Guide to Purchasing Health Insurance

"Health Plan Options" was created by the Minnesota Department of Health, Minnesota Health Information Clearinghouse. The information available through "Health Plan Options" will provide you with a brief description of the various health care options available in Minnesota.

This guide was prepared to assist you in comparing and purchasing health insurance. If you come across unfamiliar terms, please refer to the “Glossary – Commonly Used Health Care Terms.”

What are your choices?

There are many different types of health insurance. Each has pros and cons. The plan that is right for a single person may not be best for a family with small children. A plan that works for one family may not be right for another.

Choosing a health insurance plan is like making any other major purchase. You choose the plan that meets both your needs and your budget.

Cost is only one of the things to consider when buying insurance. You also need to consider what benefits are covered. It is important to carefully compare both cost and coverage before purchasing health insurance.

How do people get health coverage?

Health insurance is available through either group insurance or individual (non-group) insurance and can be purchased from a variety of companies including traditional fee-for-service insurers and health maintenance organizations (HMOs).

Group health insurance is available through employers, associations, or purchasing pools. Individual (non-group) insurance is purchased by an individual and can cover families.

Insurance reforms have made it easier for individuals to get and keep insurance coverage. For example:

  • Self-employed people may be able to deduct up to 100 percent of their self-employed health insurance premiums on their federal income tax returns.
  • Health plan companies may not refuse to renew an individual (non-group) policy as long as you pay your premiums. This is known as guaranteed renewal.
  • In general, as of September 23, 2010 health plans must cover children with preexisting conditions who are under 19 years old. This coverage will not apply to everyone until 2014. This is part of the new federal health reform law and applies as plans renew or are issued. This law does not apply to grandfathered individual market plans (individuals covered in non-group plans in effect March 23, 2010). See www.healthcare.gov for more information. Please note: Some health plans no longer offer "child only" policies for children under 19 years old. They do cover these children under "family" policies which cover the child (children) under 19 and at least one adult.
  • Other than for children under 19 years old (see above), limitations for preexisting conditions may be in place for no more than 12 months except that groups may exclude coverage for late entrants for up to 18 months. A late entrant is someone who declined coverage at an initial, open or special enrollment period and who then asked to be covered. Consumers may change health plan companies and receive credit for any preexisting condition limitation they have already met as long as they maintain continuous coverage. A new insurance company may not impose another limitation if they have already satisfied the 12-month preexisting condition limitation. This helps people who wish to switch jobs and keep adequate coverage.
  • Women cannot be charged more for health coverage than men of the same age.
  • Dependents can stay on their parent's health plan until they turn 26 years old under the new federal health reform law, unless it is a grandfathered plan. If it is a grandfathered plan, until 2014 the employer plan does not have to extend coverage if the adult child is offered health coverage through his or her employer. Grandfathered plans are plans that were in effect on March 23, 2010 and they do not have to meet some of the requirements of the new health reform law. In most cases the new law applies as plans are issued or renewed. See www.healthcare.gov. Under Minnesota law dependent children of any age who are disabled can be covered by their parent's policy. Minnesota law does not apply to most self-insured plans.
  • Recommended preventive care must be provided by certain health plans without charge to the enrollee when the enrollee sees an in-network provider. See www.healthcare.gov. This includes some screenings, vaccinations, and counseling. Required by the health reform law, in most cases the new law applies as plans are issued or renewed. Ask your insurer or health plan administrator whether these benefits apply to your plan and when they begin.
  • Insurance companies cannot deny payment and cancel the enrollee's coverage due to unintentional errors or mistakes on the enrollee's application. This applies to all plans and is effective for health plan years beginning on or after September 23, 2010.
  • Read about the Patient Protection and Affordable Care Act and other provisions of this new federal health reform law at www.healthcare.gov. The web site lists health plans offered in Minnesota and includes some comparative information about each health plan. In 2014 people will be able to purchase health insurance through a Health Insurance Exchange. Certain people will receive assistance to pay some of their premium. At www.healthcare.gov/law/about/order/byyear.html see a summary and effective date of the new protections. The laws are grouped under the following categories: new consumer protections, improving quality and lowering costs, increasing access to affordable care, and holding insurance companies responsible. The listing includes the date each law is effective.
  • Premiums for individual, conversion, most Medicare-related (not Medicare Advantage plans) and small group health plans must be approved by the Minnesota Department of Health or Minnesota Department of Commerce.

