As a patient with chronic medical needs, it is important to fully understand your health plan including what benefits you are entitled to and whether or not you must abide by any yearly or lifetime spending limits. It is vital that you regularly review your Explanation of Benefits so you can effectively manage your healthcare costs. Read on to brush up on some key insurance terms and find advice just for Alphas so you know exactly what to look for when reviewing your current health insurance plan or selecting a new one.

Key Insurance Terms

Copays

A copay (or copayment) is a flat fee that you pay on the spot each time you go to your doctor or fill a prescription. For example, if you hurt your back and go see your doctor, or you need a refill of your child’s asthma medicine, the amount you pay for that visit or medicine is your copay. Your copay amount is printed right on your health plan ID card. Copays cover your portion of the cost of a doctor’s visit or medication.

Not all plans use copays to share in the cost of covered expenses. Certain plans may use both copays and a deductible/coinsurance, depending on the type of covered service. Some services may also be covered at no out-of-pocket cost to you, such as annual checkups and certain other preventive care services.

Deductibles

A deductible is the amount you must pay each year for most eligible medical services or medications before your health plan begins to share in the cost of covered services. For example, if you have a $2,000 yearly deductible, you’ll need to pay the first $2,000 of your total eligible medical costs before your plan helps to pay.

Coinsurance

Coinsurance is a portion of the medical cost you pay after your deductible has been met. Coinsurance is a way of saying that you and your insurance carrier each pay a share of eligible costs that add up to 100 percent.

For example, if your coinsurance is 20 percent, you pay 20 percent of the cost of your covered medical bills. Your health insurance plan will pay the other 80 percent. If you meet your annual deductible in June and need an MRI in July, it is covered by coinsurance. If the covered charges for an MRI are $2,000 and your coinsurance is 20 percent, you need to pay $400 ($2,000 x 20%). Your insurance company or health plan pays the other $1,600. The higher your coinsurance percentage, the higher your share of the cost will be. You are also responsible for any charges that are not covered by the health plan, such as charges that exceed the plan’s Maximum Reimbursable Charge.

What’s the difference between copays and coinsurance?

Copays

  • Paid each time you visit your doctor or fill a prescription
  • Fixed dollar amount
  • Paid at the time of service
  • Counts toward your deductible (in most cases)

Coinsurance

  • Paid for services and medicines if you’ve met your deductible
  • The actual dollar amount varies; you pay a percentage of the total cost of covered services
  • Is paid after you meet your deductible
  • Billed by the provider who you will pay directly. You’ll also receive an Explanation of
  • Benefits (EOB) from your health plan explaining what charges you are responsible for.

What is an out-of-pocket maximum?

An out-of-pocket maximum is the most you could pay for covered medical expenses in a year. This amount includes money you spend on deductibles, copays, and coinsurance. Once you reach your annual out-of-pocket maximum, your health plan will pay your covered medical and prescription costs for the rest of the year.

Here’s an example. You have a plan with a $3,000 annual deductible and 20% coinsurance with a $6,350 out-of-pocket maximum. You haven’t had any medical expenses all year, but then you need surgery and a few days in the hospital. That hospital bill might be $150,000.

You will pay the first $3,000 of your hospital bill as your deductible. Then, your coinsurance kicks in. The health plan pays 80% of your covered medical expenses. You’ll be responsible for payment of 20% of those expenses until the remaining $3,350 of your annual $6,350 out-of-pocket maximum is met. Then, the plan covers 100% of your remaining eligible medical expenses for that calendar year.

Depending on your plan, the numbers will vary—but you get the idea. In this scenario, your $6,350 out-of-pocket maximum is much less than a $150,000 hospital bill!

Yearly and Lifetime Caps

A yearly cap is the total amount your insurance company will pay out for a plan’s services in a given year. A lifetime cap is the total amount your insurance company will pay out for a plan’s services in your lifetime.

While the Affordable Care Act (ACA) eliminated lifetime caps, there were certain exceptions, so do not assume you do not have a cap. Note that yearly and lifetime maximums may also still apply to benefits that are not considered essential health benefits. Some examples of benefits that are not essential health benefits include dental care, vision care, and medical management for chronic conditions like COPD.

The ACA also forbids insurers from denying health insurance coverage due to pre-existing conditions. A pre-existing condition is defined by health insurance companies as a health condition or illness that you’ve had at least six months before your first day of coverage on a new plan. The only exception to the pre-existing coverage rule is for grandfathered individual health insurance plans — the kind Alphas would buy themselves, not through an employer. These plans don’t have to cover pre-existing conditions.

Tips for Alphas

Filling Out Insurance Applications

If you are required to complete a health application questionnaire, be sure to answer all questions honestly, accurately, and to the best of your knowledge. Do not withhold the information you know but do not offer additional information not requested. Many applicants have become accepted and insured and have given the insurer or underwriter cause to terminate their insurance months later because they withheld facts or failed to answer questions accurately.

Staying Aware of Changes to Your Plan

With constantly escalating premium costs, your employer may shop at the end of each year for less costly health insurance. During this process, benefits could be reduced, and deductibles raised from year to year.

Managing Alpha-1 Augmentation Therapy Coverage

Be sure your augmentation therapy is being properly charged and expensed, per the provider’s agreement. Pay close attention to your EOBs (Explanation of Benefit) statements. Each time you receive one, examine it carefully. Make sure the correct amount was billed to your plan. If something doesn’t look quite right or you don’t understand it, call the insurer and ask for an in-depth explanation of the charges.

