Q: What is the difference between an HMO and Managed
A: Health Maintenance Organization ( HMO ) is a form of
Managed Care. Other forms of Managed Care include PPO's (
Preferred Provider Organizations ) and POS ( Point of
Service ) plans. Generally speaking, PPO's offer better
"in-network" than "
"out-of-network" coverage and do not usually
utilize a primary care physician referral process. A POS
plan is like a PPO in that it offers better "
in-network" than "out-of-network" coverage
but it differs from a PPO plan in that a gatekeeper or
primary care physician (PCP) is an integral part of the
Q: How does Managed Care differ from Traditional
A: Managed Care plans (HMO's, PPO's and POS) presuppose the
use of a network of hospitals, physicians and other
providers. These plans may or may not require referrals from
a primary care physician. Those that require the use of a
PCP are known as closed" or "gatekeepered"
plans while those that allow direct access to specialists
are known as "open access" plans.
On the other hand, Traditional Insurance plans do not
presuppose limited provider networks. They are in effect
plans with complete freedom of choice of doctors, hospitals
and other providers.
Q: Is medical expense coverage available for substance
abuse and mental illness?
A: Yes. Coverage varies from state to state. In Connecticut,
coverage for groups of 1 to 50 lives is mandated for mental
illness and substance abuse. On an inpatient basis mental
illness must be treated the same as any other illness for 60
days per member per calendar year. On an out patient basis
mental illness must be covered at a level of 50% of the
maximum allowable amount up to $2,000 per person per
calendar year. Expenses incurred in connection with
behavioral health problems which are biologically based are
not subject to the sixty day calendar year limitation.
Substance abuse must be covered subject to a member
co-payment of no more than $200 per admission for inpatient
services for at least 45 days per calendar year. Coverage
may be more liberal than state mandated levels.
Individual health insurance carriers are not constrained by
mandates and many limit coverage for mental illness and or
substance abuse to a specific lifetime maximum of $10,000 or
Q: What types of expenditures are commonly excluded under
major medical plans?
A: Under traditional major medical plans the following are a
few of the typical exclusions:
48366. charges which would not be made in the absence
48367. charges for services that are considered
experimental or investigational
48368. charges which exceed reasonable and customary
48369. charges for services and supplies that are not
deemed medically necessary
48370. charges for custodial care
Q: What is the difference between coinsurance and
A: Coinsurance refers to cost share. For example, after
the calendar year deductible has been paid under a major
medical plan, the company and the insured share payment of
a specific dollar amount of expenses, say $5,000. If the
coinsurance is 80/20%, the company agrees to pay 80% and
the insured agrees to pay 20%. In the case of the
aforementioned $5,000 the insurance company would pay
$4,000 (80% of $5,000 ) and the insured could pay $1,000 (
20% of $5,000 ).
Co-payment, on the other hand, refers to the small up
front charge paid by the insured before benefits are
accessed. For example, there may be a $5 co-pay for
prescriptions or a $10 co-pay for office visits. Generally
speaking, after the co-pay has been satisfied, the balance
of the expense is picked up by the insurance or other
health care carrier.
Q: What is COBRA and how does it work?
A: COBRA which stands for Consolidated Omnibus Budget
Reconciliation Act is federally mandated. Applicable to all
groups of 20 or more employees, COBRA affords employees
and/or their dependents the opportunity to continue
insurance for periods of time ranging from 18 to 36 months.
Certain Qualifying Events trigger COBRA Continuation and
they include termination of employment, retirement, death of
a spouse, divorce or the reaching of the maximum age of
eligibility. For example, under most plans, children cease
to be eligible for coverage when they cease to be full time
students. When no longer eligible under their parent's
health plan such former students are eligible for COBRA
Continuation. Reduction in the number of hours an employee
works also triggers eligibility for COBRA Continuation. One
final point should be made. Connecticut's continuation
policy applicable to groups with less than 20 employees has
recently been changed to mirror federal COBRA. Therefore, in
Connecticut COBRA now applies to all groups regardless of
size (i.e for groups of 2 or more employees).
Q: Can an individual buy health insurance?
A: Yes. However, all applications are subject to evidence of
insurability. Most of the time when one is accepted by the
insurance carrier, no exclusions for pre-existing conditions
apply. However, carriers may issue riders excluding certain
conditions or may "rate-up" standard premiums in
order to cover increased risk. Individual carriers must
provide a way for those denied coverage a way to obtain
coverage. The carriers must EITHER offer a plan or plans
which is (are) guaranteed issue OR they must contribute to a
state run pool such as Connecticut’s Health Reinsurance
Association. Most carriers have opted for the latter. State
run pools while guaranteeing access to insurance coverage
issue policies at considerably higher cost than similar
plans offered by the insurance carriers to healthy
individuals and their families.
Q: Are there medical conditions that would cause
A: Though it is difficult to address this question with
uniformity, suffice it to say that in essence the group
market is guaranteed issue. This means that even though an
applicant may or may not receive the plan he or she applies
for, there is ( are ) no condition (s ) which would render
them uninsurable. If the insurance carrier/ health care
carrier does not give the applicant the desired plan they
would be required to give them a state mandated small
employer plan. There are medical conditions that could keep
an applicant from getting the individual major medical or
health care plan he/she applied for. Heart disease,
diabetes, cancer, mental illness and substance abuse are
examples of chronic conditions that could preclude
applicants from obtaining the individual major medical or
health care plans of their choice. As noted above, people
unable to purchase individual medical insurance in the
private marketplace can get insurance at comparatively high
cost through the Health Reinsurance Association in CT or
similar pool in other states.
Q: Are employers required to purchase group insurance
A: The one word answer to this question is NO. During the
health care reform debate of 1993 there was much discussion
about an "employer mandate". For a number of valid
reasons employers are not mandated to offer or provide
health insurance for their employees. It is common
knowledge, however, that most employers though not mandated
to do so offer insurance to their employees for a variety of
reasons related to competition and smart business practice.
Q: If marital or family status changes, how quickly do
A: Change in marital or family status constitutes a
"Qualifying Event". If an employee marries or is
divorced or if a child is born that employee can add or
terminate the spouse or child within 31 days of the event.
In fact, he/she must act within that time frame or face the
prospect of waiting until the next "Open
Enrollment", an annual occurrence, to make the change.
An arbitrary decision to switch from one spouse's plan to
the other in the absence of a "qualifying event"
cannot be accommodated until the next open enrollment.