Just because a claim is

Life & Health Insurance Advisor

Health Insurance June 2013 Volume 6 • Number 6

Understanding the Claims Process, Part 2

In our last issue, we dis-cussed some of the factors that determine whether a claim is covered. In this article, we’ll discuss plan design features that affect how much your plan will pay toward a covered claim.

This Just In…

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nly half of Americans surveyed said they knew enough about the Affordable Care Act (ACA), re-ports the Kaiser Family Foundation. And a surprising 42 percent of re-spondents thought the Supreme Court overturned it or that Congress had repealed it. (Neither is true.)

Key facts about the ACA: Y It still stands as law.

Y Every state will have a health insurance exchange, whether managed by the state, federal government, or a federal/state partnership. The law requires ex-changes to open by October 1 to begin enrolling individuals and small groups for coverage that will begin on January 1, 2014. Y Starting on January 1, American

citizens and legal residents of all ages must have “minimum essential coverage,” unless they have an exemption.

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ust because a claim is covered doesn’t mean your insurer will pay 100 percent of the provider’s charges. The following features can reduce the amount your policy pays:

Allowed Amount. All health

plans specify that they will pay a maximum amount for cov-ered services. Your plan might

call this an “eligible expense,” “payment allowance” or “nego-tiated rate.” Insurers often base this maximum on a “UCR (usual, customary and reasonable) rate schedule, which uses informa-tion on what providers in a spe-cific area usually charge for the same or similar medical service.

Healthcare providers often complain that insurers’ UCR information is out of date and doesn’t reimburse them the true cost of providing services. However, fees can vary widely among providers even in the same city, so UCRs provide some cost controls for consumers. 230 S. Bemiston; Suite 900 • Clayton, MO 63105

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Life & Health Insurance Advisor • June 2013 Health Insurance

Balance Billing. If your provider charges

more than the insurer’s allowed amount for a covered service, you may have to pay the difference, called “balance billing.” Preferred providers’ agreements with health plans pro-hibit balance billing—just one more way us-ing a network provider saves you money!

Deductibles. Most health insurance plans

require you to pay a deductible, or speci-fied out-of-pocket amount, toward covered health expenses per calendar year before the plan will begin to pay benefits.

Many health plans cover preventive care with no deductible, so the cost of vaccina-tions, annual exams, etc. might not apply to your deductible. Preventive care can include (but is not limited to):

Y Periodic health evaluations, including tests and diagnostic procedures ordered in connection with routine examinations, such as annual physicals.

Y Routine prenatal and well-child care.

Y Child and adult immunizations.

Y Tobacco cessation programs.

Y Obesity weight-loss programs.

Y Screening services, including services for cancer; heart and vascular diseases, infec-tious diseases, mental health conditions, substance abuse and more.

Family plans typically have two deduct-ibles—an individual deductible and a family deductible. In a PPO or traditional fee-for-service plan, once any covered individual meets the individual deductible, the policy will begin paying benefits for that person.

mary payer” pays what it owes on your bills first, and then sends the rest to the “second-ary payer” to pay. In some cases, there may also be a “third payer.”

Coordination of benefits rules make it pos-sible for insureds to receive coverage for up to 100 percent of their claim amount, but not more. Many insurers follow coordination of benefits rules set by the National Association of Insurance Commissioners (NAIC). These rules generally set the order of payment as:

1 The plan without coordination of benefits provisions.

2 An employer’s group plan, if you are the employee. Your employer’s plan will cover your spouse on a secondary payer basis if he/she has coverage under his/her own employer’s plan.

3 An active employee plan, versus a retiree plan. If you are working and also have cov-erage as a retiree under another employ-Other covered family members must

contin-ue paying toward the deductible. Once total payments for any family member(s) reach the family deductible amount, no covered in-dividual must pay a deductible for the rest of the calendar year.

