What You Need to Know About Health Plans
Find out if your employer’s health plan is self-funded – especially if you live in New Jersey. Chances are, you don’t know if your insurance is self-funded by your employer – but it is important to understand.
Self-funded health plans are a type of job-based health insurance coverage. Instead of going through an insurance company, employers pay health care claims with their own funds. This matters because state insurance regulations do not apply to self-funded plans. That means that state laws that require coverage for certain medical conditions – like New Jersey’s law requiring coverage for treatment of autism – do not apply to self-funded plans. Note that MOST employers in New Jersey self-fund their health insurance plans, including the State of New Jersey that self-funds the State Health Benefit Program (for state employees and retirees).
It’s not that easy to know if your employer is self-funding its health plan. If the words “administered by” or your employer’s logo appears on your insurance card, that’s a sign that it’s self-funded, but you should ask your employer’s benefit manager to be sure. • Beware of budget busters when calculating total health care costs. Most people calculate their health care costs by adding up their monthly premiums, their annual deductible, and copays for doctor appointments and prescriptions. But it’s important for all families — especially families of children with special health needs — to tally up their total medical costs, including things like equipment, home modifications, special foods, supplies, and health care services that typically aren’t covered by insurance.
Beware of budget busters when calculating total health care costs. Most people calculate their health care costs by adding up their monthly premiums, their annual deductible, and copays for doctor appointments and prescriptions. But it’s important for all families — especially families of children with special health needs — to tally up their total medical costs, including things like equipment, home modifications, special foods, supplies, and health care services that typically aren’t covered by insurance.
Your child’s diagnosis matters in terms of what services are covered. A quick look at a list of health care services covered by your health plan probably won’t give you enough information to determine if the services your child needs to treat his or her condition are actually covered.
Why? Because health plans cover some services for specific diagnoses and don’t cover those same services for other diagnoses. That means it is very important for you to know your child’s diagnoses (including the formal name and diagnosis code) and to ask whether each service your child needs is covered for his or her specific diagnosis. Take a look at the questions we recommend you ask each health plan. They will help you understand how the benefits of each plan applies to your child’s specific needs. We also recommend that you take a look at this list of some of the services that are commonly not covered by insurance.
This is also important to know when you are calculating your total health care costs. The money you spend paying for “uncovered” health care services usually does not count toward meeting either your deductible or your out-of-pocket maximum.
Health care services may not be covered by insurance. When you and your family are covered by health insurance, it seems reasonable to expect that most, if not all, of your health care expenses will be covered. The truth is that there are many reasons that certain services aren’t covered.
A particular service or therapy may not be covered because the patient’s diagnosis is behavioral, not medical; it has been determined that the service is therapeutic rather than medically necessary; it may exceed the maximum number of that particular type of treatment allowed within a year; a child may be seen as failing to make “adequate” progress towards recovery; or, conversely, he or she may be seen as not “regressing” so services are no longer required.
Please use our Health Plan Evaluation Form and its accompanying step-by-step guide to help you determine if the health care services your child needs will be covered by a health plan.
There is a difference between your deductible and out-of-pocket maximum. Although people often use these two terms interchangeably, they mean very different things. Your deductible is the amount you owe for services your health plan covers before it begins to pay anything. For example, if you have a $2,500 deductible, you will have to pay for the first $2,500 of your covered health care services yourself before your insurance starts contributing. It’s also important to note that not all health care services you use (and pay for) will count toward meeting your deductible.
Your out-of-pocket maximum is the most you will pay during a policy period (usually one year) before your health plan starts to pay 100% for covered health benefits. This limit does not have to count premiums, balance billing amounts for non-network providers and other out-of-network cost-sharing, or spending for non-essential health benefits.
Remember that only covered services count towards meeting your deductible and your out-of-pocket maximum, so it is extremely important to know what services are and aren’t covered by each plan you are considering.
Understand individual versus family deductibles and out-of-pocket maximums. It is common for family policies to have both an individual deductible and a family deductible. Coverage for one member of your family (for example, your child) will begin as soon as he or she has met the individual deductible. That means that – for that individual – health plan benefits begin to pay for health care expenses. But every dollar each individual pays for his or her own covered services (and towards his or her deductible) also counts toward meeting the family deductible. Coverage for the entire family begins when the family deductible has been met, even if each family member hasn’t yet met his or her own individual deductible.
The same principle applies to individual and family out-of-pocket maximums. Individual out-of-pocket expenses are counted toward the family maximum. That means that your family can meet its out-of-pocket maximum before each family member meets his or her individual out-of-pocket maximum. Once the family maximum is met, your health plan will pay for any additional covered expenses for the rest of your policy period.
Understand the difference between copayments and coinsurance. Both copayments and coinsurance are forms of cost sharing. You contribute to a portion of your health care costs, and so does your insurer.
A copay is a fixed amount you pay whenever you use a particular type of health care service. For example, you might have a $20 copay to see a primary care doctor, a $30 copay to see a specialist, and a $25 copay to fill a covered name-brand prescription. Every time you use that service, you will pay the copay amount and your insurance company will pay the rest – no matter how big or small the rest of the bill is.
While copays are fixed amounts, coinsurance requires you to pay a percentage of the cost of your health care services and your insurer pays the rest. For example, if you have a 20% coinsurance for physical therapy, this means that you pay 20% of the cost of the therapy, and your insurer pays the other 80%.
It’s important to know that as your monthly insurance premium goes down, your copays and your coinsurance may go up.
Creating a Flexible Spending Account Can Save Money. Using a Flexible Spending Account (FSA) can save you money by using tax-free dollars to pay for many of your out-of-pocket health care costs. FSAs are set up through your employer, and your employer’s plan sets a limit on the amount you can put into an FSA each year. You decide how much of your pre-tax wages you want taken out of your paycheck and put into an FSA. You can use your FSA to pay for expenses like insurance copayments and deductibles, qualified prescription drugs, insulin and medical devices.
Understand What it Means to Have a High-Deductible Health Plan. A High Deductible Health Plan (HDHP) has higher deductibles than traditional health plans. HDHPs often also have lower premiums. It can be very tempting to choose the health plan with the lowest premium, but be sure to calculate your total health care costs when you are determining if this will be the best choice for you and your family. Remember that most families treated at Children’s Specialized meet their deductible and their out-of-pocket maximum.
Using a Case Manager - Many insurance providers offer case managers for families who use a lot of health services. A good case manager can help you navigate the complexities of your health plan so you can maximize your benefits case manager can also be your primary point of contact for questions regarding your benefits, service approvals and bills. You may want to consider asking whether a plan offers access to a case manager when evaluating your coverage options.
