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 Q.   Can’t I just buy “individual” health insurance when I need to have an expensive procedure? 

 A.   No.  If you need to receive costly medical care within the first 12 months of purchasing a health insurance policy,  insurance companies do not have to provide coverage for pre-existing medical conditions (anything you’ve been  diagnosed with or treated for in the previous 10 years) for up to one year from the start of the policy. Depending on  the severity of your illness or procedure the insurance company also can decline or post pone you for health insurance  until the procedure has been completed. Some of the better health insurance policies actually cover controlled  preexisting conditions such as Hyperlipidimia or Hypertension from day one. But most other pre-existing conditions  will  not be covered. In order to avoid such a waiting period, once you get health insurance you should always  maintain it.

Q.   I’m very healthy so why should I pay expensive monthly health insurance premiums when I “probably” won’t ever go to the doctor? 

A.   Although there may be a “probability,” based on your past health history, that you are not likely to see a doctor, incur a serious injury or develop a life-threatening illness, the fact remains, that you can never be certain.  If you don’t obtain health insurance, you are “gambling” with your health.  Here are the gambling statistics:

1.  Lack of health insurance causes 18,000 unnecessary deaths every year.
          2.  Adults without health insurance have a 25% greater chance of dying from a disease or condition than those with health insurance.

Q.   If I don’t have health insurance and need medical care, won’t the hospital charge me less money because I am uninsured? 

A.   No. What many people do not know is that hospitals routinely charge uninsured people up to four times as much for medical treatment as patients with health insurance coverage. Insurance companies often negotiate rates for their policy holders and hospitals agree to charge those patients a set dollar amount for medical care. The rate the hospital may charge an insured patient often differs from what the hospital will charge an uninsured patient. The average uninsured patient will pay $30,000 for medical treatment related to a mild heart attack while an insured patient’s private insurance company will be charged less than $10,000 for the exact same treatment. This means that the average, uninsured working man or woman can be stuck with a bill that is more than double what a managed care company or a government program pays for medical treatment. In most cases, uninsured individuals are aggressively pursued by collection agencies for debts relating to medical care.  

Q.   How many Americans do not have health insurance? 

A.   In 2005, the number of uninsured Americans stood at a record 46.6 million, indicating that 15.9 percent of Americans lack health insurance coverage.  The ranks of the uninsured in 2005 included 21.5 million people who worked full-time.  Census Bureau data shows that the number of uninsured has consistently increased over the last 5 years and more people are without health insurance now, than at any point in history. Today, more than 38 million Americans rely on Medicaid as a safety net for their care needs.  Since 2000, the ranks of the uninsured have grown by 6.8 million. Additionally, data collected in 2005, also indicates that the percentage of Americans with private health insurance declined to 67.7 percent. The percentage was 63.6 percent in 2000. The data demonstrates that 3 million fewer Americans had employment-based health insurance coverage in 2005, then in the year 2000. 

Q.   If I have health insurance do I still have to worry about bankruptcy? 

A.   Yes.  According to a recent Harvard study, nearly half of the estimated 1.5 million personal bankruptcies filed each year result from high health expenses—even though 76 percent of the filers are covered by health insurance at the onset of illness. This report appears in the February 2007 issue of Health Affairs. According to David Himmelstein, an associate professor of medicine at Harvard Medical School who led the study, "Almost every American is one step away from potential bankruptcy from serious illness." 

Q.   Why are so many Americans with health insurance coverage filing for bankruptcy?

A.   The primary reason is that policy holders really don’t understand their health insurance benefits and their total out of pocket expenses. To stay price competitive and make a larger profit, health insurance companies often eliminate or reduce benefits. Often, the way the policy is sold, this reduction in benefits may not even be noticeable. However, it is important to point out that some companies, in particular, those that service the small business & self-employed health insurance market, have decreased lifetime benefits, limited coverage for organ transplants, implemented separate hospital deductibles, restricted diagnostic & out-patient treatments and imposed access fees. Companies have even eliminated certain benefits entirely, for example, prescription drugs, organ transplants and maternity coverage.

Let’s look at how some companies have eliminated or reduced benefits for organ transplant coverage. A policy holder knows that s/he has a plan that offers coverage for organ transplants, but what s/he may not know is that there is only a $100,000 maximum benefit for a procedure that normally costs $250,000-$500,000. Now let’s take a look at how a company can advertise that a policy has a $5 million maximum lifetime benefit, when in fact, the benefit may only be $100,000 per illness. A consumer purchases a health insurance policy that offers $5 million maximum of lifetime benefits, however, in the “fine print” of the brochure, the plan states that it has a $100,000 “per illness” cap. This means that if the policy holder develops a serious illness that requires only 1 surgery, his/her $100,000 “per illness” cap may be reached by the time s/he has her 2nd surgery.

Unfortunately, consumers don’t often read the “fine print” until their insurance company informs then that they have exhausted their coverage and the policy holder discovers that the “affordable” health insurance plan with $5 million dollars of lifetime coverage won’t pay out  $5 million dollars unless the policy holder develops multiple unrelated & separate life threatening and debilitating illnesses all with a cost less than $100,000. Hopefully this should make it easier to understand why so many Americans with health insurance are forced to file for bankruptcy.

Q.   Won’t filing for bankruptcy eliminate all my medical debt? 

A.   A controversial bankruptcy law enacted by Congress in 2006, makes it tougher for many Americans to wipe out debt by declaring bankruptcy, regardless of whether their debt resulted from medical bills or from reckless spending at the mall. Under the old law, people who filed for bankruptcy under Chapter 7 were allowed to erase their debt and start fresh. The new measure makes it less likely that debtors particularly those who earn more than their state’s median income level—will qualify for Chapter 7.  Instead, they will have to file under Chapter 13, which requires paying off some or all debt over a designated period of time. Filers must then go through a "means test" to determine how much debt, if any, they can pay. They must also get credit counseling and take a financial management course at their own expense.

Q.  I know I need health insurance, but can I really afford it?  

A.  Unfortunately, it is a fact of life that you may have to give up certain luxury items, brown bag your lunch or decrease your spending in other areas to afford health insurance.  If you are the type of person that wouldn’t risk driving your vehicle without car insurance, consider the fact that there is a statistically greater chance that you will suffer from an illness or injury than an auto accident. Today, nearly 20 cents out of every dollar spent in the United States is spent on health care. In 2006, the U.S. health care spending weighed in at $2.1 trillion and is projected to double to $4.1 trillion by 2016, according to John Poisal, deputy director of the National Health Statistics Group, part of the Office of the Actuary in the Centers for Medicare and Medicaid Services, in a 2007 Health Affairs study. The report also predicts the annual growth rate for prescription drug spending will soar from 7.4% in 2007 to nearly 10% in 2016.

Q.  Where can I buy a health insurance policy? 

A.  Traditionally, health insurance policies have been sold by “captive” agents who worked for insurance companies and had a vested interest in selling you that company’s insurance products. Today, there are more consumer-friendly options for acquiring health insurance coverage. “Independent” insurance agents, also known as “non-captive” agents or “brokers” can sell insurance policies from several different companies, allowing them to be more objective about your personal needs. These individuals may even be able to provide a complete review of your insurance needs, something you should do at least once a year to make sure that your policy is up to date with your current financial situation. Finally, the web has become an excellent resource for comparison shopping, however, when purchasing insurance, consumers must keep in mind that, although convenient, the web is no substitute for the personal attention that you will receive when you deal with a knowledgeable, ethical and reputable health insurance agent or “broker.” It does not cost a penny more to purchase your insurance through an agent or broker so why buy blindly?

Q.   What is a “captive” agent?” 

A.   A “captive” agent is an insurance agent that works for one company and is restricted, by agreement, to only recommend and sell the insurance products that that particular company offers, even if those products do not exactly meet the insurance needs of the customer. In essence, the “captive” agent has more of an allegiance to the insurance company than the insurance buyer. For example, if you walk into a State Farm office to purchase health insurance that agent can only sell you Assurant Health products. Assurant Health products are some of the most expensive  health insurance products on the market today and they contain significant additional out of pocket expenses. If you expect your insurance agent to provide you with several plan comparisons from different carriers, it is in your best interest to work with a knowledgeable, ethical and reputable “independent” agent or “broker.”

Q.   What is a “non-captive” “independent” insurance agent or “broker?”

A.   A “non-captive” “independent” insurance agent or “broker” is a licensed professional representing the insurance buyer/consumer, rather than the insurance company. A “non-captive’ “independent” insurance agent or “broker” usually represents more than one company, therefore, plan comparisons can be made and plan benefits can be added, based on the buyer’s specific insurance needs. Most insurance “brokers” also offer multiple lines of insurance products including health insurance, life insurance, accident only policies, disability insurance, critical illness policies, long term care insurance, workman’s compensation insurance, business insurance and certain financial services.

Q.  Should I choose to work with a “captive” agent or an insurance “broker?” 

A.   Ultimately, that choice is really up to you.  If you have been working with a “captive” agent who has been less than forthcoming about what your health plan does and does not cover or has not fully informed you about your plan’s benefits, limitations of coverage and total out-of-pocket expenses, then it might be in your best interest to speak to a insurance “broker” to determine how your current plan’s benefits and price compare to other plans on the market. If you are too busy to comparison shop, it is in your best interest to work with a knowledgeable, ethical and reputable insurance “broker.”

Q.   How do I find knowledgeable, ethical and reputable insurance “brokers?”           

A.   Knowledgeable, ethical and reputable insurance “brokers” often rely on “word of mouth” advertising. Many insurance “brokers” advertise in the yellow pages or on the web, but advertisements are no substitute for good business relationships with existing clients.   Reputable “brokers” will usually have a web site that includes client testimonials. If a “broker” does not have a list of client testimonials, ask for a list of referrals. In most states, insurance agents and “brokers” are licensed through the State Department (or Division) of Insurance. In Illinois, the Division of Insurance falls under the umbrella of the Illinois Department of Financial and Professional Regulations (IDFPR). The Office of Consumer Health Insurance can tell you if your insurance agent is licensed and whether there have been any disciplinary actions taken against that individual. You can call the Office of Consumer Health Insurance toll free at (877) 527-9431. The Illinois Division of Insurance also compiles statistics regarding the type of insurance complaints it receives and the reason for the complaints. The IDFPR also collects complaint data against insurance companies. The number to the IDFPR is 312-814-2424.

Q.  What if the “broker” I am working with recommends that I buy a health insurance policy from a company that I have never heard of before?  

A.   If you are uncertain about your “broker’s” recommendation, take some time to do your own due diligence before making a purchasing decision.  It is your right to have all of your questions answered and to feel completely comfortable with your purchasing decision before you sign on the dotted line. Today, more than ever, consumers have an overwhelmingly number of options when it comes to purchasing health insurance.  If your “broker” works with many companies, chances are very likely that your “broker” may recommend a plan or a company that you have not heard of before. Just because a particular company doesn’t spend tens of millions of dollars on T.V. and radio advertising, like Blue Cross/Blue Shield, Humana or United Health Care, does not mean that the company does not have sufficient reserves to pay claims. Before you buy a policy from ANY insurance company, even if the name is highly recognizable, it is important to check out the company’s rating with a leading independent rating service, such as Standard & Poor's A.M. Best, Moody’s or another reputable rating service. The company’s ratings will tell you whether the company is likely to be able to pay off claims in the event of a disaster or an abundance of payouts. If you are working with a reputable insurance “broker,” who has had several policies issued with that particular company, your “broker” will be able to tell you what you can expect in terms of claims payments, speed of payout, and customer service.

Q.   How do I know if there have been any complaints issued against a particular insurance company? 

A.   In Illinois, the Office of Consumer Health Insurance offers consumers help if they have questions or concerns about their health insurance policy or a health insurance company. The office was established by the Illinois Department (now Division) of Insurance on January 1, 2000, as part of the new Managed Care Reform and Patient Rights Act. The Office of Consumer health insurance can explain your rights as a health care consumer, answer questions about health insurance, help you understand the coverage provisions of your specific health care plan and assist you when you have a problem or complaint. To contact the Office of Consumer Health Insurance, call toll free at (877) 527-9431. The Illinois Division of Insurance also compiles statistics regarding the type of insurance complaints it receives and the reason for the complaints. This information is available to consumers @ www.idfpr.com/DOI/Complaints/Complaints.asp. For general questions, you can email the Division of Insurance at director@ins.state.il.us.

Q.   What if my insurance company can’t answer my questions about my health insurance benefits or I have concerns about claims that have not been paid? 

A.   If you are not happy with the answers that your insurance company is giving you, have outstanding claims that have not been paid, or just generally feel like you are getting the run around, the first person you should call is the insurance agent or “broker” that sold you your policy. Your agent or “broker,” should be able to work with you and your insurance company to resolve your insurance issues. If you can not resolve your issues by working with your agent or “broker,” you can file a consumer complaint against the insurance company by completing a complaint form on the Division of Insurance web site. The form can be completed and sent electronically or printed out and mailed to the Illinois Division of Insurance. Find the form here: www.idfpr.com/DOI/Complaints/file_complaint.asp.  When you make a complaint against an insurance company or insurance producer (agent), the Division of Insurance will initiate an investigation, assign your complaint a file number and notify you of the results of their investigation.