A high-deductible health plan (HDHP) linked to a health savings account (HSA) has different rules for deductibles. To qualify for the HSA, an HDHP covering a family must have a minimum deductible of $2,500 for 2013. If either the deductible for the family as a whole or the deductible for an individual family member is below the minimum annual deductible for family coverage, the plan does not qualify as an HDHP.

How much of your deductible have you satisfied to date? Check the latest Explana-tion of Benefits (EOB), or statement from your health insurer that shows what claims it has paid on your behalf. In addition to show-ing what your provider charged and how much your plan paid (after fee adjustments), the EOB should show the individual and fam-ily deductible satisfied to date.

Copayments. HMO and PPO plans

re-quire insureds to pay a fixed amount (such as $25) each time they access a covered health service. Copayments help control overuse of medical services, so some plans do not charge copayments for certain visits that they want to encourage, such as annual exams. Copayments do not apply to your deductible.

Coordination of Benefits. If you or your

dependents have coverage under more than one health plan, “coordination of benefits” rules determine which pays first. The

“pri-Y Individuals without an exemption will have to obtain coverage or pay a fine.

The law exempts members of certain groups and those who cannot afford cover-age from the covercover-age requirement. Generally speaking, those with coverage under a group or individual health insurance policy, Medicare or other federal health plan already have the coverage they need.

How much do you know about the ACA? Take the quiz at kff.org/quiz/health-reform-quiz, or contact us for more information.

Life & Health Insurance Advisor • June 2013 Risk Management

Life’s Most Important Paperwork

“It’s a joke in the zoo business, a weary joke, that the paperwork involved in trading a shrew weighs more than an elephant, that the paperwork involved in trading an elephant weighs more than a whale, and that you must never try to trade a whale, never.”

— Yann Martel, Life of Pi

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f trading a shrew involves tons of pa-perwork, just imagine all the paper-work involved in a serious or prolonged illness and transfer of a complex estate. The following checklist can help you en-sure you have life’s most important paper-work in order when your family needs it most. This list covers just the basics—business own-ers and those with significant assets will also

want to get input from their tax preparer and financial advisor(s).

1 A living will: A legal document also known as an “advance directive,” the living will provides information about the type of care you want to sustain life if you be-come incapacitated. You can use it to state your general feelings about using er’s plan, the plan of the employer you

are currently working for would become primary.

4 Children who have coverage under both parents’ group plans would have primary coverage under the plan of the parent whose birthday is earlier in the year. For example, Beth and Dave both have em-ployer-sponsored coverage for their chil-dren. Beth’s birthday is in January and Dave’s is in March. Beth’s plan would be the primary payer; Dave’s the secondary. In cases of divorce, the plan of the parent financially responsible for the child’s healthcare generally becomes the prima-ry payer.

5 If none of these rules apply, the plan you’ve had the longest will be considered the primary plan.

Different rules apply for those who have Medicare plus private health insurance; for specifics, go to www.medicare.gov and type in “who pays first.”

Doctors and other healthcare providers might have a working knowledge of what a health plan will pay, but they can’t be experts in all of them. To avoid surprises, review your plan to ensure it covers any elective proce-dures or treatments before scheduling them. If you’re unsure, or if your healthcare provid-er recommends an uncovprovid-ered or expprovid-erimen- experimen-tal treatment, you can ask your insurer if it will provide coverage.

For more information on health plans, please contact us.

Life & Health Insurance Advisor • June 2013 Dental Insurance

Dental Insurance

Makes Dental

Care Affordable

More than one in three American adults (36 percent) has delayed or will delay dental care for financial reasons, found a recent survey.

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he survey, by ORC International and commissioned by Aspen Den-tal, also found that more than 80 percent of those who are making that decision know that delaying dental care will cost them more in the long run.

