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                                     Contents Include…

                                     What Is Good Health
                                     Insurance Coverage?
                                     What to Look for

                                     and What to Avoid,
                                     pages 6-11

              Health                 Special Worksheet
                                     to Help You Evaluate

                                     Your Health Insurance
                                     Choices, page 12

                                     Insurance Transitions –
                                     What They Are and
                                     How to Navigate Them,
                                     pages 22-30

First in the Series
Strategies for Navigating
the Health Care System

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Understanding Private
Health Insurance
© 2006, National Endowment for Financial Education® (NEFE®). All rights reserved.

Funded by the National Endowment for Financial Education® (NEFE®), Grant Project number

This publication is meant to provide general financial information; it is not meant to substitute
for, or to supersede, professional or legal advice. The content areas in this material are believed
to be current as of the date of publication, but, over time, legislative and regulatory changes, as
well as new developments, may date this material. The authors, Georgetown University and the
National Endowment for Financial Education, specifically disclaim any personal liability, loss
or risk incurred as a consequence of the use and application, either directly or indirectly, of any
information presented herein.

Mention of a trademark, proprietary product, or commercial firm in text or figures does not
constitute an endorsement by the publisher and does not imply approval to the exclusion of
other suitable products or firms.

This publication is not intended for commercial use. Nonprofit, government, and educational
organizations providing health insurance assistance or counseling to individuals are permitted
to duplicate these materials, without alteration, in whole or in part for the limited purpose of
providing this information in printed form without charge to clients or students. No other
reproduction of these materials is permitted without written permission of the copyright

Obtaining Copies
Copies of this booklet, other booklets in NEFE’s series Managing Medical Bills: Strategies for
Navigating the Health Care System, and other resources about your rights in obtaining and
keeping health insurance can be found online at the Web site of the Georgetown University
Health Policy Institute,, and on the National Endowment for
Financial Education consumer Web site,

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Elements of Good Health Insurance Coverage
          Key questions to ask .......................................................................7
          Recognizing products that are not health insurance ...............9
          Evaluating Health Insurance Choices Worksheet...............12

Be an Informed, Proactive Policy Holder                                                                          14
          Read and keep your policy or benefits handbook .................15
          Keep your doctor informed about the policy, too..................15
          Keep good records ........................................................................15
          Call member services at your health plan ...............................15
          Don’t take “no” for an answer ...................................................15

Know Your Rights                                                                                                 16
          Employer-sponsored group health plans ................................17
          Individual health insurance ........................................................18
          Health insurance sold through associations ...........................21

Navigating Health Insurance Transitions                                                                          22
          Special enrollment periods in job-based plans .......................23
          Regular health insurance enrollment periods and
          open seasons for job-based plans...............................................23
          Family and medical leave............................................................23
          COBRA ............................................................................................24
          State continuation laws ................................................................25
          When access to employer-sponsored
          health insurance ends...................................................................25
          When protections apply...............................................................27

For More Information                                                                                             31
          U.S. Department of Labor ...........................................................32
          State health insurance regulators...............................................33
          Appealing disputes with health plans......................................33
          State high-risk pools .....................................................................34

Acknowledgments........................................................... 37

End Notes ........................................................................ 38

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       In the United States, we rely on health insurance for our ticket to health care.
       Unfortunately, millions of Americans are uninsured or underinsured. Some may be
       eligible for private or government insurance programs but have difficulty navigating
       the maze of complex rules and insurance jargon. Many more may not have any
       affordable coverage options or may not be eligible for any. Without health coverage
       for an illness or disability, the challenge of paying for necessary medical care can be
       daunting. Bills can accumulate. Access to health care can suffer.

       This booklet is the first in a series on strategies for navigating the health-care system.
       Two other booklets in this series may also be of interest to you. Understanding Private
       Health Insurance was written to help you make the most of private coverage and
       navigate transitions that can make it hard to get and keep health insurance. The
       second booklet, Medicare and Medicaid: A Health Care Safety Net for People with Serious
       Disabilities and Chronic Conditions, provides an introduction to the two largest
       government programs offering safety-net health coverage. A third booklet, Options
       for Avoiding and Managing Medical Debt, gives an overview of programs and
       strategies for seeking free or reduced-cost health care and for managing medical

       To help you understand how health insurance works and options for getting and
       keeping coverage, this booklet provides information about private health insurance,
       which is the main source of coverage for Americans under the age of 65.1

       Everyone needs health insurance. Health insurance companies provide an important
       service by helping to pay for their policyholders’ health care. Because thousands of
       different health insurance policies are available in the United States, this booklet
       offers only general information to help guide your inquiries. You should also ask
       questions of your human resources department, a licensed insurance agent, or other
       experts available to you. Additional sources of help and information are listed in the
       back of this book.

       Most people with private health insurance get coverage through an employer—their
       own, a spouse’s, or a parent’s. Job-based health insurance is most popular because it
       usually offers the most comprehensive coverage and it is subsidized, with employers
       and tax breaks paying some or most of the premium on your behalf.

       Not everybody has job-based coverage, however. People who own their own
       business, work in a job with no health benefits, work part-time, or don’t work at all,
       may have to buy their own coverage in the individual health insurance market.

        Medicare is a federal program providing health coverage to nearly all Americans who are age 65 or
       older. For more information about Medicare, visit

UNDERSTANDING PRIVATE HEALTH INSURANCE                                                        PAGE 4

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       Some people get health coverage from government programs. Usually, people can
       only get public coverage if they qualify based on age, income, family status, or
       health status.

       This booklet is organized in five chapters. The first discusses the adequacy of health
       insurance coverage with some cautionary words about products that may not
       provide adequate protection. The second chapter reviews steps you can take to get
       the most out of your insurance protection. The third chapter describes some basic
       legal protections that may apply to you as a health insurance consumer. The fourth
       chapter lists options that can help you navigate transitions that may cause loss or
       change in your health insurance coverage. The fifth chapter contains resources that
       provide more information. Web site addresses mentioned in chapter five may be
       accessed by following the instructions provided. For more extensive and direct
       URLs, please see the references provided in the End Notes at the back of the booklet.

UNDERSTANDING PRIVATE HEALTH INSURANCE                                              PAGE 5

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         Chapter 1: Elements of Good Health Insurance Coverage

                               Many kinds of private health insurance poli-
                               cies are for sale, though not all offer the same
                               protection. Sometimes it can be difficult to
                               recognize good coverage or compare the pros
                               and cons of different policies.

                               The most obvious feature of any policy is the
                               premium. Many people look for the cheapest

Chapter 1
 Elements of Good Health Insurance Coverage

                               health-care coverage available. Just as impor-
                               tant, however, is the comprehensiveness of the
                               coverage. Often, there is a direct tradeoff
                               between the cost of health insurance and the
                               level of protection it provides.

                               As you weigh this tradeoff, keep in mind: you
                               buy health insurance in case you get sick—not
                               in case you stay healthy. Most people who
                               declare bankruptcy because of high medical
                               bills have health insurance. Buying inadequate
                               coverage can be risky.

  UNDERSTANDING PRIVATE HEALTH INSURANCE                                PAGE 6

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       Key questions to ask                        An insurance contract may exclude
       To evaluate how well a health insur-        coverage of some types of claims in
       ance policy might protect you when          advance. Review the list of items and
       you need it most, ask yourself the fol-     services that are excluded from cover-
       lowing key questions.                       age. There could also be exclusions that
                                                   apply specifically to you. Many poli-
       What services are covered?                  cies temporarily exclude services
       Look at the list of benefits and services   relating to a medical condition you
       the policy covers to see whether it in-     have now or had in the past. Some pol-
       cludes the basics, such as:                 icies add riders (amendments) that
                                                   permanently exclude services relating
       » Hospital and doctor care.                 to your specific condition or the organ
       » Lab tests.                                system or body part it affects. (See
                                                   chapter three, section “What about pre-
       » Medical equipment.
                                                   existing conditions” on page 17 for
       » Prescription drugs.                       more information on rules governing
                                                   these exclusions.)
       » Rehabilitation following illness or
         injury (for example, physical             Some coverage limits will be harder to
         therapy).                                 recognize or evaluate. For example,
       » Mental health care.                       most policies restrict coverage for pre-
                                                   scription drugs to those on a formulary
       Many policies have a lifetime limit on
                                                   (approved list). You can ask the insurer
       covered benefits—for example, $1 mil-       if drugs you take are on the formulary,
       lion or higher. Some may have an
                                                   though often the lists are not made
       annual maximum on covered care. As          public. The insurer should at least dis-
       you consider these maximums, re-
                                                   close whether exceptions can be made
       member that care for a serious illness      if patients need a drug not on the for-
       (such as a heart attack or cancer diag-
                                                   mulary. Other care, such as surgery or
       nosis) or traumatic injury could easily     mental health care, may require prior
       cost $100,000 or more.
                                                   authorization to be covered. A policy
       Look also for limits on covered serv-       should state whether prior authoriza-
       ices, especially those that will leave      tion is required, but generally consum-
       you without coverage for catastrophic       ers will not be able to tell ahead of time
       health-care costs. For example, some        whether prior authorization will be
       policies may only cover four doctor         granted. You may want to contact your
       visits per year, only $5,000 for chemo-     state insurance department to find out
       therapy, or only $800 per year for          how many complaints have been
       prescription drugs. These policies          lodged against an insurer for refusing
       could leave you facing tens of thou-        to authorize care.
       sands in medical bills if you become
       seriously ill.