Q.   I found out that my agent misrepresented the type of health insurance benefits I have and now my insurance company is refusing to pay claims that I thought were covered.  What should I do?

A.   First, you should talk to your agent to see if you if there anything that s/he can do to help you resolve your issue with your insurance company. If your agent is unable or unwilling to help you resolve your issue with your insurance company, you can contact the Office of Consumer Health Insurance to ask for assistance. To contact the Office of Consumer health insurance, call toll free at (877) 527-9431. Depending on the situation, the Office of Consumer Health Insurance may direct you to file a complaint against the insurance producer that sold you your policy, the insurance company that issued your policy or both. The complaint form is available on the Division of Insurance’s web site www.idfpr.com/DOI/Complaints/file_complaint.asp. The consumer complaint form can be completed either electronically or in hard copy format. When you make a complaint against an insurance company or insurance producer (agent), the Division of Insurance will initiate an investigation, assign your complaint a file number and notify you of the results of their investigation.

Q.   I was contacted by an insurance agent who informed me that I could only get health insurance at a cheaper price, if I joined an Association.  Is this true? 

A.  In many cases yes. Many quality products are endorsed and specifically designed to work with a reputable association. Often times an insurance company will design “private label” products specifically for the members of a particular association. They do this to appeal the members of this association and to reap the premiums that would be inherent to enrolling an association comprised of many members. There is one association you should be aware of and avoid. It is called the National Association of Self-Employed (NASE), a division of the MEGA Life and Health Insurance company and the Mid-West National Life Insurance Company (a.k.a. Health Markets). You may get great association benefits, like discounts on office supplies, but what you may not get is adequate health insurance. This association targets unsuspecting business owners by offering low price health plans with added benefits like discounts on office supplies and other products. Often, this association’s plans offer very limited benefits, resulting in enormous out of pocket expenses for the buyer. According to the National Association of Insurance Commissioners (NAIC), N.A.S.E. has been the subject of 14 investigations by state insurance officials since 1995. Mega Life & Health (a.k.a. Health Markets) were just slapped with the largest Insurance regulatory fine in health insurance history, $20,000,000. Read about it here: (http://activerain.com/blogsview/608832/Mega-Life-Health-Midwest) This fine was due to inappropriate market conduct and misleading sales material. If you are a business owner, you have, most likely, been inundated with phone calls from telemarketers and insurance agents claiming to offer the very best health insurance plans at the cheapest price. Remember the caveat, “Buyer beware.” If something sounds too good to be true, it probably is. Due your own due diligence and read the fine print!

Q.   I was approached by someone offering to sell me a health plan that offered discounts on medical, vision and dental care and prescription drugs. Is this the same thing as health insurance? 

A.   No. A health care discount plan is NOT health insurance however, some unscrupulous agents and non-agents have been known to misrepresent discount plans as health insurance plans. To misrepresent a discount plan as an insurance plan or policy is a violation of state insurance regulations. To see if a drug, vision or health care DISCOUNT PLAN is registered with the Division of Insurance in Illinois, refer to the Department of Insurance’s Preferred Provider Administrator List, available at www.idfpr.com/DOI/PPA/PPAlist.asp

Q.   How do I become an educated and informed insurance consumer?

A.   In Illinois, the Illinois Division of Insurance offers some excellent consumer resources on their web site. You can take an interactive online quiz to determine how much you know @ www.idfpr.com/DOI/Get_Smart_Week/2005/flashQuiz/web_quiz.html. To assist you in selecting a reputable insurance company, the Division also has a list of telephone contacts and web site links which can help you determine if the company holds a certificate of authority (license) to do business in Illinois, is financially sound, and has a low rate of consumer complaints www.idfpr.com/DOI/General/find_reputable.asp.The Division of Insurance also offers some good advice on how to watch out for insurance fraud www.idfpr.com/DOI/General/Fraud_facts.asp, so you don’t fall victim to an insurance scam or scheme. Additional consumer information can be obtained from the National Association of Insurance Commissioners (NAIC) at www.naic.org/index.htm

Q.   How often should I review my health insurance coverage to see if my policy is meeting my insurance needs? 

A.   You should review your health insurance policy with your agent on a yearly basis to make sure that your plan still offers you adequate benefits and a price that that is comfortable for your current financial situation. Most insurance savvy business owners know that even if you don’t file an insurance claim, insurance rates still go up. Insurance rates are usually adjusted on your policy’s anniversary. To keep your insurance rates affordable, you may have to purchase another plan when rates go up. A good insurance agent or “broker” should contact you prior to your policy renewal date to notify you of your premium increase and to make sure that your health insurance policy is still meeting your needs. If the rate increase is too high or if your agent believes s/he can find you a comparable plan at a lower price, you may have to apply for a new policy which can go into effect before your rate increase occurs.

Q.   What is the process if I decide to obtain a health insurance policy? 

A.   After contacting a health insurance agent, the agent will gather some preliminary information about your medical history in order to prepare for you an insurance quote. 

The insurance quote should reflect any additional premiums you will be charged for certain medical or life-style conditions, such as obesity or smoking. The final quote should reflect the total amount of money you will need to pay over the term of the insurance policy in exchange for coverage. Insurance policies are usually in effect for 1 year and are renewable upon your policy anniversary. If you agreed to pay the premium amount to the insurance company, your agent will collect payment for a small application fee only. Once you are approved for said coverage and you accept their offer, the first month’s premium will be collected on or about your requested effective date. You will receive a copy of your insurance policy which details the terms and conditions of your coverage shortly thereafter.

Q.   Does the law require all insurance companies to issue “individual” health insurance policies to anyone who applies?

A.   No. Companies that issue “individual” health insurance coverage underwrite the applications prior to the policy being issued. Underwriting is based on many things including, but not limited to, age, health status, occupation and certain hobbies. The company may (1) issue the policy as applied for; (2) issue the policy with stipulated exclusions either for a limited or unlimited period of time; (3) issue the policy with an added premium; or (4) decline issuance of the policy. If a policy is issued other than as applied for, the company must provide a reason for offering exclusions or a declination, upon request.

Q.  I have chronic medical conditions, but I was recently told by an agent that s/he could “guarantee” me coverage on an “individual” health insurance policy.  Is this true?

A.   No.  If you apply for an “individual” health insurance policy, you will still have to go through an “underwriting” process.  If you have medical conditions, are currently receiving medical treatment or are extremely obese, you may not receive an offer of coverage from the insurance company. If the agent told you that you would be “guaranteed” coverage, it is likely that the plan is nothing more than a discount plan that offers you a discount on the cost of routine medical services. “Guaranteed” coverage is only available on “group” health insurance policies. You are never “guaranteed” coverage when you apply for an “individual” health insurance policy. However, some states have a health insurance “risk pool” which guarantees coverage to individuals who have certain pre-existing medical conditions or who have been declined for traditional health insurance coverage. In the state of Illinois this coverage is available through the Illinois Comprehensive Health Insurance Plan (I.C.H.I.P). Find out more about this coverage: http://www.chip.state.il.us/

Q.   What happens if an incident occurs and I have to file a claim for payment with my insurance company? 

A.   If an incident occurs that requires medical treatment, depending on the type of policy you have your insurance company may require that you 1. Pay the medical expense out of pocket and submit a claim to your company for reimbursement or 2. Assign your insurance benefits (payment) to the treating physician or medical facility. In most cases, claims are automatically initiated by your medical provider and all you have to do is present your insurance I.D. card at the time of claim. No payment is usually required up front other than a small co pay if it is an outpatient doctor’s office visit. Once your claim is processed, you will receive an “explanation of benefits” or E.O.B., from your insurance company that details the total expenses of your medical treatment and lists the amount you owe.     

Q.   How long does an insurance company have to pay my medical claims?

A.   Once your claims have been received, the company has a reasonable time period in which they must either pay or deny a claim. If the claim is not paid within 30 days after the insurance company receives all of the needed information about your claim, they must pay interest on the claim at the rate of 9% per annum.

Q.   What does a company mean by usual and customary charges?

A.    Usual and customary, also called reasonable and customary, means the fee amount charged by most of the providers in a given geographical area for a particular service. Insurance companies may subscribe to an independent service which periodically surveys providers in a given area, or they may use their own claims experience to establish usual and customary allowances. Most companies pay claims based upon a percentile of the usual and customary fee schedule.

Q.   My insurance company is delaying payment of my claim because they are checking for a pre-existing condition and are requesting information about all the doctors I have seen in the past 10 years. I know the condition was not pre-existing, and this is just a waste of time. Can they do this?  

A.   Yes. The company is allowed to look back ten years to determine if treatment was received for a condition, or if symptoms were present that would have caused a prudent person to seek treatment for a condition. Individual health insurance policies are allowed to exclude benefits for pre-existing conditions for the first two years the policy is in force. Some companies only exclude preexisting conditions for one year and only look back for one year. This varies from policy to policy. A quality policy will pay for certain controlled pre-existing conditions such as Hypertension & Hyperlypidimia from day one providing they are disclosed at the time of application. If a claim is submitted to the company within the pre-existing exclusion period, a pre-existing condition investigation will most likely take place. Note: Any condition that has been excluded by a rider may be excluded for the life of the policy. Please refer to question Number 2 for more information. If you believe the company has taken too long to complete the investigation, you may file a complaint online with the Division of Insurance www.idfpr.com/DOI/Complaints/file_complaint.asp.   Be sure to provide copies of any correspondence received from the company, as well as a copy of the insurance contract. We will contact the company to find out why the claim is being delayed, and see if anything can be done to expedite the process.

Q.  My insurance company has rescinded my health insurance coverage. What exactly does that mean? 

A.   Illinois law permits insurance companies to rescind a health insurance policy under certain circumstances. An insurance policy is issued based on information contained in the application or enrollment form. When an individual fails to completely and accurately disclose health information, including weight and height, on the application, it affects how the policy would have been issued. The company may have issued the policy with an exclusionary rider, issued the policy for a higher premium, or declined coverage altogether had they been provided with correct information. Insurance companies will generally review the
application for accuracy and completeness when they receive the first claim. If they find an error or omission that is material (one that would have changed their offer of coverage) the company will take action to rectify the situation. They may issue an exclusionary rider for the health condition in question and ask that you accept it as part of the policy. Or, if the error or omission is significant enough, the company may rescind the policy and return your premiums to you less any claims paid out. Rescission means that the policy will be null and void from the beginning. They may also offer you the opportunity to pay the extra “load” that they would have applied to the policy had they know about the pre-existing condition thereby keeping your policy in force. It is most important to fill out your application accurately and completely to avoid having your policy rescinded or the original offer modified. When you receive your policy, check your copy of the application in the back of the policy to be sure that information was accurately recorded if you did not fill out the application personally.

Q.   How do I know if my health insurance policy offers me sufficient coverage and that I am paying a fair price for my monthly premiums?  

A.   Most people who shop for insurance can not distinguish the difference between the benefits they “need” and the benefits they “want.”  If you were to purchase a health insurance plan with every benefit that you can imagine, you many have great coverage, but the monthly premiums are bound to put a significant drain on your finances. If you don’t have disposable income; you won’t be able to afford health insurance coverage for very long. If you are perfectly healthy and don’t take any medication, it may be in your best interest to select a plan with a higher deductible and a discount prescription card to keep your monthly premiums lower. Set some money aside each month just in case an illness or injury occurs and you to pay your deductible or buy expensive prescription medications.

If the worst happens, you are financially prepared, if it doesn’t, that money is still yours to keep. Since there are so many plan options available from different insurance companies, your insurance agent should be able to provide you with several plan options from different carriers that meet your insurance needs. Ultimately, it is up to you to make certain that you understand your insurance coverage. The Illinois Division of Insurance web site offers many tips to help you ask the right questions so you understand your health insurance purchase. Visit their site here: www.idfpr.com/DOI/Main/consumer_info.asp.  

Q.   What kind of health plan should I select if it is likely that I will need medical treatment? 

A.   Firstly, if you have received medical treatment already for this condition or a doctor has diagnosed you with a particular condition in which medical treatment is needed the chances are likely that you will not be approved for health insurance on an individual basis anyway. However, if your family history shows that you may be more susceptible to a particular illness and or you are getting older, it may make sense to select a health insurance plan with a lower deductible. However, your monthly premiums will be significantly higher. Remember, if you opt to pay a higher monthly insurance premium and you do not need medical treatment, you do not get any portion of higher monthly premiums that you paid to the insurance company back. There is no refund for remaining perfectly healthy.

Q.   Why do many insurance agents recommend health insurance plans with very low deductibles, like $250 or $500?  

A.   Simple, plans with lower deductibles cost more. Since insurance agents are paid a percentage based upon the amount of premiums collected, lower deductible plans mean a bigger paycheck for the agent. Unfortunately, not every insurance agent acts in their client’s best interest. Reputable, ethical and knowledgeable insurance agents and “brokers” usually have a long track record of doing what is in their client’s best interest, even if it means less of a commission. A reputable agent will take the time to understand your insurance needs and explain what your policy does and does not cover.

