- Children Diagnosed With Cancer: Financial and Insurance Issues
- Insurance is complicated
- Private health plan coverage for children
- How to manage your child’s health insurance
- Getting answers to insurance-related questions
- Keeping records of your child’s insurance and medical costs
- Handling a health insurance claim denial
- Keeping employer-sponsored health insurance coverage when you leave your job
- What if my child’s medical care is covered by more than one insurance company?
- Government-funded health plans
- Who regulates insurance plans?
- Options for uninsured children
- State coverage and health insurance options for the hard to insure
- What sources are available to help with treatment costs if my child doesn’t have insurance and there’s no public assistance available?
- Financial issues for families: Getting help with living expenses
- To learn more
Private health plan coverage for children
Private health insurance coverage is basically a contract between you and an insurance company, which promises to help pay the costs of medical care. That could include routine check-ups and screening tests to prevent or detect an illness, diagnosis and treatment of an illness or injury, and follow-up care. Good medical coverage can help your child stay healthy and help you avoid major money problems if your child gets sick or is in an accident.
Many parents are insured through employee group plans or individual plans. It’s important to have accurate, up-to-date information and a good understanding of your financial situation and insurance coverage for your children. And, if your insurance cost is not deducted from your paycheck, it’s very important to keep paying your monthly insurance premiums on time.
Group health plans
A group plan is a policy that covers a group of people, usually employees of the same company, and often their dependents (family members). In general, employees and their families don’t have to prove that they are healthy to be insured through their job’s plan. Employers must offer health coverage to full-time employees, even if an employee is sick or has a pre-existing condition, but they are not yet required to offer a plan that covers dependents. Some employers pay part of employee health care premiums, which are the monthly payments to maintain coverage.
Individual health plans
Individual plans are sold by insurance companies directly to the insured person, not through an employer. Many individual policies also cover family members or dependents. The company may check into your and your family’s health and they may require physical exams or lab tests before they’ll insure your family.
They often charge higher monthly premiums and require patients to pay more for their care than group plans, depending on the insured’s age and health status. Some individual policies may also cover family members (dependents), but some do not. In some cases, a health insurer may choose not to sell an individual plan to families in which someone has had a serious illness. This can be a big problem for families with children who have or have had cancer.
Individual plans also offer different levels of coverage. Some plans offer very good coverage, while others offer coverage that isn’t enough for someone with a serious illness. The good news is that the individual health plan picture is changing in 2014.
The health care marketplace – finding individual plans for 2014 gets easier
Starting in 2014, individual plans on the health care marketplace will have to follow a new set of rules that are designed to protect patients. Insurers will have to sell individual plans to anyone who applies for one, regardless of their health status. Family plans are generally available on the individual market to cover dependent children, regardless of the health status of any family member. And, the marketplace is required to offer “child-only” plans to insure children up to age 21 who can’t get coverage at their parent’s workplace.
Plans will not be able to charge higher monthly premiums to a child or family just because a family member is ill or has been ill. And they will have to offer a minimum set of benefits needed to treat diseases such as cancer. Sign-ups for this coverage began in October 2013, and coverage starts in January 2014. Open enrollment through the marketplace extends through the end of March 2014.
Types of private health plans
There are different types of health insurance and health service plans. Here are very brief descriptions of those that are most common:
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-insurance may also be less.
Co-payments or co-pays may also be called co-insurance. This is the amount you must pay at the time of service, usually a flat fee for office visits or other services.
Co-insurance may be a percentage of the bill you must pay even after you’ve paid the yearly deductible amount.
Premiums, co-pays, and co-insurance amounts can differ among managed care companies and even among services within the same company. There’s usually no need to file claim forms.
Some managed care plans employ their own doctors and run their own hospitals. Others require 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’s responsible for the overall medical care of the patient. This doctor organizes and approves medical treatments, tests, specialty referrals, and hospitalizations. For example, if your 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. Otherwise your 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 list or network of providers. When parents choose to go outside the network for their child’s care, they might 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 helps to know all the ins and outs of the plan and how it will affect your child’s care.
These are the most common types of managed care plans:
- Health maintenance organizations (HMOs): An HMO will usually cover most expenses after a small 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, the payment will not be covered. 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 isn’t in the plan (he’s 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 along with what the insurance company pays for each service. It’s 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%.
Balance billing: It’s important to know that, even if your child’s hospital is part of your plan’s network, some of the people who treat your child in that hospital may not be in network. If you go out of network, and the doctor charges more than your insurer typically pays, you might get a “balance bill” for an amount well above the co-pay percentage. Typically, insurers do not allow their network doctors to “balance bill” the patient, but charges from out-of-network doctors are harder to fight. You can formally appeal to the insurance company to pay more if you think they’ve underpaid. If not, you can ask the doctor in question if they will accept the amount that the insurance company considers usual and customary, or if they will discount your child’s bill. Check with your state’s insurance commission to find out the rules about balance billing in your situation (see the “To learn more” section for contact information).