UNDERSTANDING PRIVATE HEALTH INSURANCE                                             PAGE 7

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       From whom                                  scription drugs. In addition, insurance
       can I get care?                            will typically require you to pay for a
       Most private health insurance policies     portion of covered services after you’ve
       have networks of hospitals, doctors,       met your deductible. Co-payments (flat
       pharmacies, and other health-care          dollar fees, such as $25 per visit) or co-
       providers. Depending on the type of        insurance (a percentage of covered
       policy purchased, care may be covered      charges, such as 20%) may apply. What
       only when received from a network          you pay for covered services may de-
       provider. Traditional HMOs (health         pend on whether you seek care in or
       maintenance organizations) may re-         outside the insurer’s provider network.
       strict coverage in this way. Other
                                                  Increasingly, health insurance policies
       policies give you a choice of receiving
                                                  have tiered (multiple levels of) cost
       care within or outside their provider
                                                  sharing. The deductible, co-pays, and
       network, although the portion of
                                                  co-insurance that apply depend on the
       health costs covered by insurance may
                                                  particular item or service you need or
       be much lower for out-of-network care.
                                                  the type of provider you see. For ex-
       Plans like these may be called PPOs
                                                  ample, a policy might charge a $10 co-
       (preferred provider organizations) or
                                                  pay for generic drugs, a $50 co-pay for
       POS (point-of-service plans). Whatever
                                                  some brand name drugs, and 50 per-
       the acronym, review the list of
                                                  cent co-insurance for very expensive
       participating providers. If staying with
                                                  injectible drugs (to treat diabetes or
       your current doctors is important to
                                                  multiple sclerosis, for example). Care
       you, check to see if they are included.
                                                  in community hospitals may be subject
       In addition, look for names of other
                                                  to a co-pay of $250, while care in spe-
       respected physicians—such as cardi-
                                                  cialized academic medical centers may
       ologists, surgeons, and oncologists—
                                                  be subject to 20 percent co-insurance.
       even if you may not need them today,
       as another indication of the protection    It is important that a policy have an
       the health plan offers.                    annual out-of-pocket maximum, or limit
                                                  on what you will pay for covered care.
       How much will I pay                        Without this cap, you could end up
       for covered services?                      paying most of the cost of a cata-
       Many policies impose an annual             strophic illness. Also keep in mind,
       deductible—an initial amount of costs      even if there is a cap, not all costs may
       you must pay yourself before the in-       apply to this out-of-pocket limit. Co-
       surance will pay. Usually, choosing a      pays for prescriptions, for example,
       higher deductible will result in a lower   often do not count against the out-of-
       monthly premium. The deductible            pocket limit. In addition, the policy
       might not apply to all covered services,   probably won’t limit the amount you
       such as preventive care. Some policies     have to pay for doctor or hospital fees
       have separate deductibles for certain      beyond a level recognized as reason-
       services, such as hospital care or pre-    able by the health insurer. Usually,

UNDERSTANDING PRIVATE HEALTH INSURANCE                                            PAGE 8

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                                                          Tony compared insurance policies and picked a
                                                          short-term policy that was cheapest. Four months
       providers in the insurer’s                         later, Tony took a bad fall, injured his back, and
       network are not allowed                            needed surgery and physical therapy. His claims
       to charge more than the                            were covered for two months until the policy
       insurer’s      recognized                          expired. The insurer refused to renew, leaving Tony
       charge, but care by out-                           uninsured and still in need of care.
       of-network       providers
       may result in large out-
       of-pocket bills.                                                premiums will increase if you make a
                                                                       lot of claims under the policy.
                 Typical Hospital Charges                              Not all health insurance sold to indi-
           Medical observation                     $ 2,800             viduals is guaranteed renewable.
           following heart attack                                      Short-term policies are widely mar-
           Cardiac bypass surgery                  $17,000             keted as an affordable health insurance
                                                                       option. As the name implies, short-
           Heart Transplant                        $51,000
                                                                       term policies offer coverage only for a
           * Based on Medicare hospital payments, 2006.
           Physician/surgeon charges additional.                       limited time (for six months, for exam-
                                                                       ple). The policy can be renewed, but
                                                                       usually just a few times and only at the
       Some policies impose a cap on what
                                                                       insurer’s option. A key reason why
       they will reimburse for certain kinds of
                                                                       short-term policies tend to be cheaper
       health care. For example, a policy that
                                                                       is that insurers don’t have to continue
       pays no more than $650 per day for
                                                                       coverage after you get sick. If you
       hospital care could leave the policy-
                                                                       make a claim, the insurer can, and
       holder owing thousands of dollars in
                                                                       probably will, refuse to renew cover-
       hospital bills.
                                                                       age. Short-term policies can help
                                                                       bridge a gap in insurance coverage and
       Is the policy renewable?
                                                                       may be an option if you are very cer-
       If you buy your own health insurance,
                                                                       tain another, more stable source of
       it is important to get coverage that is
                                                                       coverage will be available in the near
       renewable, meaning you have the right
                                                                       future. However, these policies should
       to continue the policy as long as you
                                                                       not be mistaken for comprehensive
       pay your premiums, even if your
                                                                       health insurance that is guaranteed
       health status changes. Even if a policy
       is guaranteed renewable, the price of
       coverage can increase from year to
       year. Ask the insurer or agent about                            Recognizing products
       renewal premiums. In particular, ask                            that are not health insurance
       whether renewal premiums are based                              Among the many kinds of private
       on how long you’ve been covered                                 health coverage sold today, you may
       under the policy. So-called durational                          encounter products that look and
       rating discourages consumers from re-                           sound like health insurance, but do
       newing coverage. Also, ask whether                              not, in fact, provide comprehensive

UNDERSTANDING PRIVATE HEALTH INSURANCE                                                                PAGE 9

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 It was hard for Audrey to afford her insurance premium, which
 was over $300 per month. Because she had diabetes, she
 worried she’d have trouble buying other coverage. Then she              ciated with accidents as
 saw an ad promising “affordable health care,” including hos-            well as illness, accident-
 pital, doctor care, and prescription coverage. The ad also pro-         only policies generally
 mised “all pre-existing conditions accepted” for a monthly              are not a good value.
 premium of only $89. So Audrey dropped her insurance and
 bought the new plan. Once she realized the difference in                Supplemental policies
 protection provided by the “discount plan,” it was too late to          Supplemental         policies
 get her original policy back. A few months later, Audrey was            (sometimes called hos-
 hospitalized and now she owes more than $20,000 in bills.               pital indemnity policies)
                                                                         pay cash benefits for each
                                                                         day you are in the
           health insurance protection. Be careful.        hospital. Usually, however, the cash
           These products are not a substitute for         benefit will be nowhere near the cost of
           comprehensive coverage.                         hospital care. Still, these policies can be
                                                           popular because they are inexpensive
           Dread disease policies                          in relation to comprehensive coverage
           Dread disease policies pay only for             and can be simple to buy. Supple-
           costs related to treatment for specific         mental policies may be an option if you
           diseases, such as cancer. One state has         want to cover “extras” that can come
           banned their sale and other state insur-        up when you get sick. But they usually
           ance regulators have posted advisories          are not a good buy and they should not
           cautioning consumers about these poli-          be confused with comprehensive
           cies.2 Most insurance experts recom-            coverage.
           mend buying a good comprehensive
           policy instead. Dread disease policies          Discount plans
           tend to be a poor value and some sell-          Discount plans are not health insur-
           ers try to mislead consumers and prey           ance, and they will not protect you
           on their fears about cancer or other            from high medical expenses. Some
           diseases.                                       people may mistake discount health
                                                           plans for health insurance because of
          Accident-only policies                           insurance-like features of these prod-
          Accident-only coverage pays for care             ucts. For example, discount plans
          you need as a result of an accident that         charge a monthly premium, issue an
          is not due to illness. Since a good com-         ID card, and offer “coverage” for a
          prehensive policy will cover costs asso-         broad range of health services. Dis-
                                                           count plans also typically advertise a
             See, for example, advisory of Wisconsin
          Department of Insurance (
                                                           network of providers who will dis-
          pi-001.htm), Alabama Department of Insurance     count charges by, say 25 or 30 percent
          (                  to patients who are cardholders. Some
          Insurance.aspx),   and     North     Carolina
          Department of Insurance (          consumers have reported problems
          Consumer/Publications/Health Insurance and       obtaining promised discounts even on
          Managed Care/A Consumer Guide To Cancer
                                                           smaller-ticket health-care services.

