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Health Insurance 101

What is health insurance?

It’s a way to pay for health and medical care. You buy health insurance from an insurance company. It’s a contract between you and the insurer for how your medical costs are covered. Health insurance is also called having a “health plan.” You pay a monthly fee, or premium, to keep your health insurance plan.

Why have health insurance?

Like other types of insurance, it helps protect you from unexpected and high costs. These costs might be for a hospital stay, an illness or treatment for an injury. Here’s an example, the average U.S. cost for an emergency room visit is $1,233. The average cost for monthly rent in the U.S. is $871. That ER visit could wipe out your rent that month and leave you with debt. Having health insurance will reduce the cost of a needed ER visit.

What type of services does health insurance pay for?

Insurance pays “covered services.” Every type of health plan lists the things your insurance company will pay, or cover. Thus the term “covered” services. There are also non-covered services that insurers do not pay. For example, cosmetic surgery is mostly a non-covered service. Every health plan must show what it covers and how much it costs.

How does health insurance work?

The insurance company pays a portion of your contracted medical costs with the premium money from all the people they insure. In the same way, your premium helps pay medical costs for others when they need it. You lose your insurance if you do not pay your premium.

What other costs, besides premium, might I have with my health plan?

There are typically three other costs, in addition to the premium. They are called out-of-pocket costs. That means you pay them personally from your own pocket. If you have them with the health plan you choose, here’s what they mean:

There's deductible. It’s a set amount you need to pay each year toward health care costs before the insurance company pays. You pay this every year. Meet your deductible and your insurance begins to cover a portion of costs. Example: your deductible is $500, your insurance will only begin paying after you have paid $500 on medical costs. Some things may be paid for before you reach your deductible, like preventive screenings. There are many types of health plans. Some have higher or lower deductibles. It all depends on the plan you buy.

There's co-payment, or co-pay. A small fee that you pay at the time a health service is provided, like a doctor’s office visit. Co-pay is only charged after you meet a yearly deductible.

There's coinsurance, or cost-sharing. A fixed share of the cost you pay for a medical service when you get it. Coinsurance applies after you reach your deductible, if your health plan has a 20% coinsurance, you pay $20 of a $100 doctor bill. The insurer pays the remaining $80.

What is a Medical Loss Ratio (MLR)?

The Medical Loss Ratio (MLR) minimum standard requires that health-insurance companies spend a certain percentage of premium dollars on medical claims and activities that improve health-care quality. Rebates are due to members if an insurer fails to meet minimum loss ratios of 80 percent in the individual and small group markets. For each calendar year, Capital BlueCross and its affiliates will calculate and pay rebates, if required, to eligible policyholders prior to August 1 of the following calendar year.

Capital BlueCross and its affiliates met and exceeded the required Medical Loss Ratio for 2014, therefore Capital BlueCross will not be required to pay any rebates.

Legal Entity Group Size 2014 MLR
Capital BlueCross (CBC)

Individual

Small Group

Large Group

114.9%

91.0%

96.6%

Capital Advantage Insurance Company® (CAIC)

Individual

Small Group

Large Group

91.3%

90.9%

90.0%

Capital Advantage Assurance Company® (CAAC)

Individual

Small Group

Large Group

71.6%

88.3%

89.0%

Keystone Health Plan® Central (KHP)

Individual

Small Group

Large Group

104.0%

89.5%

87.7%

For more information on Medical Loss Ratio and your health insurer’s Medical Loss Ratio, visit the Federal Marketplace.

Health Coverage Know-How

What can help me make a decision about health insurance?

First, think about your medical or health care needs. Ask yourself these questions: How much health care do I need and how often — what about family?

Your needs are different if you’re healthy than someone who has a chronic illness or needs regular medications. Health plans are set up to meet different needs for different people.

On average, if you only need 2 or 3 doctor visits a year, a low premium plan might be your choice — you’ll pay less in premium but a bigger deductible. But if you go to the doctor a lot, see specialists or often need medicines, you should consider a higher premium plan — you’ll pay a higher premium but you’ll meet your deductible sooner, after which the health plan pays, based on your coinsurance rules.