Neglecting dental health can affect the health of your whole body. A study by Aetna Insurance Co. and Columbia University Col-lege of Dental Medicine found that people who received regular periodontal (gum) care had fewer problems with diabetes, strokes and coronary artery disease. Regular dental care can also help detect other illnesses. The American Dental Association says more than 90 percent of medical illnesses, including cancer and HIV, show in the mouth. Regular dental visits can lead to an earlier diagno-sis and perhaps better outcomes and lower treatment costs.

Dental Insurance Encourages Preventive Care

Dental insurance can make dental care more affordable by taking unpredictability medical technology to sustain life, and at

what point. You can also name specific types of care you want or don’t want— such as feeding tubes or ventilators— when you are at the end of life or in a per-manent state of unconsciousness. You can also use the living will to specify whether you want to donate your organs or tis-sues, and to specify which ones.

2 A durable power of attorney (POA) for

health care: Medical technology

advanc-es so rapidly that a living will might not cover all circumstances. A durable power of attorney for health care names your health care proxy, or person who will make your health decisions if you are un-able to do so. Generally, the proxy should be someone who knows you well but will not profit from your death.

3 A financial power of attorney: A financial power of attorney documents your wish to allow a trusted family member or friend to act on your behalf in financial matters if you become incapacitated. Lacking a POA, financial institutions can-not permit non-account holders to con-duct transactions.

4 An updated will and trust: Have you re-viewed and updated your will and trust lately? Does it reflect your current family and financial situation? If not, contact your attorney as soon as possible! Other-wise, your estate will be subject to pro-bate and divided according to law—a time-consuming (and costly) process.

5 Funeral plans: Do not include these in/

with your will, as wills are generally read after the funeral has passed. Store your written funeral plan with your other im-portant documents, and give copies to your attorney and next of kin.

6 Adequate life insurance: Review your life insurance policies periodically to ensure your beneficiary designations are up to date and you have adequate coverage. Life insurance proceeds can help pay fu-neral and burial expenses, along with any final medical bills and personal debts. Even those with a large estate should have some life insurance coverage. Life in-surers will pay benefits promptly upon re-ceipt of a claim form and death certificate, whereas it can take months to settle an estate.

For more information on using life insur-ance to fund end-of-life and other expenses, please contact us.

Life & Health Insurance Advisor • June 2013 Life Insurance

out of the equation. To encourage insureds to get regular exams and cleanings, most poli-cies will provide 100 percent coverage for a preventive visit every six months, plus annual x-rays. You must pay any annual deductible amount out of pocket before your plan will pay benefits, but some plans offer deduct-ibles as low as $50. Preventive services can include exams, cleanings and sealants.

Dental plans cover other types of dental treatments as well:

1 Minor restorative treatments, such as fill-ings

2 Endodontics, or root canals

3 Oral surgery, including extractions and mi-nor surgery

4 Periodontics, or treatment of periodontal disease, including scaling, root planing and treatment of infections of the peri-odontal (gum) tissue

5 Major restorative treatments, including crowns and implants

6 Dentures and bridges.

Policies often cover the first four catego-ries of treatment at a higher percentage than the last two. For example, your plan might cover fillings and root canals at 80 percent and crowns at 50 percent. You would be re-sponsible for the balance left after your plan pays. Keep in mind that many plans negotiate lower rates for their in-network providers, so the balance someone with insurance would owe for a filling, for example, might be less than 20 percent of the dentist’s normal fee.

So, What Does It Cost?

Prices vary depending on carrier, plan design, your age, your geographic area and tobacco use, but many people can find cover-age for $20 per month or less. If you qualify for group coverage (such as a voluntary plan through an employer), group discounts could bring your prices even lower.

Plan types, from most to least expensive, include:

Indemnity Plans: These traditional

fee-for-service policies let you use any dentist. The insurer then reimburses you by paying either a percentage of the fee or according to a fee schedule. Policies have annual de-ductibles and spending caps. To encourage regular preventive care, most policies cover 100 percent of the cost of preventive services after you meet the annual deductible.