Which type of insurance is right for you?

Individual (non-group) insurance may be purchased from a variety of companies. The difference between traditional fee-for-service plans and HMOs is not as clear as it once was. Most fee-for-service plans have adopted managed care practices to control costs (such as utilization review, which is a determination of appropriateness and effectiveness of medical treatment received or to be received by a patient) and to provide preventive health services. HMOs are offering consumers more freedom to choose doctors, similar to fee-for-service plans. By studying your health insurance options carefully, you will be able to pick the one that provides you with the coverage you need, no matter what it is called.

HMOs

In Minnesota health maintenance organizations (HMOs) are licensed managed care organizations. Managed care organizations are designed to provide quality health care while controlling the cost of that care.

Preventive health services are provided in order to prevent illness and to detect and treat illness early. Primary care physicians may coordinate and supervise care and arrange services of specialty physicians. HMOs are required by law to provide certain benefits to every person who joins. At a minimum, benefits must include all of the following:

  • preventive health services (e.g., immunizations, prenatal);
  • visits to the office or clinic of health care professionals for medically necessary care;
  • emergency health care services;
  • hospital care;
  • physician visits during hospital stays; and
  • prescription drugs.

HMO benefits may differ by policy or from plan to plan. Your benefits will be explained in your certificate of coverage. To receive information about benefits before you join, ask the HMO. The plan will provide material that will summarize the health care services it offers. It may also have a sample certificate of coverage.

HMOs may charge reasonable copayments for some services. Copayments may be a percentage of the charge for the service or a set dollar amount. For example, for every prescription you get you may have to pay a fixed amount, for example, $15. If the prescription actually costs less than your copay, you pay the lesser amount. Your certificate of coverage will list services and copayments.

HMOs may offer plans with deductibles of up to $3,000 per person per year and $6,000 per family per year. However, this deductible must not apply to preventive health services. An example of a preventive health service would be an annual physical exam. Out-of-pocket expenses may not exceed $3,000 per person per year or $6,000 per family per year for the larger plans or $4,500 per person per year or $7,500 per family per year for the smaller plans..

Where can I get more information about HMOs?

The Minnesota Department of Health regulates HMOs. You can reach them by calling (651) 201-5100 or 1-800-657-3916, 8 a.m. to 4:30 p.m., Monday through Friday.

Fee-for-Service Plans

With traditional fee-for-service health insurance, you go to the physician or other medical provider of your choice, the medical provider bills you, and you then submit a claim to your insurance company for reimbursement. In addition to your insurance premium, you will pay an annual deductible. The deductible is the amount of money you pay each year for medical services before the health plan starts paying part of your bills. You continue to pay a percentage of each bill until you reach the plan’s out-of-pocket maximum. Then the plan will pay 100 percent of the covered expenses for the rest of that year.

Traditional fee-for-service insurance plans may include some elements of managed care, such as utilization review, which is a way health plan companies evaluate the necessity of a service or admission. Traditional fee-for-service insurance plans may also be offered with a Preferred Provider Organization (PPO) option. If your insurance plan uses a PPO, you must use the doctors who are part of the PPO.

Where can I get information on who sells traditional fee-for-service insurance plans?

The Minnesota Department of Commerce regulates insurance companies and insurance agents. The department can tell you who is licensed to sell insurance in the state of Minnesota. The Minnesota Department of Commerce can be reached at (651) 296-4026 or 1-800-657-3602, 10 a.m. to 3 p.m., Monday through Friday.

The Minnesota Insurance Help Line offers general information on insurance, insurance companies, and suggestions on how to go about finding insurance coverage. Contact them through the Insurance Federation of Minnesota web site. Click on the Insurance HelpLine link on the left side of the page. Leave your question in the e-mail box that appears.

The Minnesota Senior LinkAge Line® offers information to individuals 65 years of age or older who want to know the different types of insurance available to them. You can reach them at 1-800-333-2433, 8:00 a.m. to 4:30 p.m., Monday through Friday. Ask for the "Health Care Choices for Minnesotans on Medicare" publication. It is published each fall by the Minnesota Board on Aging and is on the Board's web site.

