Health Insurance Basics

What is health insurance? Most simply, health insurance is a contract between you and the insurance company that says that the insurance company will pay a portion of your medical expenses if you get sick, hurt or need an annual checkup and have to visit a doctor’s office or hospital.

Why is it important to have health insurance? Without health insurance, it is more difficult to afford medication and services.

What types of health insurance are there? There are many different types of health insur­ance companies, programs and plans in the United States, each serving different populations with different needs. Two general categories are:

  • Public programs – government-funded programs to help you pay for your medical treatments. Examples include Medicare, Medicaid and Health Insurance Marketplace plans. Each program has different eligibility requirements and application processes.
  • Private plans – plans funded by either private insurance companies or private employers. Enrollment requirements and costs are determined by either the insurance company or the private employer.

Finding the Right Plan

Don’t be stumped when it comes time to finding health insurance once you turn 18. Here are some suggestions for finding coverage:

  • Stay where you are. If you’re already covered under your parents’ health insurance plan, the Affordable Care Act requires that your insurance company allow you to stay on your parents’ plan until your 26th birthday. Don’t worry though − you don’t have to live with your parents to be on their insurance plan. You can even get married and still qualify!
  • College: more than an education. If you are attending or planning to attend college, ask if the school has a student health insurance plan.
  • Work for it. If you’re going to be working, look for jobs with health insurance as an employee benefit.
  • The government. Both your state and federal government have assistance and insurance options that you can access. See PHA’s Insurance 101 page for more information.

Do a quick search yourself! Find insurance options in your state

Choosing a Health Insurance Plan

Your insurance is going to be most effective (meaning less out-of-pocket costs for you) if it covers (pays for) your prescription medications, doctor’s visits, etc. Call your potential insurance company or read the insurance company’s plan of benefits to find the answers to these important questions:

  • Is my current doctor (PH specialist) covered (paid for) by this plan? You’ll want a plan that covers your PH specialist. If you’re planning to transition to an adult specialist, you’ll want to make sure that the plan covers visits to your new specialist.
  • Will this plan cover my medications? Check to see if your plan will cover the PH medications you’re currently taking. If you anticipate taking another PH medication in the future, ask if the plan covers these medications as well.
  • Is my PH center in-network for this insurance? If your center isn’t in-network, meaning not included in the company’s list of hospitals and doctor’s offices that they contract with, you may have to pay more out-of-pocket or need to obtain prior authorization for their services and tests (even if they’re routine).
  • What are the total out-of-pocket costs and can I afford to pay them? Calculate how much you think you’ll pay monthly for medical needs and then ask yourself if you can afford it. Keep in mind:
    • Is there a premium (monthly payment) you’ll have to pay to keep the insurance?
    • Is there a deductible you’ll have to pay before the plan will start paying for benefits?
    • How much will you have to pay each time you see your doctor or fill a prescription?

www.PHAssociation.org/HELP lists resources that may help you reduce your out-of-pocket costs for your PH medication.

  • If I were to require a transplant in the future, will this insurance cover organ transplant?

Know Your Health Insurance Rights

Certain laws protect your rights. As you learn how to manage your insurance, keep these laws in mind:

  • Americans with Disabilities Act (ADA) prohibits discrimination on the basis of disability in employment, state and local government, public accommodations, commercial facilities, transportation, and telecommunications.
  • Affordable Care Act (ACA) is a comprehensive healthcare reform bill enacted in 2010. It prohibits discrimination in health insurance coverage based on pre-existing health conditions, allows young people to stay on a parent’s or guardian’s health insurance until age 26 and establishes the health insurance marketplace for the purchase of individuals health insurance coverage that meet minimum coverage requirements and do not have annual or lifetime benefit caps.
  • Consolidated Omnibus Budget Reconciliation Act (COBRA) allows you to temporarily keep your health insurance policy if you are losing or changing jobs.

Health Insurance Terms to Know

  • Appeal – the process of submitting information to justify why your health insurance should cover a product or service after coverage has initially ben denied.
  • Benefit exclusion – when a health plan refuses to cover a product or service. Benefits exclusions can typically be appealed through a defined exceptions process.
  • Benefit limitation – when a health plan limits either the amount of money that will be paid for benefits or the numbers of benefits allowed over a set amount of time. For example, a $2,000 annual limit on prescription costs, or a limit of no more than three brand-name prescriptions per month.
  • Benefit management — a process, such as prior authorization or step therapy, through which a suggested treatment plan must be reviewed and approved before it is implemented.
  • Children’s Health Insurance Program (CHIP) — an insurance program jointly funded by state and federal government that provides health insurance to low-income children and, in some states, pregnant women in families who earn too much income to qualify for Medicaid but cannot afford to purchase private health insurance coverage.
  • Co-insurance – an amount you are required to pay out of pocket when you receive covered medical care that is a percentage of the total cost
  • Copay – an amount you are required to pay out of pocket when you receive covered medical care that is a fixed dollar amount
  • Deductible – the amount of money that you have to pay before your insurance plan pays for any medical care or prescriptions
  • Durable medical equipment – medical equipment that can be used repeatedly and is not disposable, like wheelchairs, pumps and oxygen equipment
  • Formulary – an approved list of prescription drugs covered under a specific insurance plan
  • Medicaid – government health insurance program for eligible, low-income individuals; eligibility varies by state
  • Medicare – a federal health insurance program primarily for those ages 65 and older. If you qualify for social security disability assistance you may also qualify for Medicare after a 24-month waiting period regardless of your age. Medicare coverage can be broken down into several parts, typically referred to by the letters A, B, C and D.
    • Part A covers hospitalization and in-patient care.
    • Part B covers outpatient care including doctor’s visits and health screenings. It also covers durable medical equipment such as oxygen; scooters and wheelchairs; and nebulizers and pumps.
    • Part D covers prescription drugs.
    • Part C, also called Medicare Advantage, combines part A and B into a single plan. Some Advantage plans also include prescription drug coverage. Medicare recipients may choose to have Medicare Advantage coverage rather than Medicare Parts A and B.
  • Open Enrollment — the period of time set up to allow you to review and change your health insurance coverage without a penalty, usually once a year.
  • Premium – the monthly payment made by an employer or individual to purchase insurance
  • Step therapy – a health insurance plan requirement to to “try and fail” a specific medication before the originally prescribed medication will be approved