Health insurance coverage helps with the medical costs that come with the diagnosis and treatment of a child’s illness. It’s important to have and keep good medical coverage. This can help families avoid major money problems. Many parents are insured through employee group plans or individual plans.
A group plan is a policy that covers a group of people, usually employees of the same company, and often their dependents. In general, employees and their families do not have to prove that they are healthy to be insured with their job’s plan. Group plans usually cost less, and some employers pay part of the premium costs for the employees.
Individual plans may check into your and your family’s health and require physical exams or lab tests before they will insure you. They often charge higher rates or premiums based on age or health conditions, and in some cases, may not be willing to insure you at all. Some individual policies may also cover family members, though some may not cover children.
It is important to have accurate, up-to-date information and a good understanding of your financial situation and insurance coverage. And, if your insurance cost is not deducted from your paycheck, it is very important to keep paying your monthly insurance premiums on time.
Types of health plans
There are different types of health insurance and health service plans. Here are very brief descriptions of those that are most often used:
Indemnity, fee-for-service, or traditional health plans
If you have this type of health insurance, you can choose any doctor, change doctors any time, and go to any hospital anywhere in the United States. You pay a monthly fee, called a premium. Each year, you also have to pay a certain amount of the medical costs (known as the deductible) for yourself and each family member before your insurance will start to pay. After you have met your child’s deductible, your insurance will pay a set percentage of the bill for the rest of the year. You are responsible for the rest, which is called a co-payment or co-insurance.
You might have to fill out forms and send them to your insurer to get reimbursed (paid back) for medical costs you have already paid. Sometimes the doctor’s office will do this for you, and then send you a bill for the amount your insurance didn’t cover. Keep receipts of your child’s drugs and other medical costs to keep track of these medical expenses. This can help you greatly if there is a dispute about payments or other problems in the future.
After your stated deductible is met, the insurance company will pay a percentage (75% to 80% is common) of the costs or claims submitted to them. Some policies have a limit or cap on the total costs that the beneficiary (a person who gets benefits) must pay in a calendar year. This means that, after you pay a certain amount (the cap), the company pays 100% of “usual and customary” charges. Since the insurance company decides what is usual and customary, there are often still uncovered costs that families must pay beyond the co-pay and their out-of-pocket limit for the year. Always ask if the insurance company will waive (or not make you pay) the amount above the usual and customary charges.
Managed care plans
There are different types of managed health care plans. Most of them have lower premiums and co-payments (co-pays) than fee- for-service insurance. (Co-payments may also be called co-insurance. This is the amount you must pay at the time of service.) These amounts can differ among managed care companies and among services within the same company. There is usually no need to file claim forms. Here are the most common types of managed care plans:
- Health maintenance organizations (HMOs): The HMO will usually cover most expenses after a co-pay. HMOs often limit your choice of providers to those in their approved provider network. This means you have to check their listing to be sure the doctor you want your child to see is one of their doctors. If not, you may have to change to a different type of health plan to have the doctor’s services covered. Or you may have to switch to one of the approved doctors on their list.
- Preferred provider organizations: The preferred provider organization (PPO) is a hybrid of fee-for-service and an HMO. Like an HMO, there are only a certain number of doctors and hospitals your child can use to get the most coverage. When your child uses those doctors (sometimes called preferred or network providers), most of the medical bills are covered. When you don’t use these providers, the PPO makes you pay more of the bill out of your own pocket. So you pay more to choose providers that are not in the network.
- Point of service plans: A point-of-service plan (POS) is a type of HMO. The primary care doctors in a POS plan usually refer you to other doctors in the plan or network. If your child’s doctor refers you to a doctor who is not in the plan (out of network), the plan will still pay all or most of the bill. But if you choose to take your child to a doctor outside the network, you will have to pay co-insurance, even if the service is covered by the plan. Co-insurance is what you must pay in addition to what the insurance company pays for each service. It is usually a certain percentage of the cost. For example, the insurance company may pay 80% of the bill and you have to pay the other 20%.
Know your managed care plan
Some plans employ their own doctors and run their own hospitals. Others require plan members to use a primary care provider who coordinates all of the patient’s care and serves as a “gatekeeper” for care from specialists. The gatekeeper is usually a primary care doctor who is responsible for the overall medical care of the patient. This doctor organizes and approves medical treatments, tests, specialty referrals and hospitalizations. For example, if a child needs to see an expert like a lung specialist, you would need a referral from the primary care doctor before the specialist sees the child. If this is not done the plan may not pay.