UNDERSTANDING PRIVATE HEALTH INSURANCE                                                     PAGE 10

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       Unfortunately, because discount plan            can help you keep track of this infor-
       cards are not health insurance, insur-          mation. Avoid policies that do not have
       ance regulators often cannot help in            some kind of maximum out-of-pocket
       these circumstances. A number of state          limit on covered charges. Do not mis-
       insurance regulators and attorneys              take insurance-like products for com-
       general have issued alerts warning              prehensive coverage.
       consumers away from discount medi-
       cal plans.3

       “Stacked” policies
       A number of licensed insurers sell
       products that have been described by
       regulators as stacked policies. These join
       together several limited coverage
       products—for example, an accident-
       only policy combined with a supple-
       mental hospital policy or dread disease
       policy and a discount medical plan.
       The combination may sound similar to
       comprehensive health coverage, but it
       is not.

       In summary, it can be a challenge to
       find coverage that meets your health-
       care needs and fits your budget. Health
       insurance that covers more tends to
       cost more. Do your best to balance the
       cost (monthly premium) of a policy
       against the protection it offers. Try to
       determine what you will have to pay
       for covered services (deductible,
       co-insurance, co-pays, out-of-pocket
       limit). Also estimate costs for non-
       covered care (services excluded or
       limited by the policy) and charges (fees
       above what the plan recognizes). The
       Evaluating Health Insurance Choices
       Worksheet on the following two pages

        Britton, G., “Discount Medical Plans and the
       Consumer: Health Care in a Regulatory
       Blindspot,” Loyola Consumer Law Review,
       Volume 16, Number 2, 2004, 97-118.

UNDERSTANDING PRIVATE HEALTH INSURANCE                                              PAGE 11

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                                                                              Evaluating Health Insurance Choices Worksheet
                              This two-page worksheet helps you evaluate the types of health-care coverage available. Gather as much information on each policy as you can, and then use this
                              worksheet as a checklist to compare key features as well as premiums.
                                                                     Do you need more copies of this worksheet? You can download it online at

                                        Health Insurer: _____________________________________________________________________________                                            Phone: _________________________________
                                          Plan Name: _____________________________________________________________________________                                          Web site:   _________________________________
                                        Annual deductible: $ ______________________                                 Annual out-of-pocket limit: $ __________________                 Limit         Disease/Condition
                                        Monthly premium: $ ______________________                                               Lifetime limit: $ __________________               $ __________    ______________________
                                                                                                                                                                                   $ __________    ______________________
                                                                                                                                                                                   $ __________    ______________________
                                                                                                                                                                                   $ __________    ______________________

                                                                                                                                                Cost Sharing                                        Special Limits

                                                                                                                                                                                           Number of Days,
                                                                                                                                                                                             Visits, etc.

                                                                                             Annual Deduct-
                                                                                             ible Applies?
                                                                                                              Max. Applies?
                                                                                                                                 In-network                    Out-of- network                                       $ Covered
                                        INPATIENT FACILITIES
                                          Hospital                                !             !                !

                                          Skilled Nursing Facility                !             !                !

                                        INPATIENT PROFESSIONAL SERVI CES
                                          Medical                                 !             !                !

                                          Surgery                                 !             !                !

                                          Anesthesia                              !             !                !

                                          Lab and Radiology                       !             !                !

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                                        OUTPATIENT FACI LITIES
                                          Hospital                                !             !                !

                                          Clinic                                  !             !                !

                                          Ambulatory surgical center              !             !                !
                                                                                                                                                  Cost Sharing                              Special Limits

                                                                                                                                                                                   Number of Days,

                                                                                                    Annual Deduct-
                                                                                                    ible Applies?
                                                                                                                     Max. Applies?
                                                                                                                                     In-network                  Out-of- network     Visits, etc.            $ Covered
                                        OUTPATIENT PROFESSIONAL SERVI CES
                                            Medical                                      !             !                !

                                            Surgery                                      !             !                !

                                            Anesthesia                                   !             !                !

                                            Lab and Radiology                            !             !                !

                                        Emergency care                                   !             !                !

                                        PREVENTIVE CARE
                                            Checkups                                     !             !                !

                                            Immunization                                 !             !                !

                                            Screening (Mammogram, etc.)                  !             !                !

                                        Maternity care                                   !             !                !

                                        PRESCRIPTION DRUGS
                                            Generic                                      !             !                !

                                            Brand name (on formulary)                    !             !                !

                                            Brand name (off formulary)                   !             !                !

                                        MENTAL HEALTH/ CHEMI CAL DEPENDENCY
                                            Inpatient Treatment                          !             !                !

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                                            Outpatient Treatment                         !             !                !

                                        Rehabilitation care                              !             !                !
                                        (physical, speech, occupational therapy, etc.)

                                        Medical equip. & supplies                        !             !                !
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 Chapter 2: Be an Informed, Proactive Policy Holder

Chapter 2
Be an Informed, Proactive Policy Holder

                                                To get a policy to pay for necessary
                                                care, it’s important to understand how
                                                your insurance works — what respon-
                                                sibilities are required of you and your
                                                insurer — and follow some basic
                                                common-sense strategies.

         UNDERSTANDING PRIVATE HEALTH INSURANCE                                     PAGE 14

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       Read and keep your policy                        Call member services
       or benefits handbook                             at your health plan
       The policy or benefits handbook should be        Whenever you have a question or problem,
       kept with other important financial              call the insurer directly for guidance. Try
       records. Familiarize yourself with plan          to be polite and calm—always—even if
       rules and follow them. For example, your         you feel frustrated. If necessary, ask to
       insurance may require prior authorization        speak to a supervisor. Write down the date
       (permission) for surgery or other care, or it    and time of your call, the name of the per-
       may require a referral from your primary         son(s) you spoke with, and what they told
       care doctor in order to see a specialist.        you. If you don’t get the help you need,
       Double check your plan’s list of partici-        make your request in writing and keep a
       pating providers to make sure the ones           copy of the letter you send.
       you need are still in-network. Doctors
       sometimes change networks; often,                Don’t take “no” for an answer
       updated lists are available online. Pay          Insurance companies can make mistakes. If
       attention to deadlines and procedures. For       the health plan won’t cover care you think
       example, a referral may be good for only         it should, question the decision to see if
       two visits, may expire after 30 days, or         they’ll correct it. Contact your human
       may be invalid if faxed.                         resources department (for job-based cov-
                                                        erage) or your insurance agent (for
       Keep your doctor informed                        individual coverage) to see if they can
       about the policy, too                            intervene on your behalf. If that doesn’t
       Your doctor and other providers can help         work, consider a formal appeal. All health
       you follow insurance procedures. Ask for         insurers have procedures for appealing
       their help in obtaining referrals or other       denials and resolving other disputes. Your
       authorization for medical care and choos-        handbook should explain what those are
       ing among providers. Their billing staff         and how to pursue them. If you exhaust
       may be especially helpful at navigating the      your appeals within the plan and still are
       system. Keep them in the loop and ask for        not satisfied, contact federal or state
       help when you need it.                           authorities to lodge a complaint. In many
                                                        states, you may also be able to appeal to an
       Keep good records                                independent external review program.
       Keep track of all the care you receive,          (See chapter five, section “Appealing dis-
       when, from whom, and why. Also, keep             putes with health plans” on page 33 for
       copies of bills, explanation of benefit state-   more information.) This can take some
       ments (EOBs) from the insurance provider,        time, but remember that research shows
       and all other written correspondence from        consumers who vigorously appeal health
       doctors, hospitals, other providers, and         plan denials win at least half the time.4

                                                         Pollitz, K., et al, “Assessing State External Review
                                                        Programs and the Effects of Pending Federal
                                                        Patients’ Rights Legislation,” Report to the Kaiser
                                                        Family Foundation, March 2002.

UNDERSTANDING PRIVATE HEALTH INSURANCE                                                PAGE 15

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        Chapter 3: Know Your Rights

Chapter 3
                  Know Your Rights

                                 As a health insurance consumer, you have
                                 rights under federal and state laws. These
                                 legal protections vary depending on what
                                 kind of health-care coverage you have
                                 (job-based group health insurance, individ-
                                 ual coverage, or coverage through an asso-
                                 ciation), where you live, and other factors.

