About Health Insurance
Insurance terminology is confusing. Can you define some key terms for me?
Co-insurance This is a provision in which the insurer and the employee share in a specified ratio in a claim. For example, with 80% co-insurance the insurer would pay 80% of the total claim and the employee would pay 20%.
Co-payment This is like co-insurance, but usually refers to a flat dollar amount and is usually the employee's portion. For example, a plan with a $15 co-pay on office visits requires the employee to pay the first $15 on any office visit and the insurer to pay the rest. Different co-pay amounts may apply to emergency room treatment, prescription drugs, etc.
Deductible This is usually a flat dollar amount that each insured person must pay per calendar year towards the total medical expenses incurred before the insurer starts payment.
Maximum out-of-pocket This is the maximum amount of money that an individual or a family would pay in deductibles and co-insurance for all health care expenses in a calendar year. It puts a cap on the employee's share of the expenses incurred.
Pre-existing condition Any health condition of a person to be insured that existed prior to the effective date of a new plan is considered a pre-existing condition. For example, if an employee has diabetes today and is changing to a new health plan later, the diabetes would be a preexisting condition.
Can a pre-existing condition be excluded from my health coverage?
Any individual enrolling in a new health plan covered by California law may be subject to up to a six month waiting period before expenses related to the pre-existing condition are covered. However, the plan must subtract from the waiting period the time that the person had continuous coverage in a previous plan. Continuous coverage means that the person had less than a sixty three day gap between coverages. The insurer shall count a period of creditable coverage for all benefits or may elect to credit coverage based on Categories of Benefits specified in the policy or certificate.
Must my health insurance plan pay for my diabetic supplies and self-management education?
You are entitled to payment of all diabetic supplies and education under California law, provided that your plan is subject to California Insurance Department jurisdiction. Your plan may not be subject to this Department's jurisdiction if it is a self-insured plan or a union welfare fund. Employer group plans covering employees in more than one state and is subject to collective bargaining do not have to provide this coverage. Medicare Supplement policies do not provide this coverage.
What are my options if I wish to file a complaint against a self-insured plan, union plan, or Multiple Employer Welfare Association (MEWA)?
The above entities are exempt from state regulation under ERISA. They are however regulated by the United States Department of Labor. You may make complaints to the US Department of Labor.
U. S. Department of Labor_200 Constitution Ave., N. W._Washington, D. C. 20210_(202) 219-8233
What is "open enrollment"?
Open enrollment means that any employee, and dependents of such employee, within a small group, applying for small group health insurance coverage must be accepted at all times throughout the year for any hospital and/or medical coverage offered by the insurer to qualifying small groups in this state. Once accepted for coverage, an individual or small group cannot be terminated by the insurer due to claims experience.
In other words, an insurance company in California cannot refuse to insure an employee or small group on the basis of health, occupation, age, sex, etc. However, an applicant for an individual health insurance policy may be denied coverage.
Can HMOs prohibit doctors from telling their patients about more expensive procedures?
No. California law prohibits the HMO from restraining their providers from telling patients about more costly procedures.
My insurance company refuses to pay my hospital emergency room bill saying that it was not an emergency. Can they do this?
The company must cover any hospital ER bill provided that a prudent lay-person would have considered the incident to be an emergency at the time of the ER admittance.
How can I dispute my HMO's decision as to the necessity of my treatment?
Callifornia law requires the HMO to provide grievance procedures so that such decisions can be challenged.
What additional health insurance will I need when I turn 65 and go under Medicare?
Medicare (parts A & B) provides extensive medical benefits. There are however, gaps in coverage. To help cover these gaps in coverage, there are standardized Medigap plans throughout the country. The plans go from Plan A (least coverage for lowest cost) to Plan J (most coverage for highest cost). Not all health insurers sell all 10 plans. In addition, enrollment in a Medicare HMO can help cover the gaps in Medicare.
What information do I need to collect to get a quote?
Insurance companies will need a census of your employees that includes the number of employees, their birthdates, their genders, birthdates of dependents to be covered, and the number of children to be insured. In addition, they will need your companys inception date and the start date of coverage.
Half of my employees are insured elsewhere. What should I do?
This is a challenge for small business owners. If one of your employees has a spouse who has family coverage where he or she works, your employee may be covered on that policy, and not interested in group health insurance.