Q.  What is an “individual” health insurance policy?

A.   An “individual” health insurance policy is a policy that provides insurance coverage for an individual or an individual and their dependants.

Q.  Who purchases “individual” health insurance policies? 

A.   In most cases,” individual” health insurance policies are purchased by independent contractors, freelancers, small business owners, entrepreneurs, and individual employees who work for a company that doesn’t offer any health insurance benefits.

Q.  If I apply for “individual” health insurance, is coverage also available for my entire family? 

A.   Yes.  If you are applying for coverage for your family, each family member should be listed on your application when you apply for coverage.  

Q.  How much are the premiums for “individual” or “family” health insurance coverage? 

A.  Premiums are determined by a variety of factors, such as, the applicant(s) age at the time of application, the applicant(s) health history, if the applicant(s) smoke, if the applicant(s) take medications, etc. Premium amounts are also largely dependant on the type of health plan selected, for example, plans with lower deductibles and lower out-of-pocket expense cost more. Plans that offer maternity coverage cost more than plans that do not. 

Q.   What type of coverage does an “individual” health insurance policy provide? 

A.   “Individual” health insurance policies typically provide coverage for major medical expenses, such as doctor’s visits, hospital stays, surgery, out-patient therapy, diagnostic testing, prescription medications, organ transplants, durable medical equipment, mental health counseling, emergency room services, ambulance service and other medical expenses.

Q.  What types of “individual” health insurance plans are available? 

A.   Many different types of health insurance can now be purchased directly by consumers.  These plans include, Traditional Major Medical Plans, Catastrophic Health Plans, H.S.A. (Health Savings Account) qualified H.D.H.P’s (High Deductible Health Plans) Accident Only Plans, Catastrophic Illness Policies, Prescription Medication Plans, Dental Plans, Vision Plans and many others.

Q.   Which companies offer “individual” health insurance policies? 

A.   The majority of health insurance carriers offer some type of “individual” health insurance plan. 

Q.   If I purchase an “individual” health insurance plan, how are my rates determined?

A.   When you apply for health insurance, your rates are determined by a variety of factors: 

            1.   Your age at the time of application
            2.   Your overall health at the time of application                                                             
            3.   Your health history prior to application
            4.   Your status as a smoker, non-smoker or ex-smoker
            5.   Your weight (e.g. underweight, overweight, obese)
            6.   The types of medication(s) you are taking
            7.   The medication(s) you have taken in the past
            8.   Your current mental health status (e.g. depression or anxiety)
            9.   Your prior treatment for mental health or addiction
            10. Your occupation (e.g. attorney, pilot)
            11. The city, state and zip code in which you reside
            12. The health plan and benefits that you select (e.g. low deductible, maternity)
            13. Other factors that may be considered by underwriting

Q.  If I purchase an “individual” health insurance plan for my family, are my rates affected by the health condition of one of my family members?

A.  No.  Your portion of the monthly premium is not affected by the health history of other family members who may have poor health. However, your portion of the premium will  be calculated separately from your family members. “Family” premiums are calculated by adding the premium costs for each family member. For example, if you are a healthy, M/30 year old non-smoker, your portion of the monthly insurance premium may be $100. However, if you wife is ten years older F/40, slightly over-weight and a smoker, her portion of the premium may be significantly higher, $200.  If you have two young children
on your policy, M/10 and F/6, who are healthy, their monthly insurance premiums may be $50 each. The insurance company will then combine all of these premium amounts to determine your family’s total monthly premium: (M/30 non-smoker = $100 + F/40 over-weight smoker = $200 + M/10 = $50 + F/6 = $50) The Total Monthly Family Premium = $300 ($100 + $200 + $50 + $50)

Q.   Can I still buy individual health insurance if I have a very serious pre-existing medical condition?

A.   In most states you can be turned down for individual health insurance coverage if you have a very serious medical condition (e.g., HIV or cancer). Fortunately, even though they are not required to do so, most states have developed some way to provide uninsurable people with access to individual health insurance coverage. Thirty-three states provide coverage to medically uninsurable people through high-risk pools. Twelve states use other means of providing uninsurable people with access to individual coverage (e.g., requiring that all individual health insurance companies issue individual health insurance policies regardless of health status, coverage through a designated health insurance company of last resort, etc.). There are five states that still have no means of providing individual health insurance access to people with catastrophic medical conditions.

To find out what your state's options are for medically uninsurable individuals, check out the Health Care Coverage Options Database provide by the National Association of Health Underwriters (NAHU)www.nahu.org/consumer/healthcare/topic.cfm?catID=23

Q.  What kinds of coverage is available for the medically uninsurable individuals?

A.   Different states have adopted different means of providing access to individual market coverage for people who have a catastrophic medical condition.  A brief outline of the resources available is outlined in the following section: and they are all described in this section:

1.  Guarantee Issue Requirements
A few states require all individual market health insurance carriers to offer products to all people at any time, regardless of their health status, but most do not and instead offer the general public another alternative such as a high-risk pool. However, all states have to have at least one means of providing guaranteed-issue coverage to individuals exercising their federally mandated group-to-individual rights. It can be through the traditional private market, through a high-risk pool, or through another means. This section covers all of these state-specific provisions.  Please use the link to locate the requirements of your particular state. www.nahu.org/consumer/healthcare/topic.cfm?catID=117

2.    High-Risk Health Insurance Pools
The most common way states provide people with serious medical conditions with access to private individual health insurance coverage is through the creation of a high-risk health insurance pool. Consumers in these pools have access to comprehensive private coverage plans, but pay slightly more than the average individual market premium due to their health conditions. This section provides an overview of each state high-risk pool, including eligibility requirements, rate restrictions, preexisting condition requirements, covered services, cost information and contact information. Please use the link to locate the requirements of your particular state. www.nahu.org/consumer/healthcare/topic.cfm?catID=120

3.  High-Risk Reinsurance Pool
Another option for providing access to private individual market coverage to people with serious medical conditions is a high-risk reinsurance pool. A reinsurance pool has many characteristics that are similar to a high-risk pool, but the individual purchaser does not buy their policy directly through the pool. Instead they buy their policies from individual insurance carriers, who then cede the high-risk policies to the pool for risk spreading.  Please use the link to locate the requirements of your particular state. www.nahu.org/consumer/healthcare/topic.cfm?catID=127

4.  Defined Benefit Health Insurance Policies

If you can not afford the aforementioned High Risk Pool premiums or you do not live in a state that provides a High Risk Pool. There is now another option. The Guarantee Issue sector of the health insurance industry has been rife with fraud for many years. In the past, several predatory organizations such as Employer's Mutual L.L.C. and others have taken advantage of those who have been rendered uninsurable by the individual health insurance market leaving behind millions dollars in unpaid claims. For the first time in many years there is now a series of legitimate Defined Benefit Health insurance plans (aimhealthplans.com) for those who have been rendered uninsurable in the past. The plans are fully insured and underwritten by American Medical & Life insurance company of New York, New York (www.amlico.com) The better of the four plans available is called the "Health Max Plus plan. It provides an unlimited surgical benefit for inpatient or outpatient surgeries. It also provides up to $4,000 of coverage for the first day of hospital admission and up to $1,000 per day for each day of hospital admission thereafter up to 100 days. Medically necessary diagnostic tests and x-rays performed in a doctor's office or outpatient facility (e.g. MRI, CAT Scan, EKG, Mammography) are also covered up to $400 per visit with a 5 visit allowance per year per insured. Anesthesia is also covered at 25% of the surgeons charges. Accident Medical Expense is also available as an optional benefit. This benefit would provide "first dollar" coverage (no deductible) for Accidental Injuries.

The P.P.O. network is a nationwide P.P.O. network providing access to more than 350,000 medical providers nationwide. You can search for your preferred doctor's or hospitals @ www.multiplan.com There is a 12 month waiting period for all Pre Existing Conditions. However since the plans are fully HIPAA compliant, all insured's who enter the plan presenting a Certificate of Creditable Coverage will receive credit towards satisfying the AIM health plans pre-existing waiting period. In addition, all insured's who leave the plan will receive a Certificate of Creditable Coverage so that they receive credit towards satisfying any pre existing waiting period on any other type of guarantee issue plan (e.g. employer sponsored group health insurance plan). If you are not currently disabled, receiving workers' compensation or on Medicare you are automatically approved! It's as simple as that. There are no other medical underwriting questions on the insurance application. You can even run your own quotes and apply online yourself without an agent by clicking here: aimhealthplans.com  There are several plans to choose from, the best plan is the "Health Max Plus" plan.

Q.  Do “individual” health insurance policies include any additional benefits? 

A.  Yes.  Some “individual” health insurance policies include optional benefits (optional riders) that can be added onto your health insurance policy for additional protection.  The following is a list of “optional riders” that your health insurance company may allow you to add onto your health insurance policy for an additional premium amount:

            1.  Life Insurance (amount determined at time of application)

            2.  Accidental Death and Dismemberment

            3.  24 hour accident coverage (on or off the job)

            4.  Maternity

Q.  What are the advantages of purchasing an “individual” health insurance policy?

A.  There are three major advantages to purchasing an “individual” health insurance plan is “Price, Portability and Guaranteed Renewability.”

1.  Price – In most cases, price is a major issue in determining what health insurance plan to purchase. “Individual” coverage is usually significantly lower than “group” coverage.

2.  Portability – When you purchase an “individual” health insurance plan, your plan is completely portable, in that you can take it with you if you change jobs or residences.

3.  Guaranteed Renewability – As long as you keep paying you monthly premiums, your health insurance plan is renewable on the anniversary date of your policy.  Once your policy has been approved, your coverage will continue no matter how sick you get or how many claims you file.

Note:  Although your insurance company can not increase your insurance premiums because you file a claim for benefits, they can raise your rates incrementally during the lifetime of your policy. Most insurance companies will adjust your insurance rates higher, on the one year anniversary of your policy. Other companies will make a rate adjustment on your 6 month and one year policy anniversary. Insurance companies usually increase premiums a certain percentage each year.  On average, “individual” policy holders experience a 10-30% premium increase each year. 

Q.   How are initial “individual” premium rates determined if the insurance company is unable to obtain important medical information from my doctor?

A.   In the vast majority of states, when you apply for individual health insurance coverage, you are asked to provide health information about yourself and any family members to be covered. When determining rates, insurance companies use the medical information on these applications. Sometimes they will request additional information from an applicant's physician or ask the applicants for clarification.  If the insurance company is unable to obtain information necessary to accurately determine the risk of a particular applicant, it will underwrite more conservatively, meaning that the assumption relative to the missing information will be negative rather than positive.

Example: A person has a history of high blood pressure, but it is controlled with medication and he is not overweight. If the company is unable to determine if that individual smokes or if he has normal cholesterol, the company will assume that the missing information is negative and rate accordingly.

Q.  How are rate increases (premium increases) calculated for “individual” health insurance policy holders?

A.  There are complex formulas that insurance actuaries (number crunchers) use to calculate rate increases.  Insurance companies take many factors into consideration:

1.  The number of policy holders in a given demographic area (zip code)

2.  The amount of claims filed by policy holders

3.  The type of claims filed by policy holders

4.  The amount that the insurance company paid out in plan benefits

5.  Other factors determined by the actuaries

Q.  Does every “individual” policy holder in my zip code receive the same percentage of a rate increase?

A.  Yes.  Once the company has determined your health status, you will be assigned a rate class by the company and put into a pool of other insured individuals with similar health status. Your premium will be the rate charged to that entire class of customers. Subsequent annual renewal premium rates will be determined not by your individual claims, but instead by the claims experience of the entire rating class pool. It is against the law for an insurance company to single out an “individual” policy holder for a significantly higher rate increase, because that policy holder filed a substantial amount of claims with the insurance company.

Q.  How do I apply for an “individual” health insurance policy? 

A.  You can apply for an “individual” health insurance policy directly through an insurance company or through an insurance agent. If you apply for an “individual” health insurance policy directly through an insurance company, you choices will be limited to that health insurance plans available through that company. Although the web is a great place to comparison shop, it is in a consumer’s best interest to contact a knowledgeable, ethical and reputable insurance agent or “broker” before making a purchasing decision.

Q.  If I have an “individual” health insurance policy, can my insurance company raise my rates if I file a claim?

A.   No. If you have an “individual” health insurance policy and file a claim for benefits with your insurance company, the insurance company can not arbitrarily increase your insurance premiums just because you filed a claim. 

Q.  What is the maximum rate increase I can receive if I have an “individual” health insurance policy?

A.  Currently, there are no restrictions on how much an insurance company can raise your health insurance rates upon your renewal date. The average premium increase you can expect per year is 10-30%, however, it is not uncommon for rates to double or even triple. 

Q.   I had knee surgery last year. The insurance company will issue me a policy, but refuses to cover anything that happens to my knee. They have asked me to sign an exclusion rider that states there will be no coverage for anything that happens to my knee. Can the company do this?

A.   Yes. Insurance companies may attach an exclusion rider to the policy that specifies that benefits will not be provided for any loss that results from the condition specified in the rider. In this example, the rider may exclude any claim for injury, disease or disorder to your knee.

