Health Insurance FAQ

How does health insurance work?

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 California. It is important if you have a choice of health insurance 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 insurance you have 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)
• Preferred Provider Organizations (PPOs)
• Health Maintenance Organizations (HMO's or Managed Care)
• Self-Insured Health Plans (Single Employer Self-Insured Plans)
• Multiple Employer Welfare Arrangements (MEWA's)

How can I get a health insurance plan?

Group Coverage- You may be able to get group health coverage—either indemnity or managed care—through your job or the job of a family member.

Many employers allow you to join or change health plans once a year during open enrollment. But once you choose a plan, you must keep it for a year. Discuss choices and limits with your employee benefits office.

Individual Policies- If you are self-employed or if your company does not offer group policies, you may need to buy individual health insurance. Individual policies cost more than group policies.

Some organizations—such as unions, professional associations, or social or civic groups—offer health plans for members. You may want to talk to an insurance broker, who can tell you more about the indemnity and managed care plans that are available for individuals. Some States also provide insurance for very small groups or the self-employed.

Medicare-Americans age 65 or older and people with certain disabilities can be covered under Medicare, a Federal health insurance program.

In many parts of the country, people covered under Medicare now have a choice between managed care and indemnity plans. They also can switch their plans for any reason. However, they must officially tell the plan or the local Social Security Office, and the change may not take effect for up to 30 days. Call your local Social Security office or the State office on aging to find out what is available in your area.

Medicaid- Medicaid covers some low-income people (especially children and pregnant women), and disabled people. Medicaid is a joint Federal-State health insurance program that is run by the States.

In some cases, States require people covered under Medicaid to join managed care plans. Insurance plans and State regulations differ, so check with your State Medicaid office to learn more.

Will a pre-existing condition be excluded upon obtaining health insurance?

Under HIPAA a preexisting condition exclusion must relate to a condition for which medical advice, diagnosis, care or treatment was recommended or received during the 6-month period prior to an individual's enrollment date. This is known as the “look-back“ period.

If the health plan has an employer imposed waiting period to enroll in the plan, then the first day of the employer imposed waiting period starts the 6-month look-back period and the 12-month preexisting condition exclusion period. The preexisting condition exclusion period is reduced by any employer-imposed enrollment waiting period. Any state law applying to health insurance companies may also reduce the 6-month look-back period and the preexisting condition exclusion period.

For self-funded employers, federal HIPAA law permits health plans to have a 12-month preexisting condition exclusion period. Health plans may look-back 6-months to identify preexisting conditions as described in the first paragraph above.

For large groups (more than 50 eligible employees) health insurers may have a 3-month preexisting condition exclusion period. These health insurers are also permitted to look-back only 3-months prior to the effective date of coverage to identify preexisting conditions. If the employer imposes a waiting period prior to the effective date of coverage, then the insurer could only look back 3-months prior to the beginning of the employer imposed waiting period. Typically this date is your first day of work.

For small groups (1-50 eligible employees) health insurers may have a 9-month preexisting condition exclusion period. These health insurers are permitted to look-back 6-months prior to the effective date of coverage to identify preexisting conditions. If the employer imposes a waiting period prior to the effective date of coverage, then the insurer would look-back 6-months prior to the beginning of the employer imposed waiting period. Typically this date is your first day of work.

For individual plans, preexisting condition waiting periods imposed upon a person enrolling in an individual health benefit plan shall be no more than nine months for a preexisting condition for which medical advice was given, for which a health care provider recommended or provided treatment, or for which a prudent layperson would have sought advice or treatment, within 6-months prior to the effective date of the plan.

What is health insurance portability?

After you are accepted by an insurance company for health insurance, the insurer must reduce any time period applicable to a pre-existing condition waiting period for time covered by qualifying previous coverage. The coverage must have been continuous for at least sixty-three days before the effective date of the new coverage.

What is an HMO?

HMO stands for Health Maintenance Organization, a managed care plan where you have the ability to choose your primary care physician (PCP) from a list of network providers. Your PCP is responsible for management of all aspects relating to your health care. If you require care from any network provider other than your PCP, you may need a referral from your PCP to see that provider. Check with your plan to see if your PCP is also the "gatekeeper" for access to other network providers. You must obtain care from a network provider in order to have your claim paid through the HMO. Treatment received outside the network is generally not covered, or covered at a reduced level.