 UNDERSTANDING PRIVATE HEALTH INSURANCE                                 PAGE 16

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       Employer-sponsored                           Thereafter, employers might offer
       group health plans                           annual open seasons when you can join
                                                    or change health coverage. In addition
       The basic rules governing employer-
                                                    to any regular enrollment period or
       sponsored group health-care plans are
                                                    open season, you must be offered a
       set by the federal government and so
                                                    special, 30-day special enrollment period
       will be similar no matter where you
                                                    to enroll in your group health plan
       live. Sometimes, additional state law
                                                    after certain events. Changes that can
       protections will apply. Each employ-
                                                    trigger a special enrollment period are:
       er’s human resources department is
       supposed to be familiar with these           » Birth, adoption, or placement for
       rules and is a good place to start when        adoption of a child.
       you need help or information.
                                                    » Marriage.
       When does an employer-                       » Loss of other health insurance (for
       sponsored health plan                          example, due to death, divorce,
       have to let me in?                             legal   separation,    termination,
       First, you have to be eligible for health      retirement, or reduction in hours
       benefits. Not all employers offer health       worked).
       benefits, and when they do, it’s up to
                                                    You and your eligible dependents can
       the employer to decide which employ-
                                                    elect health-care coverage during a
       ees are eligible. However, eligibility for
                                                    special enrollment period.
       group health plan coverage cannot be
       based on your health status. Health
                                                    What will an employer-sponsored
       status means your medical condition or       health plan cover?
       history, genetic information, or dis-
                                                    It depends. Employers can decide what
       ability. This protection is called nondis-
                                                    their health plan will cover. However,
       crimination. Employers can refuse or re-
                                                    the nondiscrimination rule says you
       strict coverage for other reasons (such
                                                    cannot be offered different coverage
       as part-time employment), as long as
                                                    because of your health status. In addi-
       these reasons are unrelated to health
                                                    tion, there are laws requiring group
       status and apply to all employees.
                                                    policies to cover certain benefits. For
       Employers can also decide when health        example, most employer-sponsored
       benefits are offered. Usually, you will      health plans must cover maternity care.
       be offered benefits when you’re first
       hired. However, employers can require        What about
       waiting periods (sometimes called pro-       pre-existing conditions?
       bationary periods) before health bene-       Although employer-sponsored group
       fits begin. These waiting periods also       health plans can’t refuse to cover an
       must be imposed without regard to            individual or charge more because of a
       health status.                               health condition, they are allowed to
                                                    impose temporary pre-existing condition
                                                    exclusion periods (or pre-ex, for short).

UNDERSTANDING PRIVATE HEALTH INSURANCE                                            PAGE 17

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       There are rules governing when these        What can I be charged
       can be imposed and for how long. In         for group health plan coverage?
       general, a pre-ex cannot be longer than     It depends. Employers can decide how
       12 months. If your employer requires a      much of the group health plan pre-
       waiting period before health benefits       mium they will pay on your behalf.
       begin, the pre-ex must start on the first   Often, employers will contribute less
       day of the waiting period. (So, for         toward the premium for dependent
       example, if there is a three-month          coverage than they will for the em-
       waiting period and the health plan          ployee. Whatever your employer
       imposes a 12-month pre-ex, only nine        decides you must pay toward your
       months of the pre-ex will remain once       health benefits, that amount cannot be
       your coverage begins.) These exclusion      based on your (or your dependents’)
       periods can only limit coverage of con-     health status.
       ditions for which you actually received
       medical treatment, advice, or diagnosis     What if the group health plan
       within six months prior to enrolling in     won’t pay a claim?
       the group health plan. Employer-spon-       Call member services or check with
       sored group health plans cannot apply       your employer’s human resources
       a pre-ex to pregnancy, newborns, or         office to see if a mistake has been
       genetic information.                        made. If the problem persists, check
                                                   your benefits handbook. All employer-
       In addition, you may be able to reduce      sponsored health plans must have
       a pre-ex if you had other health cover-     procedures for considering appeals
       age prior to joining a group health         when a claim is denied. In addition,
       plan. Prior coverage can be credited        you may be able to appeal to an
       against a pre-ex provided you did not       independent external reviewer if your
       have a break in coverage of 63 con-         dispute still is not resolved by the
       secutive days. Your prior insurer           plan’s internal appeals process. See
       should have given you a certificate of      chapter five, section “Appealing
       creditable coverage that documents your     disputes with health plans” on page 33
       past coverage. Show your certificate(s)     for more information.
       to your new health plan provider and
       ask for prior coverage to be credited       If you have other questions about your
       against a new pre-ex. If you lost your      rights under your employer-sponsored
       certificate, you can request a new one.     health plan, contact the U.S. Depart-
       In addition, you can submit other           ment of Labor. See page 32 for more
       forms of proof of prior coverage, such      information.
       as old ID cards or statements from
       insurers or providers indicating            Individual health insurance
       insurance payment.                          Compared to job-based health cover-
                                                   age, far fewer people have individual
                                                   health insurance. It tends to be more
                                                   expensive, especially since employers

UNDERSTANDING PRIVATE HEALTH INSURANCE                                         PAGE 18

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       don’t help pay for it. Insurers feel pres- In most states, you have far
       sure to lower premiums, but usually          fewer protections under individual
       do so by limiting covered benefits or        health insurance than you do under an
       increasing deductibles. In addition, in      employer-sponsored group health
       most states, your health status can          plan.
       affect whether you can buy individual
       health insurance, what you pay for it,       When does an individual health
       and what it covers.                          insurer have to sell me coverage?
                                                    In most states, individual health insur-
       People often buy individual health           ance is medically underwritten. That
       insurance with help from a licensed          means you can be turned down based
       insurance agent. Agents can help you         on your health status or health history.
       find and compare insurance policies          It’s hard to know in advance whether
       and understand what’s covered. If you        you will be able to buy medically un-
       have a dispute with an insurer after         derwritten individual health insurance.
       you buy a policy, your agent may be          If you have a serious health condition,
       able to help resolve it. It’s important to   such as cancer or diabetes, you will
       know that agents are paid by insurance       likely be denied coverage, and less
       companies, regardless of whether they        serious health problems may also
       are independent or employees. How-           result in a denial of your application.
       ever, to keep their license, agents must     However, in some states, individual
       also be honest and disclose important        health insurers must sell coverage to all
       information. Any problems or concerns        residents, regardless of health status.
       about an insurance agent should be           This is called guaranteed issue.
       reported to your state insurance
       department.                                  What will individual
       Increasingly, people also shop for indi-
                                                    health insurance cover?
       vidual health insurance on the Internet.     It depends. In most states, insurers can
       A number of Web sites let you com-           decide what to cover under their poli-
       pare costs and coverage under various        cies. In general, individual health
       policies. Remember, the premiums             insurance tends to cover less than job-
       posted on these sites are for the            based coverage. For example, individ-
       healthiest individuals. Your own             ual policies usually don’t cover mater-
       health status may determine whether          nity care, and many don’t cover
       you can buy a policy, at what price,         prescription drugs or they strictly limit
       and with what restrictions.                  drug coverage (for example, to $500
                                                    per year). Many individual policies
       Individual health insurance is regu-         impose high annual deductibles of
       lated by states; the rules will depend       $1,000 or more per person. However,
       on where you live. For more informa-         some states require all insurers to offer
       tion about laws that protect you in          a standard policy covering basic bene-
       your state, see health insurance con-        fits. Many states require policies to
       sumer guides at www.healthinsurance

UNDERSTANDING PRIVATE HEALTH INSURANCE                                            PAGE 19

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       cover specific benefits or services, such   exclusion periods in individual health
       as mammograms.                              insurance.