With augmentation therapy, it is the drug itself that is the greatest expense. You know (or should know) how many milligrams or grams of medication you require at each infusion of augmentation therapy. Innocent mistakes and/or incompetent and fraudulent billing practices, expense/claim processing errors can happen. If you are receiving your therapy at home and the provider’s charges are reasonable, that’s good. However, if you find them to be excessive or unreasonable, you can question them, negotiate for a better price, or change providers.

With some exceptions, private insurance covers the cost of home infusion of augmentation therapy. If this is not the case, you may find that many immunologists, allergists, rheumatologists, neurologists, and oncologists routinely provide a number of office-based I.V. therapies and may be willing to accommodate you. A number of independent infusion centers have opened that are in competition with hospital infusion programs. Although infusion in the home is most convenient for most people, some insurance plans will reimburse more completely for infusion at one of these places.

Although under the ACA, lifetime maximums or “caps” have been largely eliminated, some private plans still include such caps. In today’s environment of high-cost medical technology, as well as bone marrow and organ transplants, and cancer and end-stage renal disease treatments, a million-dollar lifetime maximum is considered substandard. This may be the case for some Alphas receiving augmentation therapy. Frugal management of your plan can conserve costs. Most insurance policies will place augmentation therapy under the major medical benefit. There are exceptions, however, and sometimes the prescribed drug used in the augmentation therapy may be applied toward your prescription drug benefit instead. In this situation, and if there is not an annual cap on your prescription plan, then the costs generated will generally not be applied toward your lifetime maximum benefit.

Staying Covered While Changing Employers

If you plan to change jobs, there are several options available to ensure you have continuous insurance coverage. COBRA covers group health plans maintained by employers with 20 or more employees. The group health plan is required to provide you with a written notice indicating your eligibility for COBRA coverage. If you are eligible, you will have 60 days from the date the notice is sent or from the date your coverage ends — whichever is later — to elect COBRA. If the employer is too small to be subject to COBRA, state law may require the plan’s insurer to provide some continuation coverage. Another option is enrollment in health coverage through the Health Insurance Marketplace. There are special enrollment periods of 60 days before and after you leave an employer. For other employment-based coverage (such as a spouse’s plan), you must request enrollment within 30 days of your loss of coverage.

Should you become disabled, the financial award is determined and paid by the Social Security Administration. However, there is a two-year waiting period to become eligible for Medicare disability health benefits.

Depending on the length of employment, at termination, some employers provide a severance package that includes full health coverage through retirement age or until Medicare benefits become active. If you are married and your spouse is employed, it is recommended that an application for “family” coverage be made through the spouse’s existing plan well in advance of the waiting period. If this is not possible because your spouse is not presently employed, perhaps he or she should seek some type of employment well in advance and ideally with a large corporation in order to become insured and add you to the plan as a dependent.

If your present employer has at least 25 employees that are insured, you are eligible for a COBRA conversion policy upon termination. This will entitle you to 18 months of coverage. If your physician declares you disabled and unemployable, you are entitled to an additional 11 months, which may take you through the Medicare-required waiting period. It is important to note, however, that this additional benefit must be applied for within one year. However, the full premium payment, plus a small 1 to 3 percent administrative charge is required to be paid to your employer in advance. As an employee with an employer-subsidized premium payment, the full monthly cost of the premium may come as an unexpected and unpleasant surprise. It is often found unaffordable and creates financial hardship. If you have children under the age of twenty-six and your spouse is employed and insured, you may want to shift coverage for your children to his or her group plan before you become COBRA-eligible in order to reduce the premium cost.

Considering a Prescription Plan

Often, an underinsured individual with only a limited basic plan and no major medical benefit has no access to coverage for augmentation therapy unless a prescription plan is available. A limited amount of paid prescription plans may include the drug for augmentation therapy on the formulary. By industry and pharmacy standards, the definition of a prescription item is a medication that can be self-administered by the patient upon written prescription without professional assistance. Some plans clearly define coverage as orally administered medications such as capsules, tablets, suspensions, and inhaled products, and may additionally include topical ointments, transdermals, nasal sprays, and ophthalmic medication in their definition of self-administered. With the exception of bee-sting kits and insulin, most plans do not include items that are injected. However, if there is no access to a major medical benefit, the prescription benefit may be the only access to coverage for the drug of augmentation therapy, if only temporarily.

With employers annually shopping for group plans at lower costs, benefits are often eliminated or reduced. One year, a plan may include a comprehensive vision and dental plan and a small co-payment of $10-$25 per visit, while the following year, the plan may be continued but with a larger co-payment on services that are not preventative. The employer may also change health plans and purchase one that has a high annual deductible or a very limited formulary. Under the ACA, small businesses and individual plans must have prescription drug coverage, but what drugs must be covered vary from state to state. While it is acknowledged that basic hospital and major medical are the most vital benefits of any plan, the majority of individuals (and employers) view vision and dental care as an added health plan “extra” that may be helpful when needed but not all that important as a benefit to the average person. If some of the benefits are dropped or sacrificed, it is usually the vision care or dental care benefit.

Managing Oxygen Therapy Coverage

Many insurers are more concerned about oxygen use than the cost of expensive chronic therapies. If your physician has ordered oxygen for occasional or “as needed” use and you have a tank in your bedroom, you are not considered oxygen dependent. However, if you use it continuously for 24 hours or most of the day and cannot walk or travel without supplemental oxygen, you are then considered oxygen-dependent. It is important to understand that your physician may prescribe a specific oxygen delivery system. However, at the time of this writing, oxygen suppliers are being paid a fixed amount regardless of the equipment supplied and therefore try to provide the least expensive alternative, even if this is not what the physician has ordered.

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