, but are not covered under the Guaranty
Association.
Mandated Benefits and Other Plan Requirements
Covering Children
Adding Newborn Infants and Adopted or
Foster Children
Coverage for newborn children, newly adopted
children and newly placed foster children who are
covered under a policy as a dependent are
considered to be covered from the moment of birth
or moment of placement in a home as long as the
policy was in effect within the proper time period.
When coverage is in effect from the moment of
birth or placement, exclusions and waiting periods
for pre-existing conditions may not be applied.
If your policy that is in place before the birth or
placement of your child will automatically cover
your new child without additional premium (e.g.,
your policy already covers an unlimited number of
children or covers up to two children and the new
child is your second), then the policy is considered
to be in place at the moment of birth or placement,
and coverage is in effect at that time regardless of
whether you notified your insurer of your new child.
However, notifying your insurer prior to or soon
after birth or placement is a good idea in order to
avoid questions and delays regarding claims.
If your policy that is in place prior to the birth or
placement of your new child will not automatically
cover them without additional premiums (e.g., your
policy does not currently cover children or covers
only one child and you are adding a second child),
you must notify your plan prior to birth or placement
or within 30 days of birth or placement, for the
coverage to be in effect from the moment of birth or
placement. If coverage is not in effect from birth or
placement, your plan may exclude or place a waiting
period on coverage for pre-existing conditions,
including birth defects.
Mentally Retarded or Physically
Handicapped Children
The age limitation for dependant children will not
terminate coverage for a child that is and continues to be:
1. Incapable of self-sustaining employment by
reason of mental retardation or physical
handicap; and
2. Chiefly dependant on the policyholder for
support and maintenance.
Policy guidelines must be followed to properly notify
the insurance company of any request to continue
coverage for qualified children.
Customary Benefits
The following expenses are usually covered
under most health benefit plans. However,
please keep in mind these items are not required
to be covered.
• Hospital charges
• Laboratory fees and expenses
• X-rays and diagnostic test expenses
• Surgical expenses
• Anesthesia expenses
• Physical therapy expenses
• Physicians fees
• Out-patient treatment expenses
• Prescription drug expenses
• Maternity expenses
• Transportation expenses
Other expenses may be covered and those listed
may not be covered in full.
Standard Policy Provisions, Limitations and Exclusions
Shopping for Health Insurance
What Causes Premium Rate Increases
Insurance companies raise premiums when the
cost of claims rises. Examples of factors that may
lead to increases include medical-cost inflation,
increases in medical utilization and cost shifting.
• Medical-cost inflation measures increases
in the price of medical care.
• Medical utilization measures the frequency
medical treatment and services are
obtained during a period of time.
• Cost shifting occurs when hospitals
increase the amounts charged to paying
patients to offset the cost of care for
indigent patients.
• For managed care plans, premiums
increase with increases in the use of out of
network providers.
Consumer preferences for increased choice of
providers, less restrictions on care and increased
mandated benefits all have the effect of
increasing premiums due to higher prices paid to
non-network providers and increased utilization
of services.
Shopping Comparison Chart
Company Name Company Name
Questions To Ask
1 How much is the deductible? $ $
2 Do I have to pay a co-insurance amount?
If so, how much?
Yes No
$
Yes No
$
3 Are there waiting periods before certain illnesses are
covered?
Yes No Yes No
4 Does the policy have an annual benefit maximum?
If so, how much?
Yes No
$
Yes No
$
5 Does the policy have a lifetime benefit maximum?
If so, how much?
Yes No
$
Yes No
$
6 What are the limits on:
Daily hospital room and board
Medical tests or other hospital expenses
Amount paid for doctor's visits
$
$
$
$
$
$
7 What is not covered?
8 Will the policy pay for:
Maternity care
Prescriptions
Immunizations
Well baby care
Vision care
Dental care
Infertility treatment
Chiropractic care
Yes No
Yes No
Yes No
Yes No
Yes No
Yes No
Yes No
Yes No
Yes No
Yes No
Yes No
Yes No
Yes No
Yes No
Yes No
Yes No
Additional questions for managed care comparison.
9 How much is the co-payment? $ $
10 Are my doctors in the network? Yes No Yes No
11 Do I need a referral to see a specialist? Yes No Yes No
12 Are non-emergency, out-of-network services covered? Yes No Yes No
13 Are network providers conveniently located? Yes No Yes No
14 Is the doctor I want to see accepting new patients? Yes No Yes No
15 Does the plan allow providers to balance bill me for the
difference between allowed and actual charges?
Yes No Yes No
(This is only an example. You may need to tailor a comparison chart of your own to address your individual needs.)
Claims
Consumer Tips
Disclosure
North Carolina law requires all insurers to
clearly and truthfully disclose the following
information in their marketing materials and all
health insurance policies:
• A clear description of health insurance
benefits
• A complete list of items and services that
the health care plan does not cover
(exclusions and limitations)
• An explanation of how the insurer will
calculate their claim cost (their share of a
claim) and your share, including an
example of how they make that
calculation
• Length of time you must wait in order to
receive benefits if the policy contains pre-existing
health conditions limitations
• Renewal terms and provisions
• Premium rate terms and provisions
Frequently Asked Questions
The North Carolina Life and Health Insurance Guaranty Association
To protect North Carolina life and health
insurance policyholders against insurer
insolvency, the North Carolina General Assembly
created the North Carolina Life and Health
Guaranty Association. The Guaranty Association
provides up to $300,000 of benefits per person
(for guaranteed policy benefits) on covered
policies in the unlikely event of insurer insolvency.
The association is funded by insurers licensed to
do business in North Carolina.
Consumer Services and Consumer Complaints
Glossary
How to Reach Us
You Can Reach the North Carolina Department of Insurance Consumer Services Division at:
(800)546-5664 Toll free
(919)733-2032 Outside of North Carolina
(919)715-0319 TDD (Telephone Device for Deaf Caller)
(919)733-0085 Fax
You can find additional information as well as a downloadable copy of our complaint form on the North
Carolina Department of Insurance web site at www.ncdoi.com.
The address for the North Carolina Department of Insurance Consumer Services Division is:
Consumer Services Division
North Carolina Department of Insurance
1201 Mail Service Center
Raleigh, NC 27699-1201
Related Publications Available from the NCDOI and its Web Site
HMO Performance Report
Managed Care Plan Consumer Guide
Guide to Appeals and Grievances
A Consumer’s Guide to State Continuation
Employer’s Guide to HIPAA Rights Regarding Health Insurance
Employees’ Guide to HIPAA Rights Regarding Health Insurance
Your HIPAA Rights and Guide to Individual Health Insurance
Getting Off to a Good Start With Medicare
Medicare Changes and Options
Medicare + Choice Comparison Guide
Medicare Supplement Comparison Guide
Guide to Long-Term Care Insurance
How to Reach Us