Can I stay on my parent’s health insurance plan?

Yes. Most young adults can stay on a parent’s plan until age 26. Specifically, until the last day of the month you turn 26. Then you must have your own insurance.

But you don’t have to stay on your parents’ health plan that long. You can get your own. There are many health plans for individuals who want the security of having their own insurance, even before 26.

Is there risk in not having insurance?

It’s a fair question. If you have few medical needs, you may ask, “Why do I even need health insurance?” But with health reform (Obamacare), the law says having health insurance is not only good…it’s required. There are a few exceptions, like cases of low income, where an individual cannot afford it. And if you’re not able to afford the whole cost of insurance, there may be help in paying it through a government subsidy, called a premium tax credit.

Most people who have insurance through work (or a spouse’s work) won’t need to do anything different. Your employer is responsible for making sure the health plan offered meets the coverage level of the law. But, if you don’t have health insurance for you or your family, you must buy it by March 31, 2014. If you don’t have insurance by then, there may be IRS tax penalties.

 

Health insurance helps lower risk in 3 ways

1. People who go without health insurance won’t have the protections that health reform sets up. Most important is the limit reform sets on how much money you pay from your own pocket for health costs, or out-of-pocket maximum. Another way of saying this: it’s the maximum amount you have to pay for medical costs covered by your plan during the year. Out-of-pocket maximum is determined by income. The max an individual will have to pay each year is about $6,850; the max a family of 4 will pay during a year is about $13,700)

Note: Out-of-pocket cost has nothing to do with premium. The premium is the cost you pay monthly to have health insurance. When you have insurance of any kind (health, auto, life) you pay a premium. Out-of-pocket costs, however, are paid in addition to your premium. You reach your out-of-pocket max by paying deductible, coinsurance and co-pay charges.

2. Health insurance lowers your risk of paying huge sums for unplanned illness or accident. This WebMD health care infographic shows how costs are lowered when you have insurance.

3. If you’re buying insurance, there’s another protection. Your health plan must always cover a core set of benefits, or essential benefits. No matter what, your health plan must continue to cover these core benefits. It cannot put a dollar limit on coverage for these. No yearly dollar limit. No lifetime dollar limit.

Marketplace 101

What is the Health Insurance Marketplace, or Exchange?

The Marketplace is a public, web-based health insurance shopping place. It’s a network between government and private insurers to help find and compare health insurance plans. Think of it as one-stop shopping to compare costs, enroll in and buy a health plan.

The Marketplace paves the way for online health insurance shopping. You can (1) buy a health plan on the Federal Marketplace website, (2) buy direct from an insurance company, (3) get a quote and buy through an insurance broker. No matter where you buy it, your health plan must offer at least standard minimum coverage, called essential benefits. You can’t be refused due to age or pre-existing conditions.

You can only get a cost reduction (a tax credit subsidy) on your monthly premium rate if you buy a Federal Marketplace health plan. Be sure to look for Capital BlueCross health plans on the Marketplace. Cost reductions are only for those who qualify by income level.

So, savings, choice and convenience — that’s what the Marketplace is to offer.

Is it more complicated than that?

A bit. The Marketplace is either run by the state you live in or the federal government.

Pennsylvania is not running a Marketplace. In Pennsylvania the Marketplace is offered through the Federal Government. But private insurers, like Capital BlueCross, will have qualified health plans on the Marketplace. You can search Marketplace plans for our brand name.

What if I have Medicare coverage?

Medicare is not part of the Federal Health Insurance Marketplace. So if you already have Medicare coverage, you are considered covered under the new health care law. There is nothing you need to do. If you are covered by Original Medicare or a Medicare Advantage Plan, you still have the same benefits. No changes. With regard to the new health care law, the Centers for Medicare & Medicaid Services (CMS) prohibits the sale of a Marketplace health plan to a Medicare enrollee, or anyone eligible for Medicare enrollment. Note: The Marketplace does not offer Medicare supplement (Medigap) insurance or Part D drug plans.

Qualified Health Plans

What’s a Qualified Health Plan?

A Qualified Health Plan (QHP) is certified as offering the minimum essential health benefits required by the Federal Government. These plans are noted as “QHP” in their description.