       What about                                  What can I be charged
       pre-existing conditions?                    for individual health insurance?
       Individual health insurance might turn      In most states, individual health insur-
       you down if you have a pre-existing         ance premiums are based on your age
       condition. Or, the insurer might add an     and gender. In addition, in most states,
       exclusion rider to your policy that         insurers are allowed to charge more if
       excludes coverage for your pre-existing     you are sick. However, in some states,
       condition—or for the body part or           premiums are not allowed to vary
       system the condition affects. If the        based on health status. This is called
       insurer offers you a policy with a rider,   community rating. In states that do not
       your agent is required to explain the       require community rating, your health
       rider to you prior to sale. Make sure       insurance premiums may also increase
       you understand whether the exclusion        at renewal simply because you have
       is temporary or permanent or if the         held the policy for a while. This is
       exclusion means the carrier will not        called durational rating, and it can make
       pay for doctor treatment or for pre-        it hard for people to renew coverage.
       scription drugs. Some states prohibit       Occasionally, policies will also increase
       the imposition of exclusion riders in       premiums at renewal if you get sick.
       individual health insurance.                This is called re-underwriting. Finally,
                                                   some insurers will only sell a policy to
       Insurers can also make decisions about
                                                   new customers for a few years. After
       pre-existing conditions after you buy a
                                                   that, they close a policy to new custom-
       policy. When you make a claim, the
                                                   ers and sell other policies, instead. Pre-
       insurer may investigate your past
                                                   miums for old, closed policies tend to
       medical records for evidence that your
                                                   increase much more dramatically,
       health problem existed before you
                                                   making it hard for these policyholders
       bought your policy. Even if you didn’t
                                                   to afford premiums at renewal. Ask the
       know you were sick, but had some
                                                   insurer or your agent about these
       symptoms, the insurer may decide
                                                   renewal practices before you buy
       your condition was pre-existing and
                                                   coverage. In addition, contact your
       exclude coverage. Most states have
                                                   state insurance regulator to see what
       rules governing the imposition of
                                                   complaints have been filed against
       pre-existing condition exclusions after
                                                   insurers based on their rating practices.
       a policy is sold. For example, states
       may limit the length of exclusion           What if my individual policy
       periods or the period of time prior to      won’t pay a claim?
       purchasing the policy the insurer can       Call member services to see if a mis-
       investigate. In addition, some states       take has been made. If the problem
       require that prior health coverage be       persists, check your policy or hand-
       credited against pre-existing condition

UNDERSTANDING PRIVATE HEALTH INSURANCE                                            PAGE 20

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       book. States require individual insur-       protections that would apply in the
       ance companies to have procedures for        individual health insurance market in
       considering appeals when a claim is          your state.5 For example, an out-of-
       denied. In addition, in most states you      state association’s policy might not
       may be able to appeal to an independ-        have to cover all the benefits otherwise
       ent external reviewer if your dispute        required to be covered where you live.
       still is not resolved by the plan’s inter-   Contact your state insurance depart-
       nal appeals process. See chapter five,       ment for more information before
       section “Appealing disputes with             buying health coverage through an
       health plans” on page 33 for more            association. Ask whether any state
       information.                                 protections do not apply. Also, ask if
                                                    any complaints have been filed against
       Health insurance                             the association or its insurer.
       sold through associations
       Many individuals and small employers
       consider purchasing health insurance
       through associations, such as the
       chamber of commerce, alumni associa-
       tions, or professional associations,
       hoping to get better coverage, lower
       prices, or stronger legal protections by
       joining with a large group. However, it
       is important to understand that the
       rules protecting consumers in job-
       based health insurance or individual
       health insurance may not be the same
       under coverage bought through an
       association. For example, the asso-
       ciation or its insurer may be head-
       quartered in another state with differ-
       ent rules.

       In general, if your employer buys an
       employer-sponsored      health    plan
       through an association, the same rules
       (nondiscrimination, special enrollment
       periods, limits on pre-existing condi-
       tion exclusion periods, and credit for
       prior coverage) are supposed to apply.
       However, if you buy individual cover-
       age through an association, you cannot       5
                                                       Kofman, M., et al., “Association Health
                                                    Insurance: Is it time to regulate this product?”
       necessarily count on having the same
                                                    Journal of Insurance Regulation, October 1, 2005.

UNDERSTANDING PRIVATE HEALTH INSURANCE                                                  PAGE 21

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       Chapter 4: Navigating Health Insurance Transitions

Chapter 4
Navigating Health Insurance Transitions

                                 People can be vulnerable to health insurance
                                 problems during transitions—job changes,
                                 changes in family status, moves, etc.—that
                                 may also change or disrupt health coverage.
                                 Every month, an average of two million
                                 Americans lose their health insurance. Some
                                 will transition smoothly to the next coverage;
                                 others will be uninsured for at least a month.
                                 Most transitions involving private health
                                 insurance begin with a loss of job-based
                                 group coverage.

UNDERSTANDING PRIVATE HEALTH INSURANCE                                 PAGE 22

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       If you find yourself facing a health        rights you have, especially regarding
       insurance transition, you may have          nondiscrimination in benefits and
       legal rights. It’s important to know        limits on      pre-existing condition
       when you qualify for protection and         exclusion periods (see chapter three,
       what procedures and deadlines you           section “What about pre-existing con-
       must observe. Any time you anticipate       ditions?” on page 17). Pay attention to
       a transition may be likely, advance         deadlines for electing coverage.
       planning can help increase the odds
       you will navigate it successfully. The      Family and medical leave
       following laws and programs can help        If you need to take leave from a job due
       you remain covered through health
                                                   to illness, the birth or adoption of a
       insurance transitions.                      child, or to care for a seriously ill fam-
                                                   ily member, you may be able to keep
       Special enrollment periods                  your group health coverage for a lim-
       in job-based plans                          ited time. A federal law called the
       If you are about to lose your job-based     Family and Medical Leave Act (FMLA)
       group coverage and you are married,         guarantees you up to 12 weeks of job-
       find out whether your spouse’s              protected leave if you work at a com-
       employer offers health benefits. If so,     pany with 50 or more employees. If
       you can ask to sign up during a special     you qualify for leave under the FMLA,
       enrollment period (see chapter three,       your employer must continue your
       section “When does an employer-             health benefits and contribution
       sponsored health plan have to let me        toward your premium during your
       in?” on page 17). You do not have to        leave. You will have to continue pay-
       wait until the next regularly scheduled     ing your share of the premium.
       open season to join a job-based health
                                                   If you decide not to return to work at
       plan if you qualify for a special enroll-
                                                   the end of the leave period, your
       ment opportunity.
                                                   employer may require you to pay back
                                                   the employer’s share of the health
       Regular health insurance                    insurance premium. However, if you
       enrollment periods/open                     don’t return to work because of factors
       seasons for job-based plans                 outside your control (such as a need to
       Typically, employers that offer health      continue caring for a sick family mem-
       benefits will give you an opportunity       ber, or because your spouse is trans-
       to enroll in the health plan when you       ferred to a job in a distant city), you
       are first hired. Thereafter, the employer   will not have to repay the premium.
       may offer annual open seasons when
                                                   For more information about your
       you can elect to change health plans or
                                                   rights under the FMLA, contact the
       enroll in coverage that you previously
                                                   U.S. Department of Labor. (See chapter
       declined. If you begin a new job with
                                                   five, section ”U.S. Department of
       new benefits, keep in mind important
                                                   Labor”, page 32)

UNDERSTANDING PRIVATE HEALTH INSURANCE                                            PAGE 23

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                                       To qualify for COBRA continuation coverage, you must
                                       meet three criteria:
       COBRA                           1. You must work for an employer with 20 or more
       If you are leaving your             employees.
       job and you had group           2. You must be covered under the group health plan
       health coverage through             as an employee or as the spouse or dependent
       your employer, you may              child of an employee.
       be able to stay in the          3. You must have a qualifying event (see the
       plan for an extended                following lists) that would cause you to lose your
       time through COBRA                  group health coverage.
       coverage. Your covered
                                       Qualifying events for employees include:
       health benefits under
                                       » Voluntary or involuntary termination of employ-
       COBRA will be the same
                                          ment for reasons other than gross misconduct.
       as those you had before
                                       » Reduction in number of hours worked.
       you      qualified    for
       COBRA. However, the             Qualifying events for spouses include:
       employer no longer has          » Loss of coverage by the employee because of one
       to contribute toward the           of the qualifying events listed previously.
       premium. Instead, you           » Covered employee becomes eligible for
       must pay the entire pre-           Medicare.
       mium (the employer and          » Divorce or legal separation from the covered
       employee share) plus a 2           employee.
       percent administrative          » Death of the covered employee.
       fee. For many people,           Qualifying events for dependent children include:
       this makes COBRA cov-           » Loss of coverage because of any of the qualifying
       erage quite expensive.             events listed for spouses.
       On the other hand, con-         » Loss of status as a dependent child under the plan
       tinuing group coverage             rules (for example, 19th birthday or graduating
       under COBRA may be                 from college).
       especially important if
       you think you might
       have trouble buying medically under-            listed in the box above. Often, you can
       written individual health insurance.            anticipate a qualifying event, get in
       (Remember, medically underwritten               touch with the human resources
       means you can be turned down based              department, and arrange for COBRA
       on your health status or health history.)       coverage in advance. Otherwise, fed-
       Also,    remaining    covered      under        eral law requires employers to notify
       COBRA can be important if you’re in             you about your COBRA rights soon
       the middle of treatment for a health            after the qualifying event. If the quali-
       condition and don’t want to change              fying event is employment-related (job
       doctors or other covered benefits.              loss, retirement, etc.), the employer has
                                                       30 days to notify you that you can elect
       To qualify for COBRA continuation               COBRA coverage. If the qualifying
       coverage, you must meet the criteria            event is related to a change in depend-