If you want to offer a group plan, be aware that your insurer may require you to cover all of your employees.
Can I purchase and offer individual plans to my employees?
Maybe, but individual plans do not offer the advantages of group plans. Generally, with individual plans, your employees would be subject to individual underwriting. An employee who needs the coverage may not be eligible.
Another thing to note is that the contributions you make towards the cost of individual policies may be taxable as compensation to the employee. Check with your accountant for details.
Do I need both Group Health insurance and Workers Compensation insurance?
Group Health is optional; workers compensation is usually required.
In most states, employers are required to provide workers' compensation insurance, which generally pays for medical expenses and loss of income for employee injuries that are work-related. Unfortunately, most health insurance plans specifically exclude work-related injuries.
If you're a sole proprietor, partner, or officer of a small corporation, you may not be covered automatically by your workers' compensation policy. If this is the case, you must determine whether your own health insurance has an exclusion for work-related injuries; you could have a gap in your own coverage.
Generally, most business owners should consider electing to cover themselves under workers compensation if that option is available in their state. Check with your own insurance company for more information.
What about life insurance, dental insurance, and vision insurance?
There are many group insurance plans available. However, most employers work with limited budgets and need to make some choices that are attractive to the majority of their employees. Many businesses, regardless of the number of employees, rank the importance of group insurance plans in this order:
Is there a period of time during which after I purchase my life insurance policy I can change my mind and have my money refunded?
Yes, the Insurance Law requires a period of not less than ten days nor more than 30 days from the date the policy is delivered to you. A policy sold by mail order must provide for a 30 day period. The insurer must refund to you any premium paid, including any policy fees or charges.
What happens if I forget to pay my premium by its due date?
Your life insurance policy will provide for a 31 day or one month grace period within which you can still make your premium payment. Your policy will continue in force during that time. Universal Life type policies will generally have a grace period of 60 or 61 days.
If I pay my annual premium and then decide to cancel my policy, will I receive a pro rata refund of my premium?
An insurer is not required under the Insurance Law to refund any portion of your annual premium if you choose to cancel your policy during the year.
What if I made a mistake in completing my application for a life insurance policy? Can the insurer void my policy?
A life insurance policy will be incontestable by the insurer after being in force during the life of the insured for a period of two years from its date of issue. The insurer must show that a material misrepresentation was made in the application.
If I forget to pay my premium and the policy lapses is there anything I can do?
A life insurance policy must provide for reinstatement of the policy within three years from date of default, unless the cash surrender value has been exhausted or the period of extended insurance has expired, if you complete an application and show that you are in good health to the satisfaction of the insurer. In addition, you will be required to pay all the overdue premiums with interest (not to exceed 6%) and pay or reinstate your outstanding loans at the applicable policy loan interest rate.
If I take out a policy loan, what rate of interest can the insurer charge?
At the option of the insurer your policy will provide for either a fixed loan interest rate not to exceed 8% (seven and four-tenths per centum per annum if payable in advance) or a rate not in excess of an adjustable maximum rate based on Moody's Corporate Bond Yield Averages.
What happens to a life insurance policy in the event of suicide of the insured?
If the insured dies by suicide during the first two policy years, the insurer will refund the premiums paid and the death benefit will not be payable.
What happens if my outstanding loans plus interest due exceed the policy loan value on my life insurance policy?
The insurer will provide you with at least 30 days "prior notice" before terminating your policy. During that 30 day period you have the opportunity to repay the outstanding loan and/or interest in order to avoid lapse.
In order to purchase life insurance I am told I must have an "insurable interest" in the person to be insured. What is "insurable interest"?
The Insurance law defines "insurable interest" as, in the case of persons closely related by blood or by law, a substantial interest engendered by love and affection. In the case of other persons, a lawful and substantial economic interest in the continued life, health or bodily safety of the person insured, as distinguished from an interest which would arise only by, or would be enhanced in value by, the death, disablement or injury of the insured.
If there is a delay in an insurer paying the death benefit to the beneficiary when a death claim is made, is the beneficiary entitled to any interest on the death benefit?
Yes. The Insurance Law requires that interest computed daily at the rate of interest currently paid by the insurer on proceeds left under the interest settlement option be paid from date of death to date of claim.
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