Introduction to Washington Health Insurance

An illness or injury can be financially devastating, especially when considering the rising

 cost of health care over the past twenty=five  years. Washington Health insurance can

 help protect you from large, catastrophic health care expenses  that can accumulate

 during an acute or chronic illness  This can take the form of catastrophic Washington

 health  insurance, Washington group health insurance, Washington individual health

 insurance, or Washington family health insurance.,  One thing it must be is  affordable

 health insurance.  If you have a job, your employer may provide group comprehensive

ajor medical / health insurance. You can also purchase individual comprehensive major medical health insurance  privately or through

an insurance agent or broker who is licensed by the State of

Washington  to sell health insurance products    .

This summary  outlines the different types of health-medical insurance

and provides contact information should you experience a

problem with your plan.

Categories of Health Insurance and

How Health Insurance Works

Health insurance pays for expenses incurred for diagnosis

and treatment of covered medical conditions. There are

many different types of health insurance plans available in

Washington State. If you have a choice, it is important to choose

the plan that best fits your specific needs, budget, and

lifestyle. Also, make sure that you are aware of the state or

federal agency that regulates the type of health care plan you

purchase in case you experience questions or problems.

Each of the different ways of receiving health care services

has advantages and disadvantages. It is in your best interest

to become familiar with the different types of health

insurance, so you know what may be available to you.

 

• Indemnity Policies (Traditional Fee-for-Service Insurance) in Washington

Consumers Guide to Health Insurance

• Preferred Provider Organizations (PPOs)

• Health Maintenance Organizations (HMOs orr

Managed Care)

• Self-Insured Health Plans (Single Employer Self-

Insured Plans)

• Multiple Employer Welfare Arrangements (MEWAs)

Indemnity Policies (Traditionall

Fee-for-Service Insurance)

Point of Service (POS)

Most indemnity policies allow you to choose any doctor

and hospital that you wish when seeking health care services.

The hallmark of traditional fee-for-service insurance is

choice. You are given the choice of what provider to visit

when seeking covered medical services with few geographic

limitations. However freedom costs and this is generally the most expensive type of Washington health insurance policy. When purchasing an indemnity policy, you  often have a deductible. The deductible is the amount

you are required to pay before policy benefits are provided.

You generally  have a choice in the amount of your deductible.  As the deductible increases , the premium paid for the plan decreases. since higher deductibles  translates into higher co-insurance by the policy holder.

Once the deductible has been paid, the remaining charges

are reimbursed to you at a specified percentage according to

the policy contract. The difference between eligible charges

and the percentage paid is called a “co-payment,” and is

normally your responsibility. The policy or an employee

benefit booklet (if your indemnity policy is group coverage)

will spell out the terms and conditions of what is covered

and what is not covered. Read your policy or benefit booklet

before you need health care services and ask your health

insurance agent, insurance company, or employer to explain

anything that is unclear.  The Washington State Insurance Commissioners Office   regulates indemnity policies. If you have an individual or group health

insurance policy that is a traditional fee-for-service policy

issued by a  licensed health insurance company, then

you may contact the Washington State Insurance commissioners Office for assistance. Since jurisdiction

is divided between state and federal agencies, it can be

confusing to determine who regulates your health care

coverage. The Washington State Insurance Commissioners Office  is always available to assist consumers with health care questions or to direct consumers to the correct agency for assistance. Please see the last page of this

summary  for the many ways you can contact the Washington State Insurance Commissioners Office

 

Important Points to Remember About

Indemnity Policies:

• You have the freedom to choose your doctor, specialist,

or hospital with few limitations.

• Your options are seldom if ever limited by geographic

restrictions. 

  This freedom of choice  costs as indemnity plans are generally the most expensive type of Washington State Health insurance

 

• Generally you are  responsible for paying a deductible before

covered medical benefits are reimbursable.

• You may be required to pay a co-payment for covered

medical services.

• You can seek assistance from the Washington State Insurance Commissioner’s Office  for questions regarding any indemnity policy issued by an insurance

company admitted in Washington State.

Preferred Provider Organizations (PPOs) in Washington

A Preferred Provider Organization (PPO) in my opinion has the best of the features of indemnity plans and managed care plans. PPO plans provide a list

of contracted “preferred” providers from which to choose.

You receive the highest monetary benefit when you limit

your health care services to those providers on the list.  Yet, you may go directly to contracted specialists without referrals. 

If you go to a doctor or hospital that is not on the preferred

provider list (referred to as going “out-of-network”), then

the plan covers a smaller percentage of your health care

expenses or may cover none of your health care expenses

based on the contract wording of the plan. Always check

with your PPO or consult your list of preferred providers

before you seek health care services to make certain your

physician or hospital is a contracting provider (part of the

network). Make sure that your doctor refers you to health

care providers within your PPO network, if applicable.