UNDERSTANDING PRIVATE HEALTH INSURANCE                                               PAGE 24

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       ent status (divorce, graduating from       if the former employer drops health
       college, etc.), you must notify the em-    benefits for all employees.
       ployer of the qualifying event within
                                                  Contact the U.S. Department of Labor
       60 days; then the employer has 14 days
                                                  to find out more about your rights
       to notify you of your COBRA rights.
                                                  under COBRA. (For more information,
       Once you’ve been notified, you have
                                                  see chapter five, section “U.S. Depart-
       up to 60 days to elect COBRA. Your
                                                  ment of Labor”, page 32.)
       dependents have their own right to
       elect COBRA, independent from you,
       assuming they were covered under the       State continuation laws
       plan before the qualifying event.          Most states have laws requiring group
                                                  health insurers to offer continuation
       If you elect COBRA during the 60-day
                                                  coverage that is similar to COBRA. If
       election period, your coverage must
                                                  you were covered under a group
       resume retroactive to the date of your
                                                  health plan sponsored by an employer
       qualifying event. You will have an-
                                                  with fewer than 20 employees, you
       other 45 days to pay the premium
                                                  may be able to elect state continuation
       dating back to that date. Thereafter,
                                                  coverage and temporarily remain in
       you will have to pay premiums ac-
                                                  your former plan. Contact your state
       cording to the schedule set by the
                                                  insurance regulator for more informa-
       employer’s health plan (usually
                                                  tion about state continuation and
       monthly). Be sure to pay the premiums
                                                  whether this protection applies to you.
       on time. Employers are obligated to
       grant a grace period of at least 30 days
                                                  When access
       for late payment, but your coverage
       can be terminated immediately there-
                                                  to employer-sponsored
       after if you haven’t paid premiums.        health insurance ends
                                                  Once access to job-based health insur-
       COBRA coverage generally lasts for 18
                                                  ance ends, you may be faced with
       months (following job-related qualify-
                                                  buying individual health insurance.
       ing events) or 36 months (following
                                                  Remember, individual health insur-
       qualifying events related to change in
                                                  ance is medically underwritten in most
       dependent status) and cannot be
                                                  states, so you may have difficulty
       renewed. Your right to COBRA
                                                  buying coverage if you are sick. If you
       coverage ends if you join a new group
                                                  don’t live in a state where individual
       health plan. However, if the new plan
                                                  insurers must sell guaranteed issue
       imposes a pre-existing condition exclu-
                                                  coverage to all residents regardless of
       sion period, you can keep COBRA
                                                  health status, two other protections
       during the new plan pre-ex. COBRA
                                                  may be available: HIPAA and high-risk
       will also end if the plan you are con-
       tinuing in ceases to exist—for example,

UNDERSTANDING PRIVATE HEALTH INSURANCE                                         PAGE 25

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                                             To be HIPAA eligible, you must meet all of the
                                             following requirements:
       HIPAA                                 » You must have had 18 months of continuous
       In every state, you must be               prior coverage, at least the last day of
       offered some type of individual           which was under a group health plan.
       health insurance when you are         » You must have used up any COBRA or state
       HIPAA eligible. HIPAA stands              continuation coverage for which you were
       for the Health Insurance Port-            eligible.
       ability and Accountability Act of     » You must not be eligible for Medicare,
       1996. To be HIPAA eligible, you           Medicaid, or a group health plan.
       must meet all of the require-         » You must not have health insurance.
       ments in the box at right.            » You must apply for health insurance for
                                                 which you are HIPAA eligible within 63
       HIPAA coverage must be sold
                                                 days of losing your prior coverage.
       on a guaranteed issue basis
       (meaning you cannot be turned
       down based on health status)
                                                     high-risk pools also offer HIPAA
       and it cannot impose a pre-existing
                                                     coverage. High-risk pools charge
       condition exclusion period. Depending
                                                     premiums for health insurance cover-
       on where you live, you may be able to
                                                     age, and the premiums tend to be
       apply for HIPAA coverage from one
                                                     much higher than those charged for
       insurer or from all the insurers in the
                                                     medically underwritten coverage in the
       individual market. Or, you might have
                                                     private market. A few states subsidize
       to apply for HIPAA coverage from the
                                                     high-risk pool premiums for low-
       state high-risk pool (see the following
                                                     income residents. Most pools offer
       section). Also, depending on where
                                                     covered benefits similar to what you
       you live, there may be limits on how
                                                     would find in the individual health
       much you can be charged for HIPAA
                                                     insurance market. Most pools will also
       coverage. In states that do not limit
                                                     impose pre-existing condition exclu-
       premiums, HIPAA coverage can be
                                                     sion periods (unless you are HIPAA-
       very expensive. Finally, depending on
                                                     eligible). In a few states, there may be a
       where you live, there may be rules
                                                     waiting list to join the high-risk pool
       about what HIPAA policies have to
                                                     (unless you are HIPAA-eligible).
       cover. Contact your state insurance
       department or see your state-specific         If you apply for individual health
       health insurance consumer guide at            insurance and are turned down, for more          charged more, or offered a policy with
       information about HIPAA coverage.             an exclusion rider, the insurer will
                                                     probably notify you that you are eligi-
       High-risk pools                               ble for high-risk pool coverage. To find
       More than 30 states have programs             out whether your state has a high-risk
       called high-risk pools that will sell         pool, see chapter five, section “State
       individual health insurance to people         high-risk pools,” page 34. For more
       who have trouble buying medically             information about the program, contact
       underwritten coverage. Most state             your state insurance department or

UNDERSTANDING PRIVATE HEALTH INSURANCE                                               PAGE 26

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       check your state health insurance con-      » COBRA continuation under Frank’s
       sumer guide at www.healthinsurance            plan. Frank, Rosa, and Alex can elect                                     coverage independently or together
                                                     for 18 months.
       When protections apply                      » HIPAA coverage. This option will be
       To understand when you might need             available for 63 days after COBRA
       the protections described here, consi-        expires. To be eligible for HIPAA
       der the case of this hypothetical family:     coverage, Frank and Alex would
       Frank (58), his wife Rosa (50), and their     need to be ineligible for coverage as
       son Alex (17). The following examples         dependents under Rosa’s job-based
       describe common events that can trig-         health plan.
       ger health insurance transitions and
                                                   »    Other job-based coverage. If Frank
       protections that may help in those cir-
                                                       finds a new job offering health bene-
       cumstances. The options are not listed
                                                       fits, he can enroll. If there is a
       in a particular order. Frank, Rosa, and
                                                       waiting period or a pre-ex, he and
       Alex will need to weigh them in light
                                                       the family can elect COBRA until
       of their own needs and costs. For
                                                       full coverage begins to avoid a gap
       example, COBRA premiums may be
                                                       in coverage.
       higher than individual health insur-
       ance premiums, but COBRA is avail-          » Individual health insurance. This
       able regardless of health status and          could be an option for family mem-
       won’t impose a new pre-ex.                    bers who are healthy enough to
                                                     qualify for medically underwritten
       Job loss                                      coverage, or if the family lives in a
       Frank was laid off from Acme Widget,          state that requires individual insur-
       a large company that offers group             ance to be sold on a guaranteed
       health benefits. Rosa also works for an       issue basis. Pre-existing conditions
       employer that offers health benefits,         may be excluded, especially if there
       though their family has always been           is a gap in coverage.
       covered through Frank’s job. The fam-       » High-risk pool. If Frank or his family
       ily’s options for remaining covered           members have trouble getting indi-
       could include:                                vidual coverage and live in a state
       » Special enrollment opportunity in           with a high-risk pool, they may be
         Rosa’s job-based plan. Within 30 days       able to buy coverage from that state
         following the loss of coverage under        program. Pre-existing conditions
         Frank’s plan, the entire family can         may be excluded, especially if there
         enroll in Rosa’s job-based plan, Rosa       is a gap in coverage.
         can also enroll alone, but she must       » Medicaid and S-CHIP. If the family’s
         elect coverage for herself in order         income is very, very low following
         for Frank and Alex to sign up as her        Frank’s layoff, Alex (and possibly
         dependents.                                 his parents) might qualify for cover-