Dental Preferred Provider Organiza-tions (PPOs): The most common type of plan

available today, a PPO plan has a network of “preferred providers” who have agreed to discount fees when treating plan members. Plans usually limit payments to a certain per-centage of the “reasonable and customary” charges of dentists in that geographic area.

Dental PPO designs encourage the use of network providers. For example, a plan might pay 100 percent of your visit to a preferred provider for preventive services, but only 60 percent of a claim submitted by a non-pre-ferred provider (which may also be subject to higher deductibles). You would have to pay the uncovered portion out of pocket.

Most PPOs offer very extensive provider

lists; chances are good that your current pro-vider accepts one or more PPO plans.

Dental Health Maintenance Organiza-tions (HMOs): HMOs contract with dentists

who agree to provide covered dental services to members in return for a periodic per-capita payment—usually monthly. Payments do not depend on the number or type of services rendered, and the HMO accepts the financial risk for providing covered dental services to members.

Most HMO plans require members to use a dentist who is a member of the HMO in or-der to have their services covered. The incen-tive? Unlike most plans, an HMO might pay 100 percent of a covered service.

Some plans provide benefits on a reduced level when a member uses an out-of-network

SmartsPro

The information presented and conclusions within are based upon our best judgment and analysis. It is not guaranteed information and does not necessarily reflect all available data. Web addresses are current at time of publication but subject to change. SmartsPro Marketing does not engage in the solicitation, sale or management of securities or investments, nor does it make any recommen-dations on securities or investments. This material may not be quoted or reproduced in any form without publisher’s permission.

Life & Health Insurance Advisor • June 2013

Navigators vs. Agents and Brokers

provider. A member may have to pay a deductible, copayment or any amount exceeding specific plan maximum allow-ances or coverage levels.

Point-of-Service (POS) Plans: POS plans

combine features of fee-for-service plans

and managed care plans. DHMO or PPO plans may offer a point-of-service option to allow participants to use out-of-net-work providers. However, POS plans usu-ally offer lower benefits or reimbursement percentages and participants may have to

do their own paperwork, including submit-ting bills to the insurer for payment.

For a comparison of dental plans avail-able in our area, please contact us.

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n a recent poll by Aflac, an overwhelming majority (76 percent) of workers surveyed admitted they were not knowledgeable about the federal and state health insurance exchanges created by the Affordable Care Act (ACA). The ACA also created new insurance pro-grams, incentives and penalties, giving consumers and small busi-nesses a whole new system to learn.

To help consumers and small businesses make choices about coverage options within the exchanges, the ACA requires each state to establish a program of “navigators.” The U.S. Department of Health and Human Services recently released proposed regula-tions on the navigator program. These regularegula-tions would apply to navigators on federally facilitated exchanges, including state part-nership exchanges, and to non-navigator assistance personnel in state-based exchanges funded through federal exchange establish-ment grants.

Navigators, as individuals or entities:

Y Cannot be employees of health insurers or issuers of stop-loss insurance for self-insured health plans.

Y Can be health insurance agents or brokers. Independent agents

and brokers qualify, but to avoid conflicts of interest, they can-not receive commissions or fees from health insurers for their work as navigators.

Y Must meet licensure or certification standards established by the states or exchanges, although states cannot require navi-gators to obtain an agent’s license. In every state, agents and brokers must pass licensing exams and must also meet stringent continuing education requirements to keep their knowledge updated. Equivalent standards may or may not apply to the nav-igators.

Consumers new to health insurance will likely need help in navigating the exchanges. However, individuals and families with existing health insurance coverage probably need not worry. Your existing plan will likely meet the “individual responsibility” require-ments of the ACA, and your broker will continue to provide enroll-ment and other assistance. In fact, many duties of the navigators will duplicate functions already performed by agents and brokers.

As always, we are ready to guide you through the insurance-buy-ing process. For more information, please contact us.