Q.   Do exclusion riders continue for the life of the policy? 

A.   In most instances, the exclusion rider is attached for the life of the policy. In some instances, the rider will state that it may be reviewed at some time in the future (usually one to two years). Depending on the severity of your medical condition and the likelihood that your condition will someday reoccur, some “exclusionary riders” may be placed on a policy for an indefinite duration. 

Q.   Is a “rider” automatically removed by the insurance company after a certain period?

A.   No. If your “rider states that it can be reviewed sometime in the future (usually two years), it is up to you as the policyholder to request the review. The rider will not be automatically reviewed or removed by the company.

Q.   How will I know if my “pre-existing” condition will receive a “rider?” 

A.   If you have a knowledgeable health insurance agent who is familiar with the underwriting process, s/he should be able to tell you whether or not your “pre-existing” condition will receive a “rider.” 

Q.   Do all insurance carriers “rider” the same “pre-existing” conditions?

A.    No.  Some insurance carriers are more liberal than others in their underwriting process. Just because a “rider” was placed on your “pre-existing” condition by one insurance carrier, doesn’t necessarily mean that you will always receive a “rider” every time you apply for “individual” health insurance coverage.

Q.   If I have “pre-existing” medical condition, can my employer “exclude” me from participating in a “group” health plan or charge me more for my coverage? 

A.   No. There are certain discrimination prohibitions in HIPPA law that ensure that individuals are not excluded from coverage, denied benefits, or charged more for coverage offered by a plan or issuer, based on health status-related factors.

Q.   If I am refused a policy or it is not issued as applied for, how can I find out why?

A.   You must make a written request to the insurance company. They are required to inform you of the reason(s) for their decision. Or if your agent has an established relationship with an insurance company’s underwriters he or she may be able to find out for you. If the reason is based on medical information, the insurance company may request the name and address of the doctor to whom you would like the information sent. The doctor then would explain the medical reason for the adverse outcome.

Q.   What is a “pre-existing” condition? 

A.   The law defines a “pre-existing” condition as one for which medical advice, diagnosis, care, or treatment was recommended or received prior to an individual’s enrollment date (which is the earlier for the first day of health coverage or the first day of any waiting period for coverage).

Q.   If I apply for “individual” health coverage, will my “pre-existing” condition(s) be covered?

A.   Maybe. Some conditions, if present at the time you apply for health insurance may be automatically covered. The better companies will cover certain controlled pre-existing conditions such as Hypertension & Hyperlypidimia from day one providing this is disclosed at the time of application. Whether or not your “pre-existing” condition(s) are covered under your “individual” health plan vary depending on the type of health plan you apply for and the insurance company you purchase it from.

Q.   How will I know if my “pre-existing” condition(s) are covered on my “individual” health insurance plan? 

A.   When you apply for “individual” health insurance, you automatically go through a process called “underwriting.” During the underwriting process, an individual who works for the insurance company, known as an underwriter, reviews your health history to determine your “insurability.” If you are relatively healthy, the insurance company may not be overly concerned about your “pre-existing” condition(s). However, if it’s likely that your “pre-existing” condition may need medical treatment in the future, the underwriter will either rate your premium slightly higher or exclude your “pre-existing” condition. 

Q.   Do individual policies pay for prescription medications?

A.   You need to read your policy carefully. Some policies do not pay for any prescription medications; some pay for only those medications administered while confined in a medical facility; some pay a percentage of the actual charge; and some policies provide a drug card which enables you to purchase prescriptions for a specified co-payment amount, such as $15.00. Other policies include a discount prescription card only.

Q.   Can I return my policy if I am not satisfied with it?

A.   When a policy is issued to you, you will have a "free look" period of at least 10 days to review the policy and make certain that it meets your expectations. If you are not satisfied with the policy, you may return it within the 10-day period and request a full refund of the premium. To avoid any delay or confusion, return the policy directly to the company by certified mail within the "free look" period.

Q.   Can my insurance company require me to get approval prior to receiving medical services?

A.   Often individual health insurance policies will require pre-certification prior to a scheduled hospital stay or within a short period of time following an emergency admission. There may be other requirements or restrictions in your policy. Be sure you understand the requirements of your policy.

Q.   What is a “Deductible?”  

A.   A “deductible” is the amount of covered expenses you must pay before the insurance company will pay for any of the covered medical expenses. Check carefully to be sure you understand exactly how the deductible works before buying a policy. There are a number of ways deductibles may be administered by the company. Some policies apply the “deductible” to covered expenses on a per person, per calendar year basis. If the policy is a family policy, there is normally a maximum number of deductibles per family per year, and sometimes a single deductible for a common family accident. Some policies apply the deductible per medical condition or cause. This type of deductible can cause a single individual to pay several separate deductibles in a calendar year. Policies with this type of deductible may not have a maximum number of deductibles to satisfy in a calendar year. These policies normally have a lower premium than those with a calendar year deductible.  Some policies apply the deductible for each hospital confinement separated by a specified number of days (usually 60 days).

Q.  What is Co-insurance?

A.   Co-insurance is the percentage of expenses that you “split” with the insurance company after you pay your plan deductible. Most health insurance plans are designed to have the policy holder pay some percentage of his/her medical costs up to a certain dollar amount of medical bills. This amount is known as the “stop loss.” Once the “stop loss” is reached, the insurance company will provide coverage at 100%, unless your plan states that you are also responsible for additional deductibles and fees. Most plans are identified by their “co-insurance” percentage. For example, 100% (rarely seen), 90/10, 80/20, 7030 or 50/50. The first number, identified in the split (80/20) is the percentage your insurance company pays after your deductible is met for that calendar year. The second number identified in the split (80/20) is the percentage you pay after your deductible is satisfied. The maximum dollar amount that you will pay, depends on your “stop loss” dollar number. For example, on an 80/20 of $5,000 (stop loss), your co-insurance percentage is 20% of $5,000 which equates to ($1,000). On a 90/10 of $20,000 (stop loss), your co-insurance percentage is 10% of $20,000 this equates to $2,000.  

Q.  Does every health insurance plan have a “stop loss?”

A.  No. Some plans require you to pay a “co-insurance” for all your medical expenses. If you have an 80/20 plan with no “stop loss” and your medical bills for example, total $500,000. Your co-insurance amount will be 20% of the total charges (20% of $500,000) or $100,000. 

Q.  How do I know if the health insurance plan has a “stop loss?”

A.  The “stop loss” should be outlined in the plan brochure that you received from the agent. If you have already have a health insurance policy in force, your insurance policy is required to provide an outline of coverage and benefits usually on page 3 of your policy.

Q.   How do I determine the maximum out-of-pocket expenses I have to pay each year on my health insurance plan?

A.   Health insurance policies have a provision called an out-of-pocket maximum that limits the amount you must pay in a given benefit period, usually a calendar year. For example, if you purchased an 80/20 of $10,000 with a $1,000 deductible and you incur $51,000 in covered charges, your maximum out-of-pocket expenses are as follows:

Cost: $51,000 (total covered medical bills incurred)
You pay: $1,000 (your plan deductible)
Balance: $50,000
You pay: $2,000 (20% of the charges up to $10,000)
Insurance pays: $8,000 (80% of the charges up to $10,000)
New Balance (after co-insurance is “split” between you and your insurance)
$40,000
Insurance pays: $40,000 (100% of the remaining charges)
Your total out-of-pocket maximum = deductible ($1,000) + co-insurance ($2,000) Your maximum out-of-pocket expenses per calendar year = $3,000

Note: Not everything accrues toward the out-of-pocket maximum. For example, costs for excluded items, co-pays and any amount that is over the “usual and customary” determination, do not accrue toward your out-of-pocket maximum. Additionally, some health insurance policies require you to pay a separate hospital deductible for each hospital admission and emergency room visit and many plans require that you pay a separate yearly deductible for prescription medications. Other plans require you to pay separate co-pays or access fees for specific medical services, such as, out-patient physical therapy, speech therapy, out patient surgery, chemotherapy and dialysis. In some cases, these deductibles, co-pays and access fees may be unlimited, in that, there is no “cap” of what you will be required to pay out-of-pocket if these treatments become medically necessary.

Q.  If I purchase an “individual” health insurance policy, what is the lifetime maximum the insurance company will pay if I become seriously ill? 

A.   That really depends on the type of “individual” health plan that you select. Most “individual” health insurance plans have a $1 million, $2 million, or $5 million lifetime maximum. HMO’s, usually, have an unlimited lifetime maximum. Note:  Some plans now impose a “per illness” cap, often times only $100,000 per illness. If an illness exceeds $100,000 then coverage for that illness is exhausted, regardless of the total lifetime maximum amount of the policy. Consult your agent for more info. about “per illness” caps.

Q.   Is maternity coverage automatically included if I purchase an “individual” health insurance policy?

A.   No. Very few “individual” major medical plans offer normal pregnancy benefits as an optional coverage. Coverage for complications of pregnancy is a required benefit for all individual major medical plans currently issued in the state of Illinois for example. Although normal maternity benefits may be offered as an option, the benefits are usually on a graduated scale based on the length of time the policy has been in force. Sometimes individual health insurance policies have a sliding scale for the percentage for this benefit. It may pay nothing the first 12 months of the policy, 50% between 13 and 24 months, 65% from 25 to 36 months, and 80% after 37 months. Before accepting a policy, be sure you are clear as to how the benefit applies to you.

Q.  If I have an “individual” health insurance plan that does not include “maternity” coverage, how can I possibly afford to pay for my pregnancy and delivery on my own? 

A.   Many hospitals and OB/GYNs offer affordable pre-payment plans for pregnancies and deliveries. Some plans will allow you to pay a set monthly amount during your pregnancy and a larger fee right before your delivery date. These fees customarily will cover all prenatal care and a normal vaginal delivery.  However, some medical services, such as pre-natal ultrasounds, amniocentesis and genetic testing may not be included. These medical services, will, most likely, have to be paid out-of-pocket. If you don’t have a health insurance plan that provides coverage for “maternity” you should speak to your doctor as soon as you discover that you are pregnant. You and your doctor can determine what care you will need and what costs involved. If you are a low income expectant mother without “maternity” coverage, you may qualify for the State of Illinois FAMILYCARE program (formerly KIDCARE). FAMILYCARE insures expectant mothers who meet income requirements. For information call the FAMILYCARE hotline toll-free at 800-ALLKIDS (255-5437). Or you can visit them on the web @ www.familycareillinois.com Please note: These programs should be used as a last resort. Currently as of 2008 the Medicaid program, of which these programs are a part is $1.5 Billion Dollars behind in payment of claims to medical providers: (http://activerain.com/blogsview/664279/Medicaid-Expansion-Programs-Buckle) Many medical providers are choosing to no longer accept these Medicaid Expansion programs so proceed with caution! If at all possible, always choose a fully funded major medical health insurance policy instead.

Q.   If I don’t have health insurance coverage during my pregnancy, can I immediately insure myself and my infant as soon as s/he is born?

A.  No.  There is a two week waiting period before you can qualify for “individual” health insurance coverage. Usually, you can apply for coverage, right after your two week, post partum check-up. You can apply for coverage for your infant after your child’s six week check-up. Whether or not you and your infant are “insurable” depends on your health status at the time of application.

Q.  Can I purchase an “individual” health insurance plan that provides “maternity” coverage if I am already “pregnant?” 

A.  No. You can not purchase an “individual” major medical health insurance plan if you are already pregnant. You may, however, qualify for coverage under the State of Illinois FAMILYCARE program (formerly KIDCARE) FAMILYCARE insures expectant mothers who meet income requirements. For information call the FAMILYCARE hotline toll-free at 800-ALLKIDS (255-5437). Or you can visit them on the web @ www.familycareillinois.com As aforementioned, proceed with caution.

Q.   If I have an “individual” health insurance policy that doesn’t have “maternity” coverage and I give birth, is my infant automatically covered as soon as s/he is born? 

A.   No, you have a 31 day window from the time your infant is born to add your child on to your health insurance policy without proof of insurability. If you do not add your new baby on to your health insurance plan within the 31 day window and your baby has a birth defect, a life-threatening illness or a medical condition, the insurance company can “decline” to add your child onto your “individual” health insurance policy.

Q.  If I have an “individual” health insurance policy that does not include “maternity” coverage and I have to have an emergency C-section, will my C-section surgery be covered by my health insurance plan? 

A.  Yes, an emergency C-section is considered a “complication of pregnancy” and is normally covered under most health insurance plans, even if you have not added “maternity” coverage to your policy unless your existing policy has an exclusion rider due to the fact that you have had a C-section prior to the issuance of your existing policy.