Sample Questions

Before making a decision about what to choose, you may want to ask the health plan the following questions:
  • Can I stay with my current provider or clinic?
  • Does the health plan utilize a network of providers? Is my provider part of that network?
  • Will I have free choice of all type of providers?
  • Will I be required to get a referral to see specialists?
  • What happens if I live part of the year in a different state?
  • Will this plan cover expenses when I am traveling?
  • If my children attend school outside Minnesota, what coverage will they have while at school?
  • What will my total cost be each year?
  • Are there deductibles? What is the maximum out-of-pocket costs? Are there copays? Is there coinsurance?
  • What services does the policy cover? Does it cover prescription drugs? Does it cover outpatient care or home care? Are there limits on the number of days the company will pay for certain services?

 

Health Savings Accounts

Health savings accounts are available to individuals and also to employees of some companies. The individual must purchase a high deductible health plan and also put money into a health savings account. The health savings account money is to be used to pay for qualified medical services. You do not pay tax on the money you put into the health savings account. Any money that is not used during the year rolls over to the next year. If you use all the money set aside in the health savings account, you pay your health bills until you reach the deductible. Then the health plan starts paying eligible expenses.

Looking for insurance in specific situations

Change or Loss of Job

Federal and state law give you the right to continue your health coverage for a limited time after you and your dependents become ineligible for your employer’s health plan.

COBRA, or the Consolidated Omnibus Budget Reconciliation Act, was passed in 1986 and contains provisions which allow employees to continue health coverage for themselves and their dependents after they leave their jobs. COBRA and state law require that if your employer provides you and your dependents with group health coverage, your employer must also allow you and your dependents to continue that coverage at your own expense, should you or your dependents lose your coverage. In most cases, both you and your dependents may elect COBRA or state continuation coverage for up to 18 months, but the time frame varies depending on how you became eligible for continuation coverage. You will most likely have to pay the entire cost of coverage yourself. For additional information about COBRA, refer to the guide "How to Continue Your Health Care Coverage." Print copies are available from the Clearinghouse at (651) 201-5178 or 1-800-657-3793.

Temporary or Short-term Coverage

You may be able to get short-term health coverage. This temporary coverage can last for up to six months. Preexisting health conditions are not covered. This may be an option to consider if you are between jobs, just graduating from college, or waiting for your group coverage to start. Be sure you understand what is covered and what is not covered.

Preexisting Condition

The Minnesota Comprehensive Health Association (MCHA) sells health insurance to Minnesota residents who have preexisting conditions and have been turned down for health insurance by a Minnesota carrier. It is Minnesota's high-risk pool. MCHA is a nonprofit Minnesota corporation authorized to sell this health insurance. Contact MCHA at 1-866-894-8053.

The Preexisting Condition Insurance Plan (PCIP) is a temporary federal health plan for people with preexisting conditions who have been without health coverage for the previous six months and are unable to get health insurance. This plan is part of the new federal health reform law. There are premiums. See www.pcip.gov to read about the plan and apply for it, or call 1-866-717-5826 or TTY 1-866-561-1604. This health plan ends in 2014 when people with preexisting conditions will be able to get coverage through other health plans. Minnesota chose to have the federal government implement the Minnesota temporary high risk pool.

Medicare and Additional Coverage

Medicare is a federal health insurance program for people 65 or older and certain disabled people under 65. Many seniors, however, find that Medicare does not always cover all their medical costs. They may choose to purchase additional coverage to help pay those costs. Medicare supplement insurance, commonly called “Medigap” or “Medsup insurance,” is one type of health coverage to help cover the costs that Medicare does not cover. "Health Care Choices for Minnesotans on Medicare" lists all the plans that provide additional coverage to Medicare, including Medicare Advantage plans (sometimes called Medicare Part C), and lists what each plan covers. The publication provides inforamtion on Medicare prescription coverage (Medicare Part D) and lists the Medicare Stand Alone Prescription Drug Plans. Published annually it is on the Minnesota Board on Aging's web site www.mnaging.org or available in print from the Minnesota Senior LinkAge Line® 1-800-333-2433. For additional information contact the Minnesota Health Information Clearinghouse at (651) 201-5178 or 1-800-657-3793.