PPOs in Washington State  are regulated by the Washington State Insurance commissioners office .

Important Points to Remember About Preferred

Provider Organizations:

• You receive the highest monetary benefit when staying

within the PPO network.  Generally, you may go to contracted specialists without referrals from primary care physicians without penalty.

• You may have the option to go outside the PPO network

at a higher monetary cost to you.

• Check to make sure your doctor or any specialist

referred to you is part of the PPO network before

utilizing covered services.

Washington Health Insurance PPOs can also be self-funded.

 

Health Maintenance Organizations in Washington

(HMOs or Managed Care)

Membership in a Health Maintenance Organization (HMO)

requires plan members to obtain their health care services

from doctors and hospitals affiliated with the HMO. It is

common practice in HMOs for the plan member to choose

a primary care physician who treats and directs health care

decisions and who coordinates referrals to specialties within

the HMO network. The doctors and hospital personnel

may be employees of the HMO or contracted providers.

Since HMOs operate in restricted geographic regions, this

may limit coverage for plan members if medical treatment

is obtained outside the HMO network or coverage area.

Washington State HMOs are required to cover medically necessary

emergency services even when outside of their coverage area.

The intent of managed care products is to create less costly

delivery of health care services while maintaining quality

health care. HMOs offer access to a comprehensive package

of covered health care services in return for a prepaid

monthly amount (premium). Most HMOs charge a small

co-payment depending upon the type of service provided.

Important Points to Remember About Health

Maintenance Organizations:

• You must obtain health care services from HMO

providers, except in certain emergency situations.

• Your choice of primary care physician is important

because he/she directs your care. Also, your primary care

physician often coordinates referrals to specialties within

the HMO.

• Your options may be limited by the geographic restrictions

of the HMO network.

• You may be charged a small co-payment each time you

utilize an HMO covered service

Point of Service Plans in Washington (POS)

 

Self-Insured Health Plans in Washington

(Single Employer Self-Insured Plans)

Washington Health Insurance

Self-Insured Health Plans have gained in popularity among

large employers, labor unions, school districts and other

municipalities. These groups provide a pool of money and

then proceed to pay for the health care services of their

members (employees) from this pool. It is common for

self-insured plans to turn over the administration of their

health plans to a Third Party Administrator (TPA). The TPA

handles all administrative tasks including claims processing

and payments. Often the employer will contract with an

insurance company to act as a TPA for all health care claims.

Washington Health Insurance

Most self-insured health plans fall under the Employee

Retirement Income Security Act (ERISA). ERISA is federal

law that is enforced by the U.S. Department of Labor,

Employee Benefits Security Administration (DOL-EBSA).

If you are a member of a self-insured health plan through

your employer or union, then you can contact the DOLEBSA

for assistance. However, the DOL-EBSA does not

regulate self-insured health plans that are sponsored through

school districts, other municipalities, and churches. If you

are a member of this type of plan, you can file a complaint

with the plan directly or you may seek a legal remedy

through a court of law. The DOL-EBSA is available to

answer questions about self-insured employer plans that

come under ERISA regulation. You can gain information on

the type of plan that you participate in by contacting your

employer or union. If there is still some question, then you

can contact the DOL-EBSA for clarification. Please see the

“Resources” section of this brochure..

Important Points to Remember About Self-Insured

Health Plans:

• If you work for a large employer, have a union affiliation,

work for a school district, or work for a municipality, the

health plan offered to you may be a self-insured entity.

• An insurance company or a TPA may administrate a self-insured

health plan.

• Self-Insured health plans are most likely subject to federal

ERISA law.

• If your self-insured health plan is not a school district,

other municipality, or a church, you can seek help from

the DOL-EBSA.

• If your self-insured health plan is a school district, other

municipality, or a church, you may seek assistance from

the plan directly or from the courts.

Consumers Summary Health Insurance

Multiple Employer Welfare Arrangements

(MEWAs)

MEWAs permit employer members of trade, industry,

professional, and other associations to create trust funds for

the purpose of offering and providing health care benefits

to their employees. Because of significant and widely

publicized mishandling of claims by MEWAs in the 1980s

and early 1990s, legislation was passed to more closely

regulate MEWAs.

Employer Welfare Arrangements:

• Your employer may offer a MEWA health plan if they are

an employer member of a trade, industry, professional,

or other association.

How Is Health Insurance Marketed in Washington State

Health insurance coverage is sold to consumers through

individual policies or group policies. Individual health

insurance coverage should be pursued when your employer

does not offer health insurance as a benefit of employment,

when you cannot be named as the dependent on another

person’s insurance policy, or when you are not a member of

a professional or trade association that offers group coverage.

