Frequently Asked Questions

What is HIPAA?

HIPAA stands for the Health Insurance Portability and Accountability Act. Passed in 1996, HIPAA is a federal law that sets a national standard to protect medical records and other personal health information. The rule defines "protected health information" as health information that: 1) Identifies an individual and 2) Is maintained or exchanged electronically or in hard copy. If the information has any components that could be used to identify a person, it would be protected. The protection would stay with the information as long as the information is in the hands of a covered entity or a business associate. The protections apply to individually identifiable information in any form, electronic or non-electronic.

What is individual and family health insurance?

Individual and family health insurance is a type of health insurance coverage that is made available to individuals and families, rather than to employer groups or organizations. Given the option, most people would prefer to have their employer provide group health insurance coverage. But, if this is not an option for you, it is still important for you to seek coverage. You may be pleasantly surprised with the variety and affordability of the individual and family health insurance options available.

What kinds of individual and family insurance plans are available?

Individual and family health insurance plans are usually described as either "indemnity" or "managed-care" plans. Put broadly, the major differences concern choice of healthcare providers, out-of-pocket costs, and how bills are paid. Typically, indemnity plans offer a broader selection of healthcare providers than managed-care plans. Indemnity plans pay their share of the costs for covered services only after they receive a bill (which means that you may have to pay up front and then obtain reimbursement from your health insurance company).

There are several different types of managed-care health insurance plans. These include HMO, PPO, and POS plans. Managed-care plans typically make use of healthcare provider networks. Healthcare providers within a network agree to perform services for managed-care plan patients at pre-negotiated rates and will usually submit the claim to the insurance company for you. In general, you will have less paperwork and lower out-of-pocket costs with a managed-care health insurance plan, and a broader choice of healthcare providers with an indemnity plan.

How does an HMO plan work?

Though there are many variations, HMO (Health Maintenance Organizations) plans typically enable members to have lower out-of-pocket healthcare expenses, but also offer less flexibility in the choice of physicians or hospital than other health insurance plans. As a member of an HMO, you'll be required to choose a primary care physician (PCP). Your PCP will take care of most of your healthcare needs. Before you can see a specialist, you'll need to obtain a referral from your PCP.

With an HMO you will likely have coverage for a broader range of preventive healthcare services than you would through another type of plan. You may not be required to pay a deductible before coverage starts and your co-payments will likely be minimal. With an HMO plan, you typically won't have to submit any of your own claims to the insurance company. However, keep in mind that you will likely have no coverage whatsoever for services rendered by non-network providers, or for services rendered without a proper referral from your PCP.

How does a PPO plan work?

As a member of a PPO (Preferred Provider Organization) plan, you will be encouraged to use the insurance company's network of preferred doctors and hospitals. These healthcare providers have been contracted to provide services to the health insurance plan's members at a discounted rate. You typically won't be required to pick a primary care physician but will be able to see doctors and specialists within the network at your own discretion.

You will probably have an annual deductible to pay before the insurance company starts covering your medical bills. You may also have a co-payment for certain services or be required to cover a certain percentage of the total charges for your medical bills. With a PPO plan, services rendered by an out-of-network physician are typically covered at a lower percentage than services rendered by a network physician.

How does a POS plan work?

A POS (Point of Service) plan combines some of the features offered by HMO and PPO plans. As with an HMO, members of a POS plan are required to choose a primary care physician (PCP) from the plan's network of providers. Services rendered by your PCP are typically not subject to a deductible. Also, like HMOs, POS plans typically offer coverage for preventive care visits.

Typically, however, you will only receive a higher level of coverage for services rendered or referred by your PCP. Services rendered by a non-network provider may be subject to a deductible and will likely be covered at a lower level. If services are rendered outside of the network, you'll likely have to pay up-front and submit a claim to the insurance company yourself.

What's the difference between in-network and out-of-network providers?

An in-network provider is one contracted with the health insurance company to provide services to plan members for specific pre-negotiated rates. An out-of-network provider is one not contracted with the health insurance plan. Typically, if you visit a physician or other provider within the network, the amount you will be responsible for paying will be less than if you go to an out-of-network provider. Though there are some exceptions, in many cases, the insurance company will either pay less or not pay anything for services you receive from out-of-network providers. As a general rule, PPO, POS, and HMO plans make use of provider networks. Indemnity plans typically do not.

How does an HSA work?

Legislation establishing Health Savings Accounts (or "HSAs") took effect on January 1, 2004. HSAs and HSA-eligible health insurance plans are becoming more and more popular. Here are the basics:

  • An HSA is a tax-favored savings account that may be used in conjunction with an HSA-eligible high deductible health insurance plan to pay for qualifying medical expenses.
  • Choosing an HSA-eligible health insurance plan may help you save money. Typically, the monthly premium on an HSA-eligible high deductible plan is less expensive than the monthly premium for a lower-deductible health insurance plan.
  • Contributions to an HSA may be made pre-tax, up to certain annual limits.
  • Funds in the HSA may be invested at your discretion. Unused funds remain in the account and accrue interest year-to-year, tax-free.

What is a co-payment?

A "co-payment" or "co-pay" is a specific charge that your health insurance plan may require that you pay for a specific medical service or supply. For example, your health insurance plan may require a $15 co-payment for an office visit or brand-name prescription drug, after which the insurance company often pays the remainder of the charges.

What is a deductible?

A "deductible" is a specific dollar amount that your health insurance company may require that you pay out-of-pocket each year before your health insurance plan begins to make payments for claims. Not all health insurance plans require a deductible. As a general rule (though there are many exceptions), HMO plans typically do not require a deductible, while most Indemnity and PPO plans do.

What is coinsurance?

Coinsurance is the term used by health insurance companies to refer to the amount that you are required to pay for a medical claim, apart from any co-payments or deductible. For example, if your health insurance plan has a 20% coinsurance requirement (and does not have any additional co-payment or deductible requirements), then a $100 medical bill would cost you $20, and the insurance company would pay the remaining $80.