Q.   How can I find health insurance for my children if I don't have family coverage?

A.    Some insurance companies will issue policies to children without their parents being included on the policy. If your children are not insured for financial reasons, they may qualify for coverage under the State of Illinois ALLKIDS program (formerly KIDCARE) ALLKIDS insures the children of parents who meet income requirements. For information call the ALLKIDS hotline toll-free at 866-ALL-KIDS (255-5437). Or you can find them the web @ www.allkidscovered.com As aforementioned, proceed with caution with this program due to the giant unpaid debt that is already owed to physicians who have not been paid by this Medicaid Expansion program: (http://activerain.com/blogsview/664279/Medicaid-Expansion-Programs-Buckle)

Q.   How is “individual” health insurance different from “group” insurance?

A.   Individual health insurance is very different than group health insurance, which is the type of insurance that is offered through an employer. Since laws mandating what types of services must be included in individual health insurance policies are often different than those dictating what must be included in group policies, benefits are generally less extensive than what most people would receive through coverage they have through work. Individual consumers may be surprised to learn that some benefits that may be considered “standard' in a group policy, like maternity coverage or substance-abuse treatment, may not be included in an individual health insurance plan. Sometimes individual health insurance consumers have the option to pay extra for coverage of additional services like maternity coverage. This extra coverage is referred to as an optional rider.  Cost is often the primary factor for individual health insurance consumers, which is another reason why the benefits included in individual health insurance policies are often simpler. In addition, deductibles (the amount you have to pay before insurance benefits begin) and cost-sharing (the fees you pay directly to medical providers at the time of service) are also generally higher.  Individual health insurance companies are much more limited than group insurance companies in their ability to spread risk, so the laws concerning individual health insurance are different in most states. This means that applicants for individual insurance will need to complete a brief medical questionnaire when applying for benefits and, unlike a group insurance policy, in most states a company can decide not to cover people with very serious medical conditions (e.g., HIV or cancer), deeming them “uninsurable.”

Q.  What is a Health Savings Account (H.S.A.)?

A.  Health Savings Accounts (H.S.A.'s) are a new way for consumers to pay for medical expenses. As of January 1, 2004, almost anyone with a qualified High Deductible Health Plan (H.D.H.P.) can also have a Health Savings Account. H.S.A.’s can save you money on your medical care now as well as provide a good way to save for future medical expenses. H.S.A. funds can pay for expenses before you meet your deductible as well as helps pay for services not covered by your health plan, COBRA coverage during periods of unemployment, medical expenses after retirement and long-term care expenses, to name just a few. H.S.A. funds can be used to pay for expenses that insurance companies would not normally cover such as Radiokeratonomy (Lasik eye surgery) Orthodontia, & Alternative Medicine to name just a few. If you use your H.S.A. funds to pay for these expenses they will be a 100% tax deduction. Your high-deductible health plan can be one you get through your employer or a policy you buy on your own. Even if you get your high-deductible health plan or even your H.S.A. account through your employer, you own your account. You decide how much to contribute, how much of the account to use for medical expenses, and which medical expenses to pay from your account. You also choose whether to pay for medical expenses from the account or save it for future use. Even if you change jobs, your Health Savings Account is still yours.
 
You can also keep the account even if you move to another state, and you can continue to keep it as you grow older. Regardless of where you get your health insurance plan, whether on your own or through your employer, your Health Savings Account funds are yours. Unlike some other types of accounts, you don't lose H.S.A. funds at the end of the year. Unspent balances remain in your account earning interest until you spend them on medical care. You may even roll your unused H.S.A funds into no load mutual funds potentially earning an even higher rate of interest. This will be a strong incentive for you to spend wisely on your medical care, just like you do on other items you purchase. You'll want to shop around for the best value for your health care dollars. To learn all about H.S.A.’s please click: http://www.sbisvcs.com/HSA%20%26%20HDHP.html

Q.  What is a “group” health insurance policy?

A.   A “group” “group” health insurance policy is an insurance policy purchased by an individual that is “eligible” to participate in their employer’s sponsored health insurance plan.

Q.  Who purchases a “group” health insurance policy? 

A.   In most cases, a “group” health insurance policy is purchased by an employer/company that would like to offer health insurance coverage as a benefit to employees.

Q.  If I apply for “group” health insurance, is coverage also available for my entire family? 

A.   Maybe.  Ultimately it is up to your employer to determine whether your company’s “group” health insurance plan will allow you to enroll your dependants. 

Q.  What are the premiums for “group” or “family” health insurance coverage? 

A.  Premiums for “group” health insurance are usually determined by a variety of factors, such as, the age of the applicant(s) at the time of application, the health status of the individuals/family members (if applicable) applying for “group” coverage, how individuals in the “group” smoke, the number of individuals that are on maintenance medications, etc. Premium amounts are also largely dependant on the type of health plan selected; for example, plans with lower deductibles, doctor co-pays and full prescription plans will be more costly than plans with a higher deductible, no doctor co-pays and a prescription discount card.  Additionally, “group” health plans that offer maternity coverage cost more than plans that don’t. 

Q.   What type of coverage does a “group” health insurance policy provide? 

A.   “Group” health insurance policies typically provide coverage for major medical expenses, such as doctor’s visits, hospital stays, surgery, out-patient therapy, diagnostic testing, prescription medications, organ transplants, durable medical equipment, mental health counseling, emergency room services, ambulance service and other medical expenses.

Q.  What types of “group” health insurance plans are available? 

A.   Many different types of health insurance plans can now be purchased by employers.  Often, employers will give employees a choice of several health plans, so they can choose a plan that meets their insurance needs and budget.  These plans include, Traditional Major Medical Plans, Health Savings Accounts or HSA’s, Accident Plans, Catastrophic Illness Policies, Prescription Medication Plans, Dental Plans, Vision Plans and many others.

Q.   Which companies offer “group” health insurance policies? 

A.   The majority of health insurance carriers offer some type of “group” health insurance plan. 

Q.   When I participate in a “group” health insurance plan, how are “group” rates determined?

A.   Carriers often base rates on group size, group’s case characteristics, such as, age, gender, industry, demographic area, plan design and risk characteristics.  The rating process for a group is usually a two-step process:

1.  First, a premium rate is determined based on the group case characteristics and plan design factors (copays, deductibles, out of pocket maximums, etc.) but without regard to other risk characteristics.

2.  Second, the rate may be adjusted by a "risk load" to reflect risk characteristics of the group. Risk characteristics include health status-related factors, the duration of coverage, and any other characteristics related to the health status or experience of a small employer group or of any member of a small employer group. The risk load adjustment must apply uniformly to all members of the group. Initially, when an employer is first issued a policy, the risk load may be as high as 67 percent.

Q.  How much will my rates increase if I participate in a “group” health insurance plan?

A.   No more than 15% per 12-month period. The risk load may be increased at renewal by no more than 15 percent per 12-month period (pro-rata for periods less than 12 months). This 15 percent maximum applies to the risk load portion only. Increases due to other factors such as changes in plan design or changes in case characteristics may be in addition to any increase in the risk load. This does not take into consideration any changes in plan design or changes in case characteristics.

Q.  If I purchase a “group” health insurance plan for my family, are my rates affected by the health condition(s) of one of my family members?

A.  If your employer is starting a new “group” health insurance plan and you add a dependant onto your “group” health insurance plan that has a serious medical condition, the insurance carrier can apply a risk load adjustment that results in a premium increase for everyone in the group. This adjustment could be as high as 67 percent if several individuals in the group have serious medical conditions.                                                        

Q.  Does a “group” health insurance policy offer any additional benefits? 

 A.  Yes.  Some “group” health insurance policies include optional benefits (optional riders) that can be added onto your health insurance policy for additional protection.  The following is a list of “optional riders” that your health insurance company may allow you to add onto your health insurance policy for an additional premium amount:

            1.  Life Insurance (amount determined at time of application)

            2.  Accidental Death and Dismemberment

            3.  24 hour accident coverage (on or off the job)

            4.  Maternity

Q.  If I purchase a “group” health insurance policy, what is the lifetime maximum the insurance company will pay if I become seriously ill? 

A.   That really depends on the health plan your employer has selected for your “group.”  Most “group” health insurance plans have a set, lifetime maximum amount that they will pay if you become seriously ill.  In most cases, this lifetime maximum amount is $1 million, $2 million, $5 million.  HMO’s usually offer an unlimited lifetime maximum.  Note:  Many plans now impose a “per illness” cap, usually $1 million dollar per illness. If an illness exceeds $1 million coverage for that illness is exhausted, regardless of the total lifetime maximum amount of the policy.  Consult your Benefits Administrator or Insurance Agent for more information about “per illness” caps, before you decide on a policy.

Q.   Is maternity coverage automatically included on a “group” health insurance policy?

A.   No.  Most “group” major medical plans offer normal pregnancy benefits as an optional coverage. Coverage for complications of pregnancy is a required benefit for all major medical health insurance plans currently issued in Illinois. 

Q.  If I have a “group” health plan doesn’t include “maternity” coverage, how can I possibly afford to pay for my pregnancy and delivery on my own? 

A.   Many hospitals and OB/GYNs offer affordable pre-payment plans for pregnancies and deliveries.  Some plans will allow you to pay a set monthly amount during your pregnancy and a larger fee right before your delivery date.  These fees customarily will cover all prenatal care and a normal vaginal delivery. However, some medical services, such as pre-natal ultrasounds, amniocentesis and genetic testing may not be included.  These medical services, will, most likely, have to be paid out-of-pocket.  If you don’t have a health insurance plan that provides coverage for “maternity” you should speak to your doctor as soon as you discover that you are pregnant. You and your doctor can determine what care you will need and what costs involved. If you are a low income expectant mother without “maternity” coverage, you may qualify for the State of Illinois FAMILYCARE program (formerly KIDCARE). FAMILYCARE insures expectant mothers who meet income requirements. For information call the FAMILYCARE hotline toll-free at 866 ALL KIDS (255 5437) or you can find them on the web @ www.familycareillinois.com As aforementioned, proceed with caution with this program due to the giant unpaid debt that is already owed to physicians who have not been paid by this Medicaid Expansion program: (http://activerain.com/blogsview/664279/Medicaid-Expansion-Programs-Buckle)

Q.   If I don’t have “group” health insurance coverage during my pregnancy, can I immediately insure myself and my infant as soon as s/he is born?

A.  No.  If you are not currently participating in your employer’s “group” health insurance plan and you become pregnant, you will have to wait until the next open enrollment period to apply for “group” health insurance coverage. If you sign up for “group” coverage prior to giving birth, your infant will automatically be covered as soon as s/he is born. Insurance companies usually require that you contact them within 31 days from the date of delivery to add your child on to your policy as a dependant. Contact your company’s Benefits Administrator or Insurance Agent if you have any questions regarding your “group” health insurance insurance benefits.

Q.  Can I participate in my employer’s “group” health insurance plan that provides “maternity” coverage if I am already “pregnant?” 

A.   Yes. You can enroll in your employer’s “group” health insurance plan as soon as you become eligible. If you are a new employee, you are usually eligible for “group” health insurance in 30, 60 or 90 days. If you are a current employee and you are already participating in your employer’s “group” health insurance plan, you will be automatically covered for any expenses related to your pregnancy.

Q.   If I have a “group” health insurance policy that doesn’t have “maternity” coverage and I give birth, is my infant automatically covered as soon as s/he is born? 

A.   Yes. You have 31 day window from the time your infant is born to add your child on to your “group” health insurance policy as a dependant.  If you do not add your new baby on to your  plan health insurance within the 31 day window you may have to wait to the next open enrollment period to add your child onto your policy.

Q.  If I have a “group” health insurance policy that does not include “maternity” coverage and I have to have an emergency C-section, will my C-section surgery be covered by my health insurance  plan? 

A.  Yes, an emergency C-section is considered a “complication of pregnancy” and is normally covered under most health insurance plans, even if you have not added “maternity” coverage to your policy.

Q.   If I am on a “group” health insurance plan and do not need “maternity” coverage, can I decline that benefit to decrease my monthly insurance premium?

A.   No. You can not decline “maternity” coverage to lower your monthly insurance premium, even if you do not need “maternity” coverage.

Q.  If I purchase a “group” health insurance plan for my employees, are MY rates affected by the health conditions of my employees?

A.  Yes. The rates of your “group” are primarily determined by the age of the individuals in the “group” and the health status of those individuals. If there are several individuals in the “group” with serious medical conditions, the rates for every individual in the “group” will be much higher than if everyone in the “group” was perfectly healthy. The purpose of “group” health insurance is to share the risk between several individuals, some healthy, some sick. Unfortunately, if you have a “group” with a mix of both, healthy individuals pay the same amount as sick individuals.

Q.   If I am a small business owner with just a few employees can I start a “group” health insurance plan?

A.   Yes. You must have a minimum of two employees to start a “group” health insurance policy. 

Q.   My spouse and I are the only ones working for our small business. Can we qualify for “group” health insurance coverage?

A.   Yes. You must have a minimum of two employees to start a “group.” You and your spouse will have to enroll in the “group” plan separately, in order to qualify as a “group.”

Q.   If I decide to participate in my employer’s “group” health insurance plan, how are my rates determined?

A.   Your rates are primarily determined by the age of the individuals in the “group” and the health status of those individuals. If your group has a mix of healthy and sick individuals and you are perfectly healthy, your rates may be slightly higher than the rates you would pay if you were to purchase your own “individual” health insurance policy. In Illinois, insurance companies have the right to raise “group” rates by 67% if the “group” has a higher mix of sick individuals. This type of rate increase or premium increase is then averaged among all participating “group” members.

Q.   If my employer purchases a “group” health insurance plan for employees, do I have to participate in the “group” health insurance plan? 