QHPs as well as other health plans sold off of the Marketplace all provide the same minimum level of health benefits. So, both health plans sold ON and OFF Marketplace all offer the minimum core coverage.

Tip: Only Marketplace health plans allow you to get and use a premium tax credit subsidy to help pay the cost of your health plan. But off-Marketplace health plans may have richer levels of benefits than some Marketplace QHPs. It's important to compare both benefits and prices.

Health Plans must cover core benefits, or essential benefits — 10 broad areas of health coverage, like doctors’ visits, preventive care and others. Learn more about essential benefits in this video.
 

Tip: Coverage of essential benefits is based, in part, on the state where you live. So the level of benefits you get may be a bit different. An essential benefit does not mean it will be covered 100% — it may be, or it may only get partial coverage. For example, medicines. Although one of the essential benefits, you may not find all the medicine you take covered by all health plans.

Insurers use different drug or medicines lists to determine what gets covered, and what does not. This helps keep costs down. If you think about the millions of prescriptions that get filled every day, you can see how costs add up. That’s why insurers can’t cover every one of them.

Other benefits of both QHP and off-Marketplace/non-QHP plans:

  • A set limit on the money you pay out-of-pocket each year for plan costs
  • Options for individual and family coverage
  • No one turned down because of age, gender, disability, race, or pre-existing health issues

Capital BlueCross and its subsidiaries offer several Marketplace QHPs. So you’ll see our brand name on all the Marketplace plan we sell. But we offer others, too, that are not tied to the Marketplace. Remember: All our health plans — both QHP and our other plans that we sell directly — include the required minimum coverage. The difference? Only QHPs might lower the cost of your health insurance premium through a government subsidy. But if you don't qualify for a lower cost health plan, you'll find the same core coverage in health plans sold by insurers.

So you have a lot of choice. 

Marketplace and Metal Levels

Why are Marketplace health plans named by color?

Each health plan group is named for a color of metal, called “metal level” to help tell them apart. The colors also signify the level of coverage they give: Bronze, Silver, Gold and Platinum. Put another way: Metal levels show the amount of cost you pay under your health plan and the amount of cost the insurer pays. Your cost is in addition to your premium. Watch Marketplace Metal Levels video to learn more.

Tip: If you have health insurance through work, you probably won’t use the Marketplace. But you can, if you want to compare other health plans to yours to see if you find better or cheaper coverage through the Marketplace. Medicaid and CHIP members won’t use the Marketplace either.

When shopping on the Marketplace, pay attention to the metal levels.

Bronze Silver Gold Platinum Catastrophic
Actuarial value of 60%. This means it's designed to pay 60% of essential health benefits across all the people covered by this type of plan. Members as a whole pay 40%. Lowest monthly premium of all metal levels; least generous cost coverage.
Actuarial value of 70%. This means that it's designed to pay 70% of essential health benefits across all the people covered by this type of plan. Members as a whole pay 30%.
Actuarial value of 80%. This means that it's designed to pay 80% of essential health benefits across all the people covered by this type of plan. Members as a whole pay 20%.
Actuarial value of 90%. This means that it's designed to pay 90% of essential health benefits across all the people covered by this type of plan. Members as a whole pay 10%. Highest monthly premium of all metal levels; most generous cost coverage.
Requires you to pay all medical costs up to a specific limit before insurance company begins payment of your covered services. The specified limit is usually several thousand dollars. Low monthly premium.

How to understand Marketplace plans:

Tip 1: Compare metal levels.

Tip 2: Think about the premium price that will work best for your budget. Your premium will be lower if you choose to pay MORE when you go for doctor visits or medications. The premium will be higher if you choose to pay LESS at the time of a doctor visit or for medicine.

When you compare health plans you will see them in this order:

  1. Metal level – bronze, silver, gold, platinum
  2. Name of insurer – Capital Blue Cross and other brands
  3. Type of health plan – HMO, PPO, POS, HDHP (not every insurer will offer all four types of plans)

What types of health plans are part of metal levels?