Tips for shopping for health coverage

  • Check to be sure the health plan company is licensed or authorized to do business in Minnesota. Call the Minnesota Department of Commerce at (651) 296-2488 or 1-800-657-3602 or for HMOs call the Minnesota Department of Health at (651) 201-5100 or 1-800-657-3916.
  • Shop carefully. Coverage and costs vary from company to company and policy to policy. Contact several companies and ask for policy information so you can compare.
  • Read and understand the policy. Make sure it provides the kind of coverage that’s right for you. Do not buy anything until you have had all your questions answered.
  • Check to see when your coverage will begin (some policies have a waiting period before coverage begins) and whether any of your preexisting conditions will be covered.
  • Make sure there is a “free look” clause. Most companies give you at least 10 days to look over your policy after you receive it. If you decide it is not for you, you can return it and have your premium refunded.
  • Beware of single disease insurance policies. There are some policies that offer protection for only one disease, such as cancer. If you already have health insurance, your regular plan may provide all the coverage you need. Check to see what protection you already have before buying any more insurance.

Checklist: What Is Most Important to You?

The following checklist is provided to assist you in comparing plans. First check the services most important to you. Then compare the coverage for these services in the plans you are considering.

Service

Policy #1

Policy #2

Policy #3

Policy #4

Hospital care

 

 

 

 

Surgery (inpatient and outpatient)

 

 

 

 

Office visits to your doctor

 

 

 

 

Maternity care

 

 

 

 

Well-baby care

 

 

 

 

Immunizations

 

 

 

 

Medical tests, X-rays

 

 

 

 

Mental health care

 

 

 

 

Dental care, braces and cleaning

 

 

 

 

Vision care, eyeglasses and exams

 

 

 

 

Prescription drugs

 

 

 

 

Home health care

 

 

 

 

Nursing home care

 

 

 

 

Services you need that are excluded

 

 

 

 

Other issues that are important to you:

 

 

 

 

Choice of doctors

 

 

 

 

Convenient location of doctors and hospitals

 

 

 

 

Ease of getting an appointment

 

 

 

 

Minimal paperwork

 

 

 

 

Waiting period before coverage begins

 

 

 

 

Co-pays and deductibles

 

 

 

 

Premiums

 

 

 

 

Which policy is best for you?

 

 

 

 

WEB SITES

Health plans for individuals and families:
www.healthcare.gov (lists health plans with some comparative information)
www.health.state.mn.us/clearinghouse/licenlist.pdf (lists health carriers with links to their health plans)
http://mn.gov/health-reform

Minnesota public program health coverage:
Minnesota Health Care Programs: Medical Assistance (MA), MinnesotaCare,
Healthy Minnesota Contribution Program
https://edocs.dhs.state.mn.us/lfserver/Public/DHS-3182-ENG
www.dhs.state.mn.us/healthcare (Click on Minnesota Health Care Programs) or
www.dhs.state.mn.us (Click on A-Z Topics and scroll to Minnesota Health Care Programs)

Health plans for people with preexisting conditions:
www.mchamn.com
www.pcip.gov

Medicare-related health plans:
www.mnaging.org/hcc.htm
www.insurance.mn.gov
www.medicare.gov

 

 

For more information contact the Minnesota Health Information Clearinghouse:

By telephone:
(651) 201-5178 or 1-800-657-3793
TTY: (651) 201-5797

By mail:
Minnesota Department of Health
Minnesota Health Information Clearinghouse
Compliance Monitoring Division
85 East Seventh Place, P.O. Box 64882
St. Paul, Minnesota 55164-0882

By e-mail:
health.clearinghouse@state.mn.us

By fax:
(651) 201-5186

 

Health Plan Options was created by the Minnesota Department of Health in collaboration with the Departments of Commerce and Human Services. The Minnesota Department of Health thanks everyone who reviewed and provided information for Health Plan Options.

Produced by the Minnesota Health Information Clearinghouse, Revised edition June 2012. If you require this document in another format, such as large print, Braille, or cassette tape, call (651) 201-5178 or 1-800-657-3793.

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Updated Thursday, 26-Jul-2012 12:08:17 CDT