A.   No. Participation in “group” health insurance is strictly voluntary. You have the choice to participate or “decline” your employer’s health insurance coverage; it is totally your decision, not your employers. However, insurance companies often impose mandatory participation requirements (usually 100% participation for groups of 10 or less) unless you have an eligible waiver which is either proof of spousal coverage through a separate employer’s group plan or coverage provided by the Federal government.

Q.   Why would I “decline” health insurance coverage if my employer is paying for it?

A.   There are many reasons that you may choose to decline your employer’s “group” health insurance coverage. For example, if you are currently covered under your spouse’s health insurance plan, you may not need to spend any extra money on a supplemental health insurance policy. If you are covered by two different health insurance policies (double coverage), one health insurance policy will act as a “primary” policy and the other a “secondary” policy. Since it is against the law to receive reimbursement for the same medical expenses from two different insurance carriers, having double coverage provides no clear advantage. If you are unsatisfied with the benefits of the health plans that your employer offers, for example HMO, high deductible, no doctor co-pays, etc., you may also choose to decline coverage. If you are “eligible” for “group” health insurance coverage and you decline coverage, you will be asked to sign an “insurance waiver.” A waiver is simply a form that states that you are aware that you are eligible for “group” health insurance benefits and you are voluntary declining coverage. If you choose to decline coverage through your employer, and you do not have coverage through a spouse, it is advisable that you purchase your own “individual” health insurance plan from a qualified insurance agent or “broker.” 

Q.   If my employer/company offers a “group” health plan, won’t my employer pay a large portion of my health insurance premiums? 

A.   Not necessarily. If your employer offers employees “group” health insurance benefits, your employer must pay a portion of each employee’s health insurance premiums. This percentage is totally up to the discretion of the employer. Rarely does an employer/company pay 100% of its employee’s health insurance premiums. Most employers pay 50-80% of the employee’s premiums. However, some employers, usually smaller employers, pay 10-40%. The remaining percentage that the employer does not pay is then paid by each participating employee. Employees opting for family coverage will pay more than employees seeking individual coverage.

Q.  If my employer offers “group” health insurance coverage; will I be automatically enrolled in the health plan? 

A.   No, each “eligible” employee has to meet certain enrollment criteria and will have to complete the necessary paperwork for enrollment. Rarely, will your health insurance benefits start on your first day on the job. Many employers require a new employee to wait 30, 60 or 90 days before the employee is eligible for health insurance coverage. Most employers have a pre-determined month where they conduct “open enrollment” for the “group” health plan. During “open enrollment,” employees can drop their coverage, enroll in the plan, change their coverage or add additional benefits.    

Q.   Who is covered on a “group” health insurance policy?

A.   Group health insurance provides health insurance benefits to all “eligible” employees working for one company.

Q.   How do I know if I am “eligible” for “group” health insurance coverage through my employer? 

A.   If you are “eligible” to participate in your employer’s “group” health insurance plan, your employer is required to let you know that you are “eligible” for coverage. In most cases, “group” enrollment forms will be given to you by your company’s Benefits Administrator several months prior to the date you are “eligible” to participate in the plan.  Usually, there is a 30, 60 or 90 day waiting period before you can enroll. In smaller companies, the owner of the company or the office manager acts as the Benefits Administrator. Usually, to be “eligible” to participate in your employer’s health insurance plan, you must be classified as a full-time or part-time employee. Typically employees that work 32-40 hours per week are considered full-time and employees that work a maximum of 20 hours are considered part-time.

Q.   What if I don’t usually work the required amount of hours to be classified as a part-time or full-time employee? 

A.   Unfortunately, you may not meet the “eligibility” requirements established by your employer to qualify for “group” health insurance benefits. 

Q.   Does my employer have to offer coverage for “maternity, organ transplants and prescription drugs” to all “eligible” employees on a “group” health plan? 

A.   No. Your employer can pick and choose the benefits of your “group” health insurance plan. In Illinois, like most states, employers do not have to offer employees any health insurance benefits. If your employer does offer employees a “group” health insurance plan, the plan does not have to include coverage for “maternity, organ transplants or prescription drugs.”

Q.   If the premiums for my employer sponsored health insurance are too high, can I purchase my own “individual” health insurance policy?   

A.  Not necessarily. Because of mandatory participation requirements it may be necessary for you to remain insured by your employer’s group plan in order for the group plan to remain solvent. In these cases your employer may wish to contribute more to your portion of the group premium to keep the group solvent.

Q.   What is “insurability” and how does it differ between “individual” and “group” health insurance policies? 

A.   When an applicant applies for “individual” health insurance, the insurance company examines many factors relating to the applicant’s medical history to determine the applicant’s “insurability.” “Insurability” simply means that the applicant is healthy enough to be offered insurance. When an employee applies for “group” health insurance, the employee has “guaranteed insurability.” This means that all “eligible” employees are “guaranteed” insurance coverage regardless of their health history. “Group” health plans and issuers may not exclude an individual’s preexisting medical condition from coverage for more than 12 months (18 months for late enrollees) after an individual’s enrollment date. If you provide proof of creditable coverage from a previous employer’s group plan showing at least 12 months of continuous coverage with no lapse between carriers of more than 63 days then the new group health insurance policy must cover your pre-existing conditions from day one.

Q.   On a “group” health insurance plan, what is the lifetime maximum benefit the insurance company will pay if I become seriously ill? 

A.   That really depends on the type of “group” health insurance plan that your employer has selected. Most “group” health insurance plans have a $1 million, $2 million or $5 million lifetime maximum. HMO’s, usually, have an unlimited lifetime maximum.  Note:  Some plans now impose a “per illness” cap, usually $100,000 per illness. If an illness exceeds $100,000 coverage for that illness is exhausted, regardless of the total lifetime maximum amount of the policy. Some plans also cover only $1 Million per year regardless of the life time maximum. Consult your agent for more information about “per illness” caps.

Q.   If I participate in my employers “group” health insurance, will I receive immediate coverage for a “pre-existing” condition(s)? 

A.   Maybe.  It is becoming quite common for “group” health insurance plans to place restrictions on coverage for “pre-existing” conditions. These restrictions are usually in the form of  a waiting period, also know as an “exclusion” period. An “exclusion” period is a length of time the policy holder must wait before s/he can receive coverage for a “pre-existing” condition. The start of the “waiting period” begins when the policy is issued and usually ends on 1 year anniversary date of the policy.  For late enrollees, the “exclusionary” period can be as long as 18 months. If you provide proof of creditable coverage from a previous employer’s group plan showing at least 12 months of continuous coverage with no lapse between carriers of more than 63 days then the new group health insurance policy must cover your pre-existing conditions from day one.

Q.   When I apply for “group” health insurance, how do I know if there will be a waiting or “exclusion” period for my “pre-existing” condition(s)? 

A.   Your company’s health insurance benefits coordinator can tell you if there is an “exclusion” period before your “pre-existing” condition(s) are eligible for coverage. Under HIPAA law, a new employer’s plan must give individuals credit for the length of time they had prior continuous health insurance coverage (Creditable Coverage), without a break in coverage of 63 days or more, thereby reducing or eliminating the 12-month exclusion period (18 months for late enrollees). So, in most cases, the “waiting period” is waived if you have existing health insurance coverage in force. In the event that you let your health insurance policy lapse and more than 63 days passes, you will usually have to wait the same amount of days that you had a lapse in coverage before your “pre-existing” condition(s) are covered.

Q.   How is “Creditable Coverage” defined?   

A.   Creditable coverage is prior health insurance coverage under another group health plan, an individual health insurance policy, COBRA, Medicaid, Medicare, CHAMPUS, the Indian Health Service, a state health benefits risk pool, FEHBP, the Peace Corps Act, or a public health plan.

Q.   What is a “Certificate of Creditable Coverage?” 

A.   A certificate of creditable coverage is a form that must be provided automatically and free of charge by the health plan or issuer when an individual loses health insurance coverage under the plan and becomes entitled to elect COBRA continuation coverage or exhausts COBRA continuation coverage. A certificate must also be provided free of charge upon request while you have health insurance coverage or anytime within 24 months after your coverage ends.  Certificates of creditable coverage should contain information about the length of time you or your dependents had coverage as well as the length of any waiting period for coverage that applied to you or your dependents. Certificates of creditable coverage should also include an educational statement that describes an individual’s HIPAA portability rights. 

Q.   What do I do if I do not receive a “Certificate of Creditable Coverage” or the certificate I received is incorrect? 

A.   If a certificate is not received, or the information on the certificate is incorrect, you should contact your health insurance coordinator or plan issuer. You also have a right to show prior creditable coverage with other evidence — like pay stubs, explanation of benefits, letters from a doctor — if you cannot get a certificate.

Q.   If I am covered by my spouse’s “group” health insurance plan and we divorce, can I continue my health insurance coverage? 

A.   Individuals who lose their coverage in certain situations, including on separation, divorce, death, termination of employment and reduction in hours have “special enrollment rights,” under HIPPA law. These rights also apply if your employer decides to cease health insurance premium contributions and/or decides to terminate “group” coverage. Additional rights are provided to employees, their spouses and new dependents upon marriage, birth, adoption or placement for adoption.

Q.   What is HIPPA?

A.   The Health Insurance Portability and Accountability Act (HIPAA) offers protections for millions of American workers that improve portability and continuity of health insurance coverage.

Q.   What is COBRA? 

A.   Congress passed the landmark Consolidated Omnibus Budget Reconciliation Act (COBRA) health benefit provisions in 1986. The law amends the Employee Retirement Income Security Act, the Internal Revenue Code and the Public Health Service Act to provide continuation of group health coverage that otherwise might be terminated.

Q.   What does COBRA do? 

A.   COBRA provides certain former employees, retirees, spouses, former spouses, and dependent children the right to temporary continuation of health insurance coverage at group rates.  This coverage, however, is only available when coverage is lost due to certain specific events. Group health insurance coverage for COBRA participants is usually more expensive than health insurance coverage for active employees, since usually the employer pays a part of the premium for active employees while COBRA participants generally pay the entire premium themselves. 

Q.   Who is entitled to COBRA benefits?

A.   There are three elements to qualifying for COBRA benefits.  COBRA establishes specific criteria for plans, qualified beneficiaries, and qualifying events:

1. Plan Coverage - Group health insurance plans for employers with 20 or more employees on more than 50 percent of its typical business days in the previous calendar year are subject to COBRA. Both full and part-time employees are counted to determine whether a plan is subject to COBRA. Each part-time employee counts as a fraction of an employee, with the fraction equal to the number of hours that the part-time employee worked divided by the hours an employee must work to be considered full time.

2. Qualified Beneficiaries - A qualified beneficiary generally is an individual covered by a group health insurance plan on the day before a qualifying event who is an employee, the employee's spouse, or an employee's dependent child.  In certain cases, a retired employee, the retired employee's spouse, and the retired employee's dependent children may be qualified beneficiaries. In addition, any child born to or placed for adoption with a covered employee during the period of COBRA coverage is considered a qualified beneficiary. Agents, independent contractors, and directors who participate in the group health plan may also be qualified beneficiaries.

3. Qualifying Events - Qualifying events are certain events that would cause an individual to lose health insurance coverage. The type of qualifying event will determine who the qualified beneficiaries are and the amount of time that a plan must offer the health insurance coverage to them under COBRA. A plan, at its discretion, may provide longer periods of continuation coverage.

Q.   What would be considered a “Qualifying Event” under COBRA?

A.  Under COBRA, qualifying events apply to Employees, Spouses and Dependent Children.  The following explains a “Qualifying Even” in greater detail:

1.   Qualifying Events for Employees: a voluntary or involuntary termination of employment for reasons other than gross misconduct or a reduction in the number of hours of employment.

2.   Qualifying Events for Spouses:  A voluntary or involuntary termination of the covered employee's employment for any reason other than gross misconduct. A reduction in the hours worked by the covered employee, a covered employee's becoming entitled to Medicare, a divorce or legal separation of the covered employee or the death of the covered employee.

3.   Qualifying Events for Dependent Children: A loss of dependent child status under the plan rules. A voluntary or involuntary termination of the covered employee's employment for any reason other than gross misconduct. A reduction in the hours worked by the covered employee. A covered employee's becoming entitled to Medicare. The divorce or legal separation of the covered employee.  The death of the covered employee.

Q.   How does a person become eligible for COBRA continuation coverage? 

A.   To be eligible for COBRA coverage, you must have been enrolled in your employer's health plan when you worked and the health plan must continue to be in effect for active employees. COBRA continuation coverage is available upon the occurrence of a qualifying event that would, except for the COBRA continuation coverage, cause an individual to lose his or her health care coverage.

Q.   What “group” health plans are subject to COBRA? 

A.   The law generally covers health plans maintained by private-sector employers with 20 or more employees, employee organizations, or state or local governments.

Q.   What process must individuals follow to elect COBRA continuation coverage?

A.   Employers must notify plan administrators of a qualifying event within 30 days after an employee's death, termination, reduced hours of employment or entitlement to Medicare. A qualified beneficiary must notify the plan administrator of a qualifying event within 60 days after divorce or legal separation or a child's ceasing to be covered as a dependent under plan rules. Plan participants and beneficiaries generally must be sent an election notice not later than 14 days after the plan administrator receives notice that a qualifying event has occurred. The individual then has 60 days to decide whether to elect COBRA continuation coverage. The person has 45 days after electing coverage to pay the initial premium.