Under some plans, members must use only the services of certain providers and institutions that have contracts with the plan. Some plans do not require prior approval (also called pre-authorization), but do require that members choose providers from a particular list or “network” of providers. When parents choose to go outside the network for their child’s care, they may have to pay an extra fee, or even pay for the full service with no help from their health insurance plan.
Many different types of institutions and agencies sponsor managed care plans, not just insurance companies. These include employers, hospitals, labor unions, consumer groups, the government, and others. It’s important to know all the ins and outs of the plan and how it will affect your child’s care.
Other things to know about health insurance
Catastrophic illness or major medical clauses
Treating and managing most cancers costs a lot of money. Some insurance plans provide for extra coverage under a “catastrophic illness” clause. These are policies that cover major medical care needs. The policies usually have very high deductibles and fairly low premiums. They can be good for people with chronic illnesses. Check to see if your plan includes such coverage.
Pre-existing condition exclusions
A pre-existing condition is a health problem that a person had BEFORE joining the health plan. A pre-existing condition exclusion period means the plan will make you wait before they pay any costs of the pre-existing medical problem.
The Affordable Care Act (ACA) passed in 2010 affects pre-existing condition exclusion periods, among many other aspects of health insurance. The ACA does not allow insurance companies to deny coverage for pre-existing conditions (such as diabetes or cancer) in children younger than 19 as of September 2010. See the section called “The Affordable Care Act of 2010” for more on this.
National law prohibits discrimination based on genetic testing or test results
The Genetic Information Nondiscrimination Act (GINA) does not allow health insurers to turn down individuals or charge higher premiums for health insurance based on genetic information or the use of genetic services, such as genetic counseling. GINA defines genetic information as any of these:
- A person’s own genetic tests
- The genetic tests of family members
- One or more family members with a genetic disease or disorder
GINA bars group health plans, individual plans, and Medicare supplemental plans from using genetic information to limit enrollment or to change premiums. It also forbids these insurers to request or require genetic tests. GINA applies to all health insurance plans (including federally regulated plans, state-regulated plans, and private individual plans).
The law also forbids discrimination by employers based on genetic test results or genetic information. GINA states that employers must not discriminate on the basis of genetic information (no matter how they got the information) in hiring, firing, layoffs, pay, or other personnel actions such as promotions, classifications, or assignments.
Look carefully at your health insurance options at work
Look closely and compare plans if you are trying to decide among several insurance or managed care options. Sometimes there is a chance to look at and consider different types of coverage during open enrollment periods. (Open enrollment is the time period you can make changes in your coverage. It usually happens once a year.) Sometimes it is possible to add yourself, your spouse, or a child to a work health insurance policy outside the open enrollment period if you’ve had a major change in situation; for instance, if you’ve gotten married or your spouse has been laid off. Check with your health insurance administrator at work about this.
Hospital indemnity policies
Hospital indemnity policies, sometimes called supplemental medical policies, pay a fixed amount for each day a person is hospitalized. Not all indemnity policies cover children, and some that do pay a lower rate for days that children are in the hospital than they do for adults. There may also be a limit on the total number of hospital inpatient days a policy will pay in a calendar year or a cap on the total number of days it will pay. The money received from such policies can be used as the insured wishes. It is often used for medical costs not paid by the insurance company, or the other expenses that families face when a member is ill.
Case managers and financial assistance planners
Hospitals, clinics, and doctors’ offices often have someone who can help you fill out claims for insurance coverage or reimbursement. A case manager or a financial assistance planner may be able to help guide you through what can be a complicated process.
What if my child is a young adult?
The Affordable Care Act of 2010 provides coverage for young adults up to the age of 26 under their parent’s health insurance (if the plan has dependent or family coverage). This means that adult children ages 18 through 25 can join or stay on a parent’s plan whether or not they are:
- Married
- Living with a parent
- In school
- Financially dependent on a parent (the young adult does not have to be listed as a dependent on the parent’s tax return)
The only exception is if the young adult can get their own job-based coverage, then they cannot be covered by the parent’s plan.
The cost of the insurance for young adults cannot be any higher than for dependent children under the age of 18.
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