UNDERSTANDING PRIVATE HEALTH INSURANCE                                           PAGE 27

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         age under Medicaid or the State           » Other job-based coverage.
         Children’s Health Insurance Pro-
                                                   » Individual health insurance.
         gram. See the second booklet in this
         series, Medicare and Medicaid: A          » High-risk pool.
         Health Care Safety Net for People with    » Medicaid and S-CHIP.
         Serious Disabilities and Chronic Condi-
         tions for more information about          Retirement
         qualifying for coverage under state       Frank retires from Acme Widget but is
         Medicaid and S-CHIP programs.             too young to qualify for Medicare,
                                                   which begins at age 65. The same
       Employer bankruptcy                         health insurance options listed under
       Acme Widget goes bankrupt, laying off       “Job loss” on page 27 could apply.
       most of its workers, including Frank,
       and closing the group health-care plan.     Eligibility for Medicare
       Health insurance options for Frank and      Imagine Frank retires from Acme as he
       his family are similar to those options     turns 65 and becomes eligible for
       under “Job loss” on page 27, with           Medicare. Rosa and Alex will no longer
       certain differences:                        qualify for dependent coverage as a
                                                   result. Their coverage options could be
       » Special enrollment opportunity      in
                                                   similar to those listed under “Job loss”
         Rosa’s job-based plan.
                                                   on page 27 with certain differences:
       » Health Coverage Tax Credit (HCTC). If
         Acme receives special certification       » Special enrollment opportunity in
         from the federal government that its        Rosa’s job-based plan. Within 30 days
         financial problems are due to               following the loss of coverage under
         foreign trade and imports, Frank            Frank’s plan, Rosa and Alex can
         may be eligible for special trade           both enroll in Rosa’s job-based plan
         adjustment assistance (TAA) benefits        or Rosa can enroll alone. Rosa must
         and special        health   insurance       elect coverage for herself in order
         coverage options. He also may be            for Alex to sign up as her
         eligible for a special federal income       dependent.
         tax credit, called the HCTC, to cover     » COBRA continuation under Frank’s
         65 percent of the premium for               plan. Rosa and Alex can elect cover-
         certain health insurance coverage           age independently or together for 36
         options. More information about the         months.
         HCTC is available at
                                                   » HIPAA coverage.
       » HIPAA coverage. Since COBRA is not
                                                   » Individual health insurance.
         available (no group health plan
         exists to continue in), HIPAA             » High-risk pool.
         eligibility will begin the day Acme       » Medicaid and S-CHIP.
         group health coverage is lost and
         will be available for 63 days.

UNDERSTANDING PRIVATE HEALTH INSURANCE                                              PAGE 28

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       Divorce                                       age independently or together for 36
       Say that Frank and Rosa are divorcing.        months.
       Usually, the custody agreement or a
                                                  » HIPAA coverage. This option will be
       court order will specify which parent is
                                                    available for 63 days after COBRA
       responsible for Alex’s health insurance.
       Assuming Frank continues to be
       responsible for Alex’s health insurance    » Individual health insurance.
       coverage, Alex can remain eligible for     » High-risk pool.
       dependent coverage under his father’s
                                                  » Medicaid and S-CHIP.
       plan. However, Rosa will no longer
       qualify for spousal health insurance
                                                  Illness or leave
       under Frank’s job-based plan. Her cov-
                                                  Frank falls seriously ill—too sick to
       erage options could be similar to those
                                                  work—so he must take extended leave
       listed under “Job loss” on page 27 with
                                                  from his job. Coverage options for
       certain differences:
                                                  Frank and his family might start with
       » Special enrollment opportunity in        the Family and Medical Leave Act.
         Rosa’s job-based plan. Within 30 days    Frank is entitled to up to 12 weeks of
         following the loss of coverage under     job-protected leave because of his ill-
         Frank’s plan.                            ness. Depending on his benefits, this
                                                  may or may not be paid leave, but he
       » COBRA continuation under Frank’s
                                                  must be allowed to continue his job-
         plan. Rosa can elect coverage, inde-
                                                  based health insurance for the entire
         pendently or together, for 36
                                                  family during the protected medical
                                                  leave and Acme must continue to pay
       » HIPAA coverage. This option will be      the employer share of the premium. If
         available for 63 days after COBRA        he is still too sick to work after 12
         expires.                                 weeks, Frank could lose his job, in
       » Individual health insurance.             which case the following coverage
                                                  options could be considered:
       » High-risk pool.
                                                  » Special enrollment opportunity      in
       » Medicaid and S-CHIP.
                                                    Rosa’s job-based plan.
       Widowhood                                  » COBRA continuation under Frank’s
       Frank passes away, so Rosa and Alex          plan. Frank, Rosa, and Alex can elect
       are no longer dependents of an Acme          coverage independently or together
       employee. Their coverage options             for 18 months.
       could include:
                                                  » HIPAA coverage. This option will be
       » Special enrollment opportunity      in     available for 63 days after COBRA
         Rosa’s job-based plan.                     expires.

       » COBRA continuation under Frank’s         » Other job-based coverage. If Frank can
         plan. Rosa and Alex can elect cover-       manage to work in a different job

UNDERSTANDING PRIVATE HEALTH INSURANCE                                             PAGE 29

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         that offers health benefits, he can        coverage (Frank may not in light of
         enroll. If there is a waiting period,      his recent illness), or if the family
         he and the family can elect COBRA          lives in a state that requires individ-
         until full coverage begins to avoid a      ual insurance to be sold on a
         gap in coverage.                           guaranteed issue basis. Pre-existing
                                                    conditions may be excluded, espe-
       » Individual health insurance. This
                                                    cially if there is a gap in coverage.
         could be an option for family mem-
         bers who are healthy enough to          » High-risk pool.
         qualify for medically underwritten
                                                 » Medicaid/S-CHIP.

UNDERSTANDING PRIVATE HEALTH INSURANCE                                          PAGE 30

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Chapter 5:               For More Information

   Chapter 5
                    For More Information


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U.S. Department of Labor
The Employee Benefits Security Administration (EBSA) of the U.S. Department of Labor has
authority over all private-sector employer-sponsored health plans, including COBRA continuation
rights under these plans. If you have questions or concerns about your employer-sponsored job-
based health coverage or COBRA, contact the EBSA regional office nearest you.

STATE(S) SERVED         ADDRESS                            PHONE            FAX

Alabama                 Atlanta Regional Office            404-562-2156     404-562-2727
Northern Florida        61 Forsyth St., SW, Suite 7B54
Georgia                 Atlanta, GA 30303
North Carolina
South Carolina
Connecticut             Boston Regional Office             617-565-9600     617-565-9666
Maine                   JFK Building, Room 575
Massachusetts           Boston, MA 02203
New Hampshire
New York
Rhode Island
Northern Illinois       Chicago Regional Office            312-353-0900     312-353-1023
Northern Indiana        200 West Adams St.,
Wisconsin               Suite 1600
                        Chicago, IL 60606
Southern Indiana        Cincinnati Regional Office         859-578-4680     859-578-4688
Kentucky                1885 Dixie Highway, Suite 210
Ohio                    Ft. Wright, KY 41011-2664
Arkansas                Dallas Regional Office             214-767-6831     214-767-1055
Louisiana               525 South Griffin St., Suite 900
New Mexico              Dallas, TX 75202-5025
Michigan                Detroit District Office            313-226-7450     313-226-4257
                        211 West Fort St., Suite 1310
                        Detroit, MI 48226-3211
Colorado                Kansas City Regional Office        816-426-5131     816-426-5511
Southern Illinois       1100 Main St., Suite 1200
Iowa                    Kansas City, MO 64105-5148
North Dakota
South Dakota

UNDERSTANDING PRIVATE HEALTH INSURANCE                                               PAGE 32

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STATE(S) SERVED          ADDRESS                            PHONE              FAX
Arizona                  Los Angeles Regional Office        626-229-1000       626-229-1097
Southern California      1055 East Colorado Blvd.,
Hawaii                   Suite 200
                         Pasadena, CA 91106-2341
Southern Florida         Miami District Office              954-424-4022       954-424-0548
                         8040 Peters Rd., Bldg H,
                         Suite 104
                         Plantation, FL 33324
Northern New Jersey      New York Regional Office           212-607-8600       212-607-8681
Eastern New York         33 Whitehall St., Suite 1200
                         New York, NY 10004
Southern New Jersey      Philadelphia Regional Office       215-861-5300       215-861-5347
Pennsylvania             The Curtis Center
Delaware                 170 S Independence Mall West,
                         Suite 870 West
                         Philadelphia, PA 19106-3317
Northern California      San Francisco Regional Office      415-975-4600       415-975-4589
Nevada                   71 Stevenson St., Suite 915
Utah                     San Francisco, CA 94105
Alaska                   Seattle District Office            206-553-4244       206-553-0913
Idaho                    1111 Third Avenue, Room 860
Oregon                   Seattle, WA 98101-3212
Maryland                 Washington District Office         301-713-2000       301-713-2008
Virginia                 1335 East-West Hwy.,
Washington, DC           Suite 200
West Virginia            Silver Spring, MD 20910

State health insurance regulators
State insurance departments regulate health insurance companies that sell policies to individuals
and to employers, including state continuation rights (similar to COBRA continuation rights) under
small employer health insurance policies. The National Association of Insurance Commis-
sioners (NAIC) has a Web site with links to each state’s insurance department at
Contact your state insurance department if you have questions or concerns about your health
insurance policy or for more information (including previously filed complaints) about a policy you
are considering.