Q.   How long after a qualifying event do I have to elect COBRA coverage? 

A.   Qualified beneficiaries must be given an election period during which each qualified beneficiary may choose whether to elect COBRA coverage. Each qualified beneficiary may independently elect COBRA coverage. A covered employee or the covered employee's spouse may elect COBRA coverage on behalf of all other qualified beneficiaries.  A parent or legal guardian may elect on behalf of a minor child. Qualified beneficiaries must be given at least 60 days for the election. This period is measured from the later of the coverage loss date or the date the COBRA election notice is provided by the employer or plan administrator. The election notice must be provided in person or by first class mail within 14 days after the plan administrator receives notice that a qualifying event has occurred.

Q.   How do I file a COBRA claim for benefits? 

A.   Health plan rules must explain how to obtain benefits and must include written procedures for processing claims. Claims procedures must be described in the Summary Plan Description. You should submit a claim for benefits in accordance with the plan's rules for filing claims. If the claim is denied, you must be given notice of the denial in writing generally within 90 days after the claim is filed. The notice should state the reasons for the denial, any additional information needed to support the claim, and procedures for appealing the denial. You will have at least 60 days to appeal a denial and you must receive a decision on the appeal generally within 60 days after that.  Contact the plan administrator for more information on filing a claim for benefits. Complete plan rules are available from employers or benefits offices. There can be charges up to 25 cents a page for copies of plan rules.

Q.   Can individuals qualify for longer periods of COBRA continuation coverage? 

A.   Yes. Disability can extend the 18 month period of continuation coverage for a qualifying event that is a termination of employment or reduction of hours. To qualify for additional months of COBRA continuation coverage, the qualified beneficiary must have a ruling from the Social Security Administration that he or she became disabled within the first 60 days of COBRA continuation coverage and send the plan a copy of the Social Security ruling letter within 60 days of receipt, but prior to expiration of the 18-month period of coverage. If these requirements are met, the entire family qualifies for an additional 11 months of COBRA continuation coverage. Plans can charge 150% of the premium cost for the extended period of coverage.

Q.   Is a divorced spouse entitled to COBRA coverage from their former spouses’ group health insurance plan? 

A.   Under COBRA, participants, covered spouses and dependent children may continue their health insurance coverage for a limited time when they would otherwise lose coverage due to a particular event, such as divorce (or legal separation). A covered employee’s spouse who would lose coverage due to a divorce may elect continuation coverage under the plan for a maximum of 36 months. A qualified beneficiary must notify the plan administrator of a qualifying event within 60 days after divorce or legal separation. After being notified of a divorce, the plan administrator must give notice, generally within 14 days, to the qualified beneficiary of the right to elect COBRA continuation coverage. Divorced spouses may call their plan administrator or the EBSA Toll-Free number, 1.866.444.EBSA (3272) if they have questions about COBRA continuation coverage or their rights under ERISA.

Q.   If I waive COBRA coverage during the election period, can I still get coverage at a later date? 

A.   If a qualified beneficiary waives COBRA coverage during the election period, s/he may revoke the waiver of coverage before the end of the election period. A beneficiary may then elect COBRA coverage. Then, the plan need only provide continuation coverage beginning on the date the waiver is revoked.

Q.   Under COBRA, what benefits must be covered? 

A.   Qualified beneficiaries must be offered coverage identical to that available to similarly situated beneficiaries who are not receiving COBRA coverage under the plan (generally, the same coverage that the qualified beneficiary had immediately before qualifying for continuation coverage). A change in the benefits under the plan for the active employees will also apply to qualified beneficiaries. Qualified beneficiaries must be allowed to make the same choices given to non-COBRA beneficiaries under the plan, such as during periods of open enrollment by the plan.

Q.   When does COBRA coverage begin? 

A.   COBRA coverage begins on the date that health care coverage would otherwise have been lost by reason of a qualifying event.

Q.   How long does COBRA coverage last? 

A.   COBRA establishes required periods of coverage for continuation health insurance benefits.  A plan, however, may provide longer periods of coverage beyond those required by COBRA. COBRA beneficiaries generally are eligible for group health insurance coverage during a maximum of 18 months for qualifying events due to employment termination or reduction of hours of work. Certain qualifying events, or a second qualifying event during the initial period of coverage, may permit a beneficiary to receive a maximum of 36 months of coverage. Coverage begins on the date that coverage would otherwise have been lost by reason of a qualifying event and will end at the end of the maximum period.  It may end earlier if COBRA premiums are not paid on a timely basis or the employer ceases to maintain any group health insurance plan. After the COBRA election, coverage is obtained with another employer group health plan that does not contain any exclusion or limitation with respect to any pre-existing condition of such beneficiary. However, if other group health coverage is obtained prior to the COBRA election, COBRA coverage may not be discontinued, even if the other coverage continues after the COBRA election. After the COBRA election, a beneficiary becomes entitled to Medicare benefits. However, if Medicare is obtained prior to COBRA election, COBRA coverage may not be discontinued, even if the other coverage continues after the COBRA election. Although COBRA specifies certain periods of time that continued health coverage
must be offered to qualified beneficiaries, COBRA does not prohibit plans from offering continuation health coverage that goes beyond the COBRA periods.

Some plans allow participants and beneficiaries to convert group health insurance coverage to an individual policy. If this option is generally available from the plan, a qualified beneficiary who pays for COBRA coverage must be given the option of converting to an individual policy at the end of the COBRA continuation coverage period. The option must be given to enroll in a conversion health insurance plan within 180 days before COBRA coverage ends. The premium for a conversion policy may be more expensive than the premium of a group health insurance plan, and the conversion policy may provide a lower level of coverage. The conversion option, however, is not available if the beneficiary ends COBRA coverage before reaching the end of the maximum period of COBRA coverage.

Q.   Who pays for COBRA coverage? 

A.   Beneficiaries may be required to pay for COBRA coverage. The premium cannot exceed 102 percent of the cost to the plan for similarly situated individuals who have not incurred a qualifying event, including both the portion paid by employees and any portion paid by the employer before the qualifying event, plus 2 percent for administrative costs.  For qualified beneficiaries receiving the 11 month disability extension of coverage, the premium for those additional months may be increased to 150 percent of the plan's total cost of coverage.  COBRA premiums may be increased if the costs to the plan increase but generally must be fixed in advance of each 12-month premium cycle. The plan must allow you to pay premiums on a monthly basis if you ask to do so, and the plan may allow you to make payments at other intervals (weekly or quarterly). The initial premium payment must be made within 45 days after the date of the COBRA election by the qualified beneficiary.  Payment generally must cover the period of coverage from the date of COBRA election retroactive to the date of the loss of coverage due to the qualifying event. 

Premiums for successive periods of coverage are due on the date stated in the plan with a minimum
30-day grace period for payments. Payment is considered to be made on the date it is sent to the plan.  If premiums are not paid by the first day of the period of coverage, the plan has the option to cancel coverage until payment is received and then reinstate coverage retroactively to the beginning of the period of coverage. If the amount of the payment made to the plan is made in error but is not significantly less than the amount due, the plan is required to notify you of the deficiency and grant a reasonable period (for this purpose, 30 days is considered reasonable) to pay the difference. The plan is not obligated to send monthly premium notices. COBRA beneficiaries remain subject to the rules of the plan and therefore must satisfy all costs related to co-payments and deductibles, and are subject to catastrophic and other benefit limits.

Q.   If I elect COBRA, how much do I pay? 

A.   When you were an active employee, your employer may have paid all or part of your group health insurance premiums. Under COBRA, as a former employee no longer receiving benefits, you will usually pay the entire premium amount, that is, the portion of the premium that you paid as an active employee and the amount of the contribution made by your employer.  In addition, there may be a 2 percent administrative fee. COBRA rates may seem high because you will be paying “group” health insurance premium rates. Depending on the health history of your “group,” your “group” health insurance premiums may be much higher than the rates you would pay if you purchased an “individual” health insurance policy. Since it is likely that there will be a lapse of a month or more between the date of layoff and the time you make the COBRA election decision, you may have to pay health insurance premiums retroactively-from the time of separation from the company. The first premium, for instance, will cover the entire time since your last day of employment with your former employer. You should also be aware that it is your responsibility to pay for COBRA coverage even if you do not receive a monthly statement.  

Q.   Will my employer subsidize COBRA Coverage? 

A.   Some employers may subsidize COBRA coverage, although they are not required to do so.

Q.   Can I receive COBRA benefits while on FMLA leave? 

A.   The Family and Medical Leave Act, effective August 5, 1993, requires an employer to maintain coverage under any group health plan for an employee on FMLA leave under the same conditions coverage would have been provided if the employee had continued working.  Coverage provided under the FMLA is not COBRA coverage, and FMLA leave is not a qualifying event under COBRA. A COBRA qualifying event may occur, however, when an employer's obligation to maintain health benefits under FMLA ceases, such as when an employee notifies an employer of his or her intent not to return to work.  Further information
on FMLA is available from the nearest office of the Wage and Hour Division, listed in most telephone directories under U.S. Government, U.S. Department of Labor, Employment Standards Administration.

Q.   What is the Federal Government's role in COBRA? 

A.   COBRA continuation coverage laws are administered by several agencies. The Departments of Labor and Treasury have jurisdiction over private-sector health group health insurance plans. The Department of Health and Human Services administers the continuation coverage law as it affects public-sector health plans.

Q.   I am a federal employee.  Can I receive benefits under COBRA?

A.   Federal employees are covered by a law similar to COBRA. Those employees should contact the personnel office serving their agency for more information on temporary extensions of health insurance benefits.

Q.   Am I eligible for COBRA if my company closed or went bankrupt and there is no health insurance plan?

A.   If there is no longer a health insurance plan, there is no COBRA coverage available. If, however, there is another plan offered by the company, you may be covered under that plan. Union members who are covered by a collective bargaining agreement that provides for a medical plan also may be entitled to continued coverage.

Q.   How do I find out about COBRA coverage and how do I elect to take it? 

A.   Employers or health plan administrators must provide an initial general notice if you are entitled to COBRA benefits. You probably received the initial notice about COBRA coverage when you were hired. When you are no longer eligible for health coverage, your employer has to provide you with a specific notice regarding your rights to COBRA continuation benefits. Employers must notify their plan administrators within 30 days after an employee's termination or after a reduction in hours that causes and employee to lose health insurance benefits. The plan administrator must provide notice to individual employees of their right to elect COBRA coverage within 14 days after the administrator has received notice from the employer. You must respond to this notice and elect COBRA coverage by the 60th day after the written notice is sent or the day health care coverage ceased, whichever is later. Otherwise, you will lose all rights to COBRA benefits. Spouses and dependent children covered under your health plan have an independent right to elect COBRA coverage upon your termination or reduction in hours. If, for instance, you have a family member with an illness at the time you are laid off, that person alone can elect coverage.

Q.   What is short term health insurance coverage?

A.   Short-term health insurance, are low-cost plans designed to provide temporary health insurance coverage for a limited number of months. The length of time you can keep the policy will depend on the carrier. Typically, coverage can be purchased in one month increments for up to 12 months. Short term health insurance policies do not cover “pre-existing” conditions.

Q.   Who purchases short term health insurance coverage? 

A.   In most cases, individuals who purchase short term health insurance are those that find themselves temporally without health insurance coverage. In many cases, COBRA coverage is an option, but the premiums are too high. Short-term health insurance offers an affordable coverage option for individuals who have been recently laid off, recent college grads, part-time or seasonal workers, freelancers and other temporary workers. 

Q.   Is short term health insurance coverage available for my entire family? 

A.   Yes.  Short-term health insurance coverage is available to both individuals and families. 

Q.   How much are premiums for short-term health insurance? 

A.   Short-term health insurance premiums are priced very low because there is a coverage laundry list of limitations and exclusions which include all “pre-existing” medical conditions.

Q.   What type of coverage does a short-term policy provide? 

A.   Typically a short term policy works like an "indemnity" plan, which generally gives you the freedom to go to any doctor or specialist you like. However, most plans do require pre-certification. Plans usually have a 1, 2 or 5 million dollar maximum benefit which will cover any illness, as long as it is not “pre-existing.” The majority of plans cover hospital care, emergency services, diagnostic tests, rehabilitation services, follow-up doctor visits, and even limited mental health care. Coverage does not typically include routine preventative care.

Q.   How do I apply for short-term health insurance? 

A.   There are many sites that will allow you to complete an online application for short-term health insurance. Usually the application takes less than 5 minutes to complete and you are able to pay your first monthly premium by credit card. If you need help deciding on a short-term health plan, or have questions about your coverage options, it is best to speak with an insurance agent or “broker” before making a purchasing decision.

Q.   What is catastrophic health insurance? 

A.   "Catastrophic" or "major medical" health insurance plans cover catastrophic illness. These plans pay for major hospital and medical expenses.