Many consumers are self-employed, contract employees, or

work for small employers and do not have access to a group

policy secured by an employer. Individual coverage can be

obtained by contacting a licensed health insurance agent

or broker.   You will need to complete an application that

includes your medical history, which will be reviewed by a

medical underwriter at the health insurance company. If you

meet the underwriting qualifications and are issued a policy,

the company may not cover preexisting conditions up to nine months

 after the effective date of the policy. However, if you

have been previously insured under an individual or group

policy without a break in coverage of more than 62 days,

your new insurance company must apply the prior creditable

coverage refer to the “Health Insurance Terms”

towards any waiting period for preexisting conditions.

Individual health insurance companies may reject your

application based on your medical history.  If you are rejected, you are then offered the WSHIP plans offered thru Washington State Health Insurance Pool.   These plans are much higher in rates as the population of people in these plans utilize services to a much greater degree than average.  

 Group health insurance offers certain advantages over

individual health insurance policies.  If you have at least  2 employees working at least 20 hours per week in the group, you may apply for group coverage.  There are no required health questionnaires for members of a group of up to 50 employees in size.   

Also, if you have been previously insured under a group

policy without a break in coverage of more than  62 days,

your new insurance company must apply the prior creditable

coverage toward the nine-month waiting period for preexisting

conditions. It should be noted that, upon application for

coverage, large employer groups (more than 50 employees)

may be underwritten, as a group, by insurance companies. 

Association group health insurance, like individual

health insurance, is subject to medical underwriting.  These are generally for groups  of 5 employees or larger in size.  You can  be medically underwritten as a group  and rates can vary depending upon the health history.

Medical underwriting rules for small group health insurance (2-50

employees) differs from large group and individual health

insurance policies. Regardless of any preexisting condition,

you must be offered coverage under a small group policy (2-50 employees)  on a guaranteed issue basis. However, the small group insurance

company can utilize the nine-month waiting period for

preexisting conditions. Of course, if you have prior creditable

coverage it must be applied to decrease or eliminate the

waiting period.

Important Points to Remember About Individual and

Group Health Insurance Coverage:

• Health insurance coverage is sold to consumers under

either individual or group policies.

• Individual and Association group policies are subject to

medical underwriting, on an individual basis.

• Qualifying creditable coverage must be applied towards

the nine month  waiting period for preexisting conditions in

individual policies and  group policies.

• Small group policies require that coverage be

offered on a guaranteed issue basis regardless of

any preexisting condition.

12 Washington health Insurance

What Is COBRA?

The Consolidated Omnibus Budget Reconciliation Act

(COBRA) is federal law that extends your current group

health insurance when you experience a qualifying event

such as termination of employment or reduction of hours

to part-time status. The extension period is 18 months and

some people with special qualifying events may be eligible

for a longer extension. To be eligible for COBRA, your

group policy must be in force with 20 or more employees

covered on more than 50 percent of its typical business days

in the previous calendar year.

Indemnity policies, PPOs, HMOs, and self-insured plans

are all eligible for COBRA extension; however, federal

government employee plans and church plans are exempt

from COBRA. Individual health insurance is also exempt

from COBRA extension, which may be another reason to

pursue participation in group health plans, if possible.

• COBRA is federal law that extends your current group

health coverage after a qualifying event. Individual policies

do not qualify for COBRA.

• COBRA law applies to group policies in force with 20 or

more employees covered on more than 50 percent of its

typical business days in the previous calendar year.

• Indemnity policies, HMOs, PPOs, and self-insured plans

are COBRA eligible. Federal government employee plans

and church plans are COBRA exempt

What Is the Health Insurance Portability and Accountability Act

(HIPAA)?

In 1996 the federal government passed into law the Health

Insurance Portability and Accountability Act (HIPAA).

HIPAA law provides eligible individuals who have recently

lost their employer sponsored group health plan the

opportunity to purchase health insurance coverage even if

they have a preexisting health condition. If you meet the

definition of an eligible individual, all health insurance

companies who sell individual plans must offer you

health insurance regardless of your medical history. This

requirement to issue insurance is called “guaranteed issue.”

You may not be declined coverage based on medical reasons.

In order to qualify as an eligible individual you must meet

the following conditions:

• Your last health care coverage must have been under an

employer sponsored group health plan, which includes

COBRA continuation coverage, for at

least 18 months. This prior 18-month coverage is referred

to as “creditable coverage.”

• All available COBRA continuation

coverage has been elected and exhausted. If you qualify

for COBRA you are required to accept

the coverage and continue the coverage for the maximum

time period allowed. (When an employer terminates

its existing group health plan entirely, COBRA coverage ends

 and is considered exhausted.)

• You are not eligible under a group health plan,

Medicare or do not have other

health insurance coverage.

• You did not lose your most recent health coverage due to

nonpayment of premium or fraud.

Washington Health Insurance

 

Once has been exhausted, you have

63 days to file an application to purchase a guaranteed issue

HIPAA policy with an insurance company or health plan.