The types of health plans are each a bit different. That means how you get care and how it’s paid differs from one type of plan to another. Let’s take a look:
HMO health plans limit the number of doctors, hospitals and medical providers from which you can get care. This is called a network. Network providers agree to a pre-set dollar amount that will be paid for services. This pre-set amount helps keep costs down — a network provider cannot charge more.
  • If you use a provider that is not in the network, you may have to pay the whole cost. HMO plans do not pay benefits for services provided by out-of-network providers.
  • You must choose a primary care doctor to guide all your health care decisions. That includes seeing other doctors, or referral.
  • There is a premium
  • Co-pays go toward out-of-pocket requirements
  • You may have a co-pay for services, like doctors’ visits
 
This type of health plan generally has more doctors, hospitals and medical providers in its network than an HMO plan. You can seek care in or out of the provider network.
  • You pay more for out of network care. But you don’t need to choose a primary care doctor or get referrals.
  • Some paperwork. You submit claims forms for out of network services
  • You pay a premium, plus yearly deductible, coinsurance and co-pay charges
  • Co-pay amounts get applied toward the deductible
  • You may have to pay a balance for out-of network provider charges once your health plan pays its share of costs
 
Catastrophic (CAT) plans are designed for people under 30. These plans also cover the core essential benefits of the law. There may be cases of low income where individuals, regardless of age, could get a CAT plan. A CAT plan is minimum “just in case” insurance to cover a major accident or serious illness.
  • Usually a lower premium than other types of health plans
  • High deductible and high out-of-pocket charges
  • Full coverage for first 3 primary care doctor office visits only


Can I work with someone in person?  

Marketplace Premium Tax Credit Subsidy

Do I qualify for lower costs?

Some people will qualify for a type of financial aid to help pay the cost of a Marketplace health plan premium. This is called a subsidy, or advanced premium tax credit (money from the government to help you pay your premium). People who qualify for a subsidy are called “eligible.” Your income is used to determine any tax credit subsidy.

Am I eligible for a premium tax credit?

It depends on your income, and the government has different guidelines for different levels of income. If you are eligible you must buy a Federal Marketplace qualified health plan to get the subsidy. To get your subsidy confirmed you must do it on the government's website.

What if I’m not eligible?

Your income determines eligibility.* Maybe your income is too high to get a subsidy, so you’ll need to pay the whole cost of the premium. There’s also a chance that your income is close to an income level that may give a small subsidy, but it might be just a few dollars. If that’s the case, you may want to look for a richer benefits plan sold privately.

Medicare recipients cannot qualify for subsidy, regardless of income, as they are already covered by a government insurance program and not eligible to buy a Federal Marketplace subsidized health plan.

Will I get a big or small premium tax credit?

A subsidy might pay all, most or only part of the premium cost for a health plan. The higher your income, the lower the amount of tax credit subsidy you might get. You can estimate your subsidy here to get an idea.

How do I get my tax credit?

The exact amount of subsidy is determined by the government. You will need to fill out an online application on the government's website and give information about your income, health habits and family status. Plan to spend 30 minutes to an hour, sometimes more, to complete the form to get the exact amount of tax credit eligibility. You must do this on the Federal Marketplace website

What if I already know my income is too high to get a tax credit?

If you don’t qualify, or the amount of premium tax credit you could get is small, you don’t have to enroll in a Federal Marketplace plan. You can buy direct from an insurer, like Capital BlueCross. This is referred to as ‘buying off exchange.’ 

Tip: Probably the biggest reason to buy a Marketplace QHP is to get a premium tax credit subsidy. So if you don’t qualify for one, don’t worry. You can still buy a Marketplace QHP if you want it – you just won't get the tax credit . Or... you can buy a health plan “off Marketplace” from Capital BlueCross. You’ll get the same core benefits as a Marketplace plan — in some cases you’ll find options giving even more coverage.

Are there other savings I could get?

If you are low income and buy a Silver category health plan through the Federal Marketplace, you might qualify for a discount on out-of-pocket costs you have to pay. This discount is called a cost-sharing reduction. Your income level must be between 100-250% of government poverty level to get this discount. Talk with us to get more details at 1.800.451.1181