Getting the most from your managed care plan: Sometimes you must go out of network for care. You may be able to reduce your costs if you discuss and negotiate costs up front with doctors, clinics, and hospitals when surgery, procedures, or other treatments are planned. You can start with the billing department to find out the usual costs of the treatment your child needs. You may then want to contact your insurer to find out what the company will pay and how much you’ll have to pay. You can use this information to find out if the medical facility or clinic will be willing to accept the amount paid by insurance as full payment. If not, ask if they’re willing to discount the portion you have to pay.
Fee-for-service plans are the least restrictive plans that offer the most choice in medical providers. They are also called indemnity 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 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 medical bills for the rest of the year.
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. These records can be a great help if there’s a dispute about payments or other problems in the future.
After your stated deductible is met, the insurance company pays a percentage (75% to 80% is common) of the covered costs submitted to them. The percentage they pay is based on what they consider to be “usual, reasonable, and customary” (UCR) charges. The insurance company decides what the UCR charge is. Again, if your child’s doctor charges more than the UCR, you may get a “balance bill” for an amount above the co-pay percentage. (Balanced billing is discussed above.)
Other things to know about finding health insurance for children
Fake health insurance and other deceptions
There have always been people who look to profit from the needs and hardships of others. Now they’re exploiting health care reform in many different ways. They may advertise on hand-lettered signs, post ads on websites, or go door to door. They may be completely fly-by-night or they may have a legitimate-sounding 800 number. But there are 3 basic approaches:
One is by offering a stripped-down insurance policy that doesn’t cover major illness. These policies are cheap because they make you pay for most of your own care. By the time you find out you have a serious illness it may be too late to get real coverage.
Another way is to offer a medical discount card that gives you minor discounts but leaves the big payments up to you. Sellers might call this “coverage” or “protection,” but it’s neither. Discount cards can be helpful, but they don’t take the place of health insurance.
The third offers completely fake health insurance. The seller takes your money and gives you a worthless piece of paper. They may promise lower rates if you buy now. The seller might say that they’re “required” to offer this great, low-cost coverage by the Affordable Care Act. Sometimes scammers say that it’s government-sponsored insurance or that they work for the government. Or they’ll use a well-known insurance company’s name, even though they don’t work for the company.
How to spot scammers
Watch out for aggressive sales people, very low premiums, easy sign up, and a push for you to sign up right away. They may try to evade your questions, and often don’t have the full policy details in writing. Some offer you coverage only if you join an association, union, or other group. You may not get an insurance card or policy for some time after you sign up, if ever. And when you file a claim, there’s no response or a very slow response; when you call they explain it’s a glitch or processing error – if they answer at all. Here are some tips to help you protect yourself.
- Don’t give them money, but especially don’t give them your credit card or bank account numbers unless you know exactly who they are and what you’re getting.
- Read the policy line by line or have someone read it for you.
- Check out any association you have to join – go online, be sure they have a street address, and find out if they have legitimate activity besides selling insurance.
- Call your state insurance department to be sure the plan is licensed in your state; also ask if the plan has had complaints made against it. (See the “To learn more” section to find your state insurance department.)
- Finally, check with your doctor and pharmacist to be sure they accept the plan.
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.
A few people buy only catastrophic illness insurance, sometimes called a hospital-only or short-term plan. The plan often won’t cover doctor visits, medicines, or routine care, but kicks in when your child is hospitalized and has very high expenses. Depending on the policy, expect to pay a few thousand dollars for the deductible alone and some percentage of co-insurance on the rest of the bill.
Health Savings Accounts
If you have enrolled or plan to enroll in an insurance plan with a high deductible, you may be able to set up a Health Savings Account (HSA). You don’t have to pay federal income taxes on the contributions you make to the HSA as long as the money is used to pay for qualified medical expenses. If you use it for anything else, you will be required to pay the tax and a penalty.
Note that an HSA is different from a Flexible Spending Account (FSA); for instance, you can have an FSA even if you don’t have a high-deductible health plan. FSA funds are set up to be used for both medical and child care expenses. But the FSA money you don’t use goes away at the end of each year, while the HSA money is yours until you take it out. For more information about setting up an HSA you can contact your employer, bank, or credit union.
Pre-existing condition exclusions
A pre-existing condition is a health problem that a person had before joining the health plan. The Affordable Care Act (ACA) passed in 2010 doesn’t allow insurance companies to deny coverage for pre-existing conditions (such as diabetes or cancer) in children younger than 19 for any plan that started after September 23, 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 people 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 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’re trying to decide among several insurance or managed care options. Sometimes there’s a chance to look at and consider different types of coverage during open enrollment periods. (During open enrollment you are able to make changes in your coverage. This usually happens once a year.) Sometimes it’s 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 married, divorced, adopted a child, 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 in the hospital. 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 ever pay. The money received from such policies can be used as the insured needs or wishes. It’s often used for medical costs not paid by the insurance company, or the other expenses that families face when one member is ill.
Case managers and financial assistance counselors
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 counselor 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 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:
- 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.
Last Medical Review: 10/07/2013
Last Revised: 10/07/2013