All carriers that sell individual health care policies must offer

their two most marketed individual plans to HIPAA eligible

individuals regardless of your health status. If you accept a

conversion policy or a short-term policy after exhausting

COBRA, you give up your HIPAA

eligibility. It is important to understand that a conversion

policy is not a HIPAA policy.

When applying for a HIPAA policy you can present a

Certificate of Creditable Coverage from your insurance

company or health plan as part of the application process.

The Certificate of Creditable Coverage is a written statement

from your insurance company or health plan showing the

length of time you have been covered. The Certificate can

be used as proof of your 18 months continuous creditable

coverage when applying for a HIPAA policy.

Although HIPAA is federal law, as of January 1, 2001,

 

Important Points to Remember About HIPAA:

• HIPAA gives eligible individuals who have lost

group coverage the opportunity to purchase individual

health coverage.

• HIPAA eligible individuals are not subject to

medical underwriting.

• HIPAA policies must be issued to eligible individuals

on a guaranteed issue basis regardless of any preexisting

medical condition.

• You have only 63 days after COBRA

has been exhausted to file an application to purchase a

HIPAA policy.

• HIPAA policies are not conversion policies. Accepting

a conversion or short-term policy terminates your

HIPAA eligibility.

 

.

Creditable Coverage or Prior Qualifying Coverage — The

number of months you had health insurance in place before

your current or new policy became effective. Creditable

coverage must be counted towards any preexisting condition

exclusion in either an individual or group policy.

Claim — A notification to your insurance company that

payment is due under the policy provisions.

Consumers Guide to Health Insurance 25

Co-payment — The portion of charges you pay to your

provider for covered health care services in addition to any

deductible.

 

GLOSSARY OF TERMS:

 

Coverage — The scope of protection provided by an

insurance contract which includes any of the listed benefits

in an insurance policy.

Denial — An insurance company decision to withhold a

claim payment or preauthorization. A denial may be made

because the medical service is not covered, not medically

necessary, or experimental or investigational.

Deductible — A fixed amount which is deducted from

eligible expenses before benefits from the insurance company

are payable.

ERISA — Stands for the Employee Retirement Income

Security Act (1974). Administered by the U.S. Department

of Labor, Employee Benefits Security Administration. ERISA

regulates employer sponsored pension and insurance plans

(self-insured plans) for employees.

Exclusions and/or Limitations — Conditions or circumstances

spelled out in an insurance policy which limit or exclude

coverage benefits. It is important to read all exclusion,

limitation, and reduction clauses in your health insurance

policy or certificate of coverage to determine which expenses

are not covered.

Experimental and/or Investigational Medical Services — A

drug, device, procedure, treatment plan, or other therapy

which is currently not within the accepted standards of

medical care.

Grace Period — A specified period immediately following the

premium due date during which a payment can be made to

continue a policy in force without interruption. This applies

only to Life and Health policies. Check your policy to be

sure that a grace period is offered and how many days, if any,

are allowed.

26 State of California Department of Insurance

Guaranteed Issue — A health insurance policy that must be

issued regardless of any preexisting medical condition. The

present and past physical condition of a health insurance

applicant is not considered as a part of underwriting. No

physical examination is required. The insurance company

cannot decline coverage to an applicant of a guaranteed issue

policy based on medical history.

Independent Medical Review — A process where expert

medical professionals who have no relationship to your health

insurance company or health plan review specific medical

decisions made by the insurance company. California law

provides for an Independent Medical Review Program, which

is administered by the CDI and the DMHC depending upon

what type of coverage you have (indemnity or HMO).

Medically Necessary — A drug, device, procedure, treatment

plan, or other therapy that is covered under your health

insurance policy and that your doctor, hospital, or provider

has determined essential for your medical well-being, specific

illness, or underlying condition.

Policy — The written contract between an individual or

group policyholder and an insurance company. The policy

outlines the duties, obligations, and responsibilities of both

the policyholder and the insurance company. A policy may

include any application, endorsement, certificate, or any

other document that can describe, limit, or exclude coverage

benefits under the policy.

Preexisting Condition — Any illness or health condition for

which you have received medical advice or treatment during

the six months prior to obtaining health insurance. Group

healthcare policies of 3 or more persons cover preexisting

Consumers Guide to Health Insurance 27

conditions after you have been insured for 6 months, and

individual policies cover preexisting conditions after you have

been insured for 1 year. Creditable coverage must be counted

towards any preexisting condition exclusion in either an

individual or group policy.

Usual, Reasonable, and Customary — The amount that your

insurance company determines is the normal payment range

for a specific medical procedure performed within a given

geographic area. If the charges you submit to your health

insurance company are higher than what is considered

normal for the covered health care services, then your health

insurance company may not allow the full amount charged

to you.