Appealing disputes with health plans
You can find consumer guides explaining your rights to appeal disputes with health plans at (search for Consumer Guide).

UNDERSTANDING PRIVATE HEALTH INSURANCE                                                   PAGE 33

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                                                                                     State high-risk pools
                                                                                     Thirty-two states operate high-risk pool programs for people who have trouble buying individual health insurance
                                                                                     because of their health. Eligibility for these programs varies, as do premiums and covered benefits. Contact the program
                                                                                     in your state for more information.

                                                                                     PROGRAM                                        WEB SITE                                     PHONE

                                                                                     Alabama Health Insurance Plan                                 1-800-513-1384 or

                                                                                     Alaska Comprehensive                                                 1-888-290-0616
                                                                                     Health Insurance Association

                                                                                     Arkansas Comprehensive                                        1-800-285-6477
                                                                                     Health Insurance Pool

                                                                                     California Major Risk                                             916-324-4695
                                                                                     Medical Insurance Program

                                        UNDERSTANDI NG PRIVATE HEALT H I NSURA NCE
                                                                                     CoverColorado                                                1-877-461-3811

                                                                                     Connecticut Health Reinsurance Association                                1-800-842-0004

                                                                                     Florida (not open for new enrollees)           none                                         850-309-1200

                                                                                     Illinois Comprehensive Health Insurance Plan                         1-800-367-6410 or

                                                                                     Indiana Comprehensive                                                1-800-552-7921 or
                                                                                     Health Insurance Association                                                                317-614-2000

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                                                                                     Iowa Comprehensive Health Association                     1-877-793-6880

                                                                                     Kansas Health Insurance Association                    1-800-290-1368 or

                                        PAGE 34
                                                                                     PROGRAM                                      WEB SITE                                         PHONE

                                                                                     Kentucky Access                                               1-866-405-6145

                                                                                     Louisiana Health Plan                                           1-800-736-0947

                                                                                     Maryland Health Insurance Plan           1-866-780-7105

                                                                                     Minnesota Comprehensive Health Association                                   952-593-9609

                                                                                     Mississippi Comprehensive                    Visit and search “Chirpa,”   1-888-820-9400 or
                                                                                     Health Insurance Risk Pool Association       then click “Consumer Information” and select     601-899-9967
                                                                                                                                  “Mississippi Comprehensive Health Insurance
                                                                                                                                  Risk Pool Association.”

                                                                                     Missouri Health Insurance Pool                                          1-800-821-2231
                                                                                                                                                                                     (all but NW Missouri)

                                        UNDERSTANDI NG PRIVATE HEALT H I NSURA NCE
                                                                                                                                                                                     (NW Missouri)

                                                                                     Montana Comprehensive Health Association                                 1-800-447-7828, ext 8537
                                                                                                                                                                                   406-444-8537 (Helena only)

                                                                                     Nebraska Comprehensive Health Association    Go to and click “Consumers,”      1-800-356-3485
                                                                                                                                  then “Brochures.” Select the “Comprehensive        (outside of Omaha)
                                                                                                                                  Health Insurance Pool (CHIP)” brochure.          402-390-1814

                                                                                     New Hampshire Health Plan                                       1-800-578-3272 or

                                                                                     New Mexico Medical Insurance Pool                                      1-800-432-0750 or

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                                                                                     Comprehensive Health                                                   1-800-737-0016 or
                                                                                     Association of North Dakota                                                                   701-277-2271

                                        PAGE 35
                                                                                     PROGRAM                                        WEB SITE                                          PHONE

                                                                                     Oklahoma Health Insurance High Risk Pool                                     1-800-255-6065, ext. 4767 or

                                                                                     Oregon Medical Insurance Pool                                      1-800-542-3104 (local)

                                                                                     South Carolina Health Insurance Pool           none                                              1-800-868-2500, ext. 42757
                                                                                                                                                                                      803-788-0500, ext. 42757

                                                                                     South Dakota Risk Pool                                 605-773-3148

                                                                                     Texas Health Insurance Risk Pool                                   1-888-398-3927

                                                                                     Utah Comprehensive Health Insurance Pool       Go to and search for “Utah     1-800-538-5038
                                                                                                                                    Comprehensive Health Insurance Pool.” Click

                                        UNDERSTANDI NG PRIVATE HEALT H I NSURA NCE
                                                                                                                                    on the #3 entry.

                                                                                     Washington State Health Insurance Pool                         1-800-877-5187

                                                                                     West Virginia – AccessWV                                               1-866-445-8491

                                                                                     Wisconsin Health Insurance Risk Sharing Plan   Go to and click on “Health   1-800-828-4777
                                                                                                                                    Insurance Risk Sharing Plan (HIRSP)” from the     608-221-4551
                                                                                                                                    list of most requested pages.

                                                                                     Wyoming Health Insurance Pool                  Go to and click on          1-800-442-2376
                                                                                                                                    “Consumer Assistance,” then scroll down to        307-634-1393
                                                                                                                                    “Wyoming Health Insurance Pool (WHIP)” and

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                                                                                                                                    click on the downloadable brochure.

                                        PAGE 36
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The three-part series titled Managing Medical Bills: Strategies for Navigating the Health Care System
was funded as a public service project by the Denver-based National Endowment for Financial
Education (NEFE). The project was made possible through a grant to Georgetown University.

Karen Pollitz, MPP, Project Director at the Georgetown University Health Policy Institute, authored
the first booklet in this series. The author expresses appreciation to Georgetown colleagues Kevin
Lucia, Eliza Bangit, and Jennifer Hersh for their significant support and contributions. In addition,
thanks to Gary Claxton for his expert review of earlier drafts. Sara Cormeny of
designed the series.

NEFE is an independent nonprofit foundation committed to educating Americans about personal
finance and empowering them to make positive and sound decisions to reach financial goals. The
National Endowment for Financial Education, NEFE, and the NEFE logo are federally registered
service marks of the National Endowment for Financial Education. For more information about the
National Endowment for Financial Education, visit

Georgetown University Health Policy Institute is a multi-disciplinary group of faculty and staff
dedicated to conducting research on key issues in health policy and health services research.
Institute faculty include experts on issues relating to health care financing, the uninsured, health
insurance regulation, quality of care and outcomes research, mental health services research, and
the impact of changes in the health care market on providers and patients.

UNDERSTANDING PRIVATE HEALTH INSURANCE                                                    PAGE 37

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End Notes
This section provides complete URLs for selected cited listings within this publication.


UNDERSTANDING PRIVATE HEALTH INSURANCE                                                     PAGE 38

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                          text reading:
                     Full Look for Our Other Publications in the
                                       MANAGING MEDICAL BILLS Series

                                                    Contents Include…

                                                    When, Where and How
                                                    To Apply for Social
                                                    Security Disability
                                                                                                                 Options    Contents Include…

                     and Medicaid
                                                    pages 7-12                                                        for   Sources of Free Health
                                                                                                                            Care, pages 2-3

                                   A Health Care
                                                    An Overview of Medicare
                                                    Parts A, B, C & D,                                          Avoiding    Negotiating Discounts
                                                                                                                            for Medical Debt, pages
                                                    pages 15-18

                                       Safety Net
                                                    Other Places for
                                  for People with
                                                    People with Disabilities                                                Answering Questions
                                                    And Their Families
                                                                                                                            about Bankruptcy,
                                                                                                                            pages 9-14
                          Serious Disabilities      To Seek Medical

                                                    Coverage, pages 25-26

                                             and    Directory of Medicaid
                                                                                                                            What You Need to
                                                                                                                            Know about Credit

                          Chronic Conditions
                                                    Offices for Every State,
                                                    pages 33-37                                                     Debt    Reports and Credit
                                                                                                                            Scores, pages 14-16

           Second in the Series                                                          Third in the Series
           MANAGING MEDICAL BILLS                                                        MANAGING MEDICAL BILLS
           Strategies for Navigating                                                     Strategies for Navigating
           the Health Care System                                                        the Health Care System

These publications are available free of charge and can be obtained online at

  Please let us know what you think! Take a moment to send us feedback about this guide

                                                                               copyright 2006

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