What You Don't Know About Your Health Insurance Could Hurt You Badly


Eliza Navarro Bangit, Esq.
Georgetown University Health Policy Institute

illions of people are forced to find new health insurance coverage because they lose their jobs, their retiree benefits are cut or their premiums soar. But the mumbo jumbo that fills health insurance policies can cost you thousands of dollars in unexpected expenses, because you often don’t get what the policy seems to promise.
That’s because health insurance policies are full of language that is difficult to decipher and important details that are hard to grasp -- whether your policy is provided by an employer or individually purchased. Since policies are not regulated by the federal government but by each state, there is no mandate as to what they should contain. In recent surveys, more than half of respondents did not understand their current health insurance policies... and those who thought that they had good policies had loopholes, limits and exclusions that they didn’t know existed.
The problem has not gone unrecognized. Aside from the heated debate about creating a national health insurance program, members of Congress have proposed a bill that would require insurers to more clearly communicate to consumers what is covered in a policy -- and what is not covered.
Whether you have a health insurance policy already (either through your employer or on your own) or are considering buying health insurance (perhaps because you have recently been laid off), it pays to know what the fine print says and what to do if there are loopholes or limits that could cost you. What you need to know...

WHAT TO LOOK FOR

No health insurance plan will pay for everything, but some provide more than others. Watch for...
Comprehensive coverage. Seek out the most comprehensive policy that you can afford. Look first at the policy’s list of covered benefits, which should include hospital stays and expenses, outpatient treatment, doctors’ visits, prescription drugs, mental health treatments, rehabilitation care and lab and imaging tests. If a medical service is not mentioned in the policy -- for example, outpatient chemotherapy -- chances are that it is not covered.
Find out which providers and hospitals (especially specialty hospitals) are covered by the policy. Be aware that even a policy that covers what is "medically necessary" may exclude particular services or cap them. A recent study analyzed the estimated out-of-pocket costs for heart attack treatment under several different health plans in California. Although cardiac rehabilitation is standard medical treatment for heart attack patients, one of the insurance policies did not cover this treatment at all.
If you are buying your own policy, review the health plans in your state at eHealthInsurance (800-977-8860, www.ehealthinsurance.com) or Vimo (866-955-8466, www.vimo.com). To evaluate different policies, our team at Georgetown University Health Policy Institute has created a worksheet, available at http://healthinsuranceinfo.net/managing-medical-bills/worksheet.pdf.
How the deductibles work. This is the amount of money that you will pay for medical care each year before your health insurance kicks in.
When reviewing a policy, check to see if all of your costs for medical care will apply to one deductible or to two -- for example, a separate deductible for drug costs. Determine if the deductibles apply separately to individuals and to family members. If you have a high deductible and each family member has a separate deductible, it can be costly. There are no exact guidelines regarding reasonable deductible amounts.
Best: Weigh the health insurance premium against the protection that the policy offers -- what are the covered benefits, what is excluded and limited, what is the cost if you get sick.
A protective out-of-pocket maximum. Look for a policy that protects you with an out-of-pocket maximum, the most that you will have to pay for medical expenses in a given year. Add up the deductibles, copayments and coinsurance to determine the out-of-pocket maximum.
Avoid: Policies that exclude the deductible or any copayments or coinsurance from the out-of-pocket maximum.
In some cases, costs for office visits, prescriptions and mental health outpatient visits are not counted toward your out-of-pocket maximum. If so, then your actual out-of-pocket expenses can be much more -- even thousands of dollars more per year -- if you get really sick.
No caps on lifetime or annual benefits. The problem with any kind of limit on lifetime or annual benefits is that you could be left on your own to pay for treatment costs that are much greater than you expected. If you get sick, you want to be sure that your policy can easily accommodate big bills. Check to ensure that the policy has no cap on specific kinds of treatment, such as hospital and outpatient medical treatment, doctor visits, drugs and diagnostic imaging tests.
The contract, not a brochure. Ask for the contract, called Evidence of Coverage (EOC), which is legally binding. Insurers may say that the EOC is available only after a purchase, but don’t take no for an answer. Examine the contract carefully.
Loopholes. It’s hard to catch every detail, especially since loopholes can crop up anywhere.
Example: A policy offered by AARP began hospital coverage on the second day of a hospital stay. But the first day -- when diagnostic tests and emergency procedures are performed -- typically is the priciest. AARP has since suspended sales of this policy.
Best: Get a referral for a licensed insurance broker from someone you trust. A broker can help speed up the shopping and application process.

HOW TO CUT UNEXPECTED COSTS

If you do find a loophole or aren’t satisfied with your policy, you can...
Switch policies. Very often, it is not until you are using an insurance policy that you find out what it really covers (or doesn’t). If you have health insurance through your employer, and several policies are offered, you can usually change policies during open enrollment, a period of time set up annually when employees can change or make changes to their insurance. If you have your own health insurance policy and you are healthy, you should have no trouble finding another one. But do not cancel your existing policy until your new one takes over. If you have a preexisting medical condition, insurers in many states can deny coverage (except in Massachusetts, Maine, Vermont, New York or New Jersey), exclude coverage for a specific condition or charge you more.
Appeal. If you have a claim that was denied and you don’t think that it should have been, you can appeal the decision. Most states require health insurance providers to have both an internal and external (independent) review process to handle complaints and appeals. The Henry J. Kaiser Family Foundation offers comprehensive information about the process at www.kff.org/consumerguide/00-intro.cfm.