Q.   Who purchases catastrophic health insurance plans? 

A.   In most cases, individuals who purchase “catastrophic” health insurance are those that do not have health insurance coverage through their employer. On the average, people who buy catastrophic health insurance plans are either in their 20's, or between the ages of 50 to 65. Young adults tend to buy the coverage if they are self-employed or don't get coverage through work. On the other end of the spectrum, older adults purchase a catastrophic health insurance plan when they are concerned with financial losses in the event of a heart attack, cancer or other serious illness.

Q.   Is “catastrophic” health insurance coverage available for my entire family? 

A.   Yes. Catastrophic health insurance coverage is available to both individuals and families. 

Q.   How much are the premiums for “catastrophic” health insurance? 

A.   “Catastrophic health insurance plans have very low premiums because the insured usually pays most of their medical expenses out-of-pocket. Coverage usually excludes many “pre-existing” medical conditions.

Q.   What type of coverage does a “catastrophic” health insurance policy provide? 

A.   Typically a “catastrophic” health insurance policy offers a $1 million, $2 million or $5 million dollar maximum lifetime benefit. This benefit will cover any illness, as long as it is not “pre-existing.” The majority of plans cover hospital care, emergency services, diagnostic tests, rehabilitation services, follow-up doctor visits, and even limited mental health care.  Coverage does not include routine preventative care. Coverage may or may not include prescription medication. Most catastrophic health insurance plans do not cover pregnancy, and other plans do not cover maternity care for a full year after your effective date.

Q.   How do I apply for “catastrophic” health insurance?

A.   You can purchase “catastrophic” health insurance coverage through a health insurance agent or “broker.” There are many” catastrophic” health insurance plans available on the market today. It is best to speak with an insurance agent or “broker” to determine what ‘catastrophic” health insurance plan is right for you, before making a purchasing decision.

Q.   What is “Critical Illness” insurance? 

A.   “Critical Illness” insurance is an exclusive benefit policy that offers financial protection in the event of a specific illness or operation.  A “Critical Illness” policy pays a lump sum cash benefit to you, while you are still alive. Therefore, it differs from traditional Life Insurance policy that protects your dependents after your death. The lump sum cash benefit paid out due to a claim can be used for any purpose. You can use the money to pay off debts, such as a mortgage, use it to adapt your home or car to accommodate a wheelchair or to fulfill a life-long dream. When you purchase a “Critical Illness” policy, you select the amount of insurance (lump sum) and the length of time (term) that you are covered. Premiums are related to your age and health at the start of the policy, and are normally paid monthly. Premiums can be guaranteed not to increase during the term of the policy.

Q.   Who purchases “Critical Illness” insurance? 

A.   Critical Illness plans are usually purchased by individuals ages 20-65 who want the peace of mind. These individuals are concerned about the loss of income during an illness and would like to establish a financial “safety net.” Unlike the majority of individuals, who think “it wont happen to me,” these individuals know that if they don’t plan ahead, they will unable to handle the enormous financial burdens that many people suffer due to a critical illness. The majority of “Critical Illness” policy holders have known a friend or relative that has suffered a major life-threatening illness. These individuals understand that recuperation from a critical illness may take many months or years, and can involve significant expenses like home health care, housekeeping services, hiring someone to help you run your business, etc.  

Q.   Is “Critical Illness” coverage available for my entire family?

A.   Yes. However, each individual family member must purchase his/her own “Critical Illness” policy. Additionally, certain age restrictions may apply. Typically, ‘Critical Illness” policies can be purchased by individuals ages 20-65. 

Q.   How much are premiums for “Critical Illness” insurance? 

A.   The monthly premiums for “Critical Illness” plans vary based on the lump sum benefit that is selected, how many illnesses/surgeries the plan covers and the term of the plan.  “Critical Illness” policies, typically offer very affordable monthly premiums. 

Q.   What type of coverage does a “Critical Illness” policy provide? 

A.   “Critical Illness” policies typically provide coverage for the following:

1.  Heart Surgery

2.  Cancer

3.  Renal Failure

4.  Stroke

5.  Multiple Sclerosis

6.  Major organ transplants like kidney, lung, pancreas or bone marrow.

Q.   How do I apply for “Critical Illness” insurance? 

A.   You can purchase “Critical Illness” insurance through a health insurance agent or “broker.” There are many” Critical Illness” plans available on the market today.  It is best to speak with insurance agent or “broker” to determine what ‘Critical Illness” plan is right for you, before making a purchasing decision.

Q.   What is an “Accident Only” policy? 

A.   An “Accident Only” provides you coverage in the even that you experience an accident. These policies pay you benefits directly and will even pay you if you have a separate health insurance policy. Most “Accident Only” policies will provide you with 24/7 protection and many plans also will reimburse you for work related injuries, even if you have workman’s compensation insurance. Policies are renewable and portable, so you can take them with you if you move or change jobs.

Q.   Who purchases an “Accident Only” policy? 

A.   “Accident Only” policies are usually purchased by individuals who have a high deductible health insurance plan. “Accident Only” policies often provide enough of a cash reimbursement to meet your deductible and cover any additional medical expenses that may not be covered by your health insurance plan. Individuals in occupations that have a higher risk of injury, for example, construction, purchase “Accident Only” policies for added protection. Individuals participating in extreme sports or high risk hobbies often purchase an “Accident Only” policy for extra protection. Statistically, 39.2 million Americans are treated each year in hospital emergency rooms as the result of an accidental injury. Of the 39.2 million individuals that are treated, approximately 2.7 million are hospitalized or need some form of follow-up care. Accidents cost Americans over $607.7 billion each year and nine out of ten debilitating injuries occur when workers are off the job.

Q.   Are “Accident Only” policies available for my entire family? 

A.   Yes.  “Accident Only” policies can be purchased to cover an “individual” or a “family.” Families who have children who are “accident prone” or have children engaged in sports activities, often purchase “Accident Only” policies for added protection. 

Q.   What are premiums for an “Accident Only” policy? 

A.   The premiums for an “Accident Only” policy will vary depending on the type and amount of coverage you select. For the most part, “Accident Only” policies are relatively inexpensive to purchase.  The premiums are typically less than $40 monthly and this premium covers the entire family up to $5,000 per accident per occurrence.

Q.   What type of coverage does an “Accident Only” policy provide? 

A.   In most cases, an  “Accident Only” policy provides you 24/7 protection for accidents and injuries that occur anywhere, whether you are at home, at work, on vacation or just riding your bike. Typically your policy will pay you a cash benefit (lump sum) when you seek treatment for medical services. Medical services are usually defined as the costs for necessary medical treatment by a physician or dentist, hospital room and board, use of an ambulance, dental work to sound natural teeth, medicines and diagnostic tests and rental of durable medical equipment, such as crutches. In most cases, you are free to use any doctor or hospital. Your policy will normally pay you directly, unless you assign your benefits to your health care provider. Benefits can range from $2,500, $5,000, or $10,000 for each family member after you pay a $100 deductible per occurrence. 

Q.   Do “Accident Only” policies include any additional benefits? 

A.   Yes. Many “Accident Only” plans offer Accidental Death and Dismemberment coverage, usually $5,000 of coverage for each family member, on the $2,500, or $5,000 plan and of $10,000 coverage on the $10,000 plan. Additionally, some plans offer world-wide medical air transportation service and medical lifeguard emergency rescue. This specific benefit often has no deductible. Up to $4,000 is usually available for medical transportation via helicopter, plane or boat.  

Q.   How do I apply for an “Accident Only” policy? 

A.   You can purchase an “Accident Only” policy through a health insurance agent or “broker.” There are many “Accident Only” policies available on the market today. It is best to speak with insurance agent or “broker” to determine what ‘Critical Illness” plan is right for you, before making a purchasing decision.

Q.   What is a “Disability” insurance policy? 

A.   A “Disability” insurance policy is the industry name for a plan that provides you with periodic benefit payments when you unable to work because of sickness or injury.

Q.   Who purchases a “Disability” insurance policy? 

A.   “Disability” insurance policies are often purchased by working professionals who heavily rely on their income to meet financial obligations. These individuals are a mix of white-collar professionals, small business owners and skilled labor. Any individual should consider disability insurance a necessity, even if a spouse is working. It is almost impossible to manage financially when faced with a debilitating accident or illness and often families never recoup financially from a long period of lost income. This is especially true for workers with little savings, workers who support a spouse and children or workers with a working spouse that does not make enough income to support the entire household. Unfortunately, unlike home owners and automobile insurance, “Disability” insurance is not a required purchase and the majority of American’s believe that a debilitating accident or illness could never happen to them. Other Individuals believe they may have disability coverage through their employer, when, in fact, they do not. Others who do have coverage through their employer may be shocked to discover that the protection is very minimal. If you have “Disability” coverage through your employer, it is important that you know and understand your plan benefits in case you have to rely on them someday.

Q.   Are there “Disability” insurance policies that cover my entire family? 

A.   To qualify for “Disability” coverage, you must be a working adult, usually between the ages of 18-60. Although your spouse may be able to purchase his/her own “Disability” insurance policy, “Disability” plans are designed to replace income and therefore are not appropriate for children.

Q.   What types of “Disability” insurance policies are available? 

A.   There are several different types of “Disability” policies available; each having their own unique characteristics and pricing. The following are the most common:

1.  Guaranteed Renewable: These policies contain certain provisions that guarantee that policies will be renewed by the insurance company for the benefit period for which the policy has been issued. For example, a policy issued with a benefit period of “to age 65” will be renewed at least to age 65, provided that the policy holder pays the premiums. Although the rates for these policies may increase, an individual can not be singled out if s/he files a claim for disability. Additionally, the terms of the policy can not be changed by the insurance company. Only the policy holder has the right to cancel the policy.

2.  Non-Cancelable: The renew provisions for this type of policy are very similar to the guaranteed-renewable policy, except that the premium for the non-cancelable policy cannot be changed by the insurance company during the renewal period, which is typically “to age 65.” Since premiums are never adjusted during the term, premiums will be much higher for this type of coverage.

3.  Optionally Renewable: These policies which were made available quite a few years ago are rarely seen anymore. Theses policies, while low in cost, can be terminated by the insurance company. For obvious reasons, these policies make the policy holder highly vulnerable.

4.  Group Long-Term and Short-Term Disability Plans: These plans are frequently found in employer-employee work settings. In many cases, premiums are either paid in full or in part by the employer. The short-term plans usually have shorter elimination periods (such as 7, 15 or 30 days) and provide benefits for 13 or 26 weeks. The long-term plans typically have a longer elimination period (30 days or longer) and a benefit period which ranges from 2 years all the way up “to age 65.”  Few optional benefits are seen with these plans and these plans are usually voluntary.

5.  Voluntary Job-Site Disability Plans: The majority of these plans are offered through an employer, but are paid for by the employee. Typically, enrollment in these plans follows a short presentation on the job site. The benefit period for these plans are typically shorter in duration than other disability plans, therefore, they are much lower in cost. 

Q.   How much are the premiums for a “Disability” insurance policy? 

A.   More than any other type of insurance, disability-income insurance has a variety of factors which influence the final premium amount. Each of the following factors will have a bearing on how much you will pay for “Disability” insurance:

1. Age:  Older applicants will pay higher premiums. The minimum age to apply for disability insurance is 18 and the maximum age is usually 60.

2. Sex:  Unlike life insurance, rates for females are higher per unit of coverage than for male applicant

3. Smoker vs. Non-Smoker:  Those who smoke can expect to pay as much as 25 percent more for the same protection as a non-smoker.

4. Benefit Amount: Disability policies are typically issues with a specific monthly benefit amount, for example, $3000 a month. Unless specifically stated in the policy language, these policies do not coordinate with Social Security benefits (they pay in addition to the Social Security benefit). Higher premiums will be paid for higher monthly benefit amounts, however, the most insurance companies will not issue policies that pay a benefit amount that is greater than 60 percent of an individual’s gross income.

5. Benefit Period:  Policies can be written to accommodate various benefit periods.  Typically, most companies offer a 2, 3, 5 and 10 year benefit period. However, longer benefit periods, “to the age of 65, 66, 67,” are also available. These plans are designed to coincide with full Social Security benefits. Some older plans offered lifetime benefits, but these plans are rarely available today. Plans that offer a longer benefit period cost significantly more in premiums.

6. Elimination Period:  This period, often referred to as a “waiting period” refers to the amount of time that must pass before benefits are paid. In most cases, these periods are 3060 or 90 days. However, “waiting periods” of 180 and 365 days are also available. The cost per unit of coverage (premiums) will decrease as the “waiting period” increases.

Q.   What type of coverage does a “Disability” insurance policy provide? 

A.   A “Disability” policy provides a cash monthly benefit that can be used to replace your lost income. How long you must wait to receive your benefit and how much of a monthly benefit you are entitled to, largely depends on your type of policy you purchase. 

Q.   Do “Disability” insurance policies include any additional benefits? 

A.   Normally, Disability insurance policies do not include any additional benefits.

Q.   How do I apply for a “Disability” insurance policy? 

A.   You can purchase a “Disability” policy through a health insurance agent or “broker.”  There are many “Disability” policies available on the market today. It is best to speak with insurance agent or “broker” to determine what ‘Disability” plan is right for you, before making a purchasing decision.

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