Understanding Your Health Care Policy

Every year, thousands of Americans pay for medical procedures and medications out of pocket that could have been covered by health insurance. Countless others pay more for operations because they failed to get the procedures pre-certified by calling their insurance companies ahead of time.

Incidents like these wouldn't have happened if the people involved had read the booklets they received from their health plans, laying out the specific terms of their coverage.

"Many people don't look at their health plan agreement until they need it, and then sometimes they're surprised," says Shelley Rouillard, program director and cofounder of the Health Rights Hotline, an independent service that advises Sacramento, Calif.-area residents of their health care rights.

Knowing the details of your health plan is especially important if you have consumer-directed health coverage, such as a medical savings account. These plans place more of the responsibility for health care decisions on your shoulders.

Because health plans are continually being restructured, "probably now, more than ever, it's important to review your coverage and understand how to get the most out of your benefits," says Rouillard.

Reading tips

When your health plan agreement arrives at the start of the contract year, plan to read through it right away, Rouillard suggests. The text may be dry and difficult at times, but your familiarity with the information is likely to be handy some day.

"Familiar" is a key word here—don't feel you have to memorize anything. But after just one read through, you'll at least know the most important terms of the agreement and be able to look up other information when the need arises.

Rouillard offers this additional advice:

Underline important points as you go, and take notes, so you can find the information easily.

Highlight any terms you don't understand and ask a knowledgeable person to clarify them. Many terms probably are defined in a special section of the plan booklet.

Some words play a key role in explaining your financial responsibility, so it's important to become familiar with them.

For example:

• A copayment is an amount a patient must pay—often a flat fee—each time services are received.

• Coinsurance is the amount you must pay for services after the health plan has paid its portion, typically 10 or 20 percent of the allowable charge.

• A deductible is how much you must pay each year before the plan will start paying for the services you receive.

• The out-of-pocket maximum is the most you'll have to pay for covered services in any given year.

Read the plan summary first, if your agreement has one. This time-saving section covers in brief many of the major points you'll want to know.

Read further into the booklet for more specifics about coverage. Look closely at benefits you may need in the coming year. If you're planning a family, for example, you'll want to know about any benefit limitations related to prenatal care and childbirth. If a covered member of your family may need treatment for chronic illness, mental health, or substance abuse, look at related benefits.

Be sure to check the "exclusions" section, which describes health care services the plan won't cover. These may include infertility treatments or cosmetic surgery, for instance. Also be aware of any preexisting condition limitations; there may be a waiting period before you can receive coverage for conditions you were treated for before joining your current health plan. Look for services that you might need or want, but that might not be mentioned at all in the plan, such as mental health services, acupuncture or eye glasses.

Preauthorization

Take note of situations where preauthorization is required—meaning that you or your doctor will need to call your health plan before having a procedure or an operation. When in doubt, call your insurance company before seeking treatment.

Read through the information on prescription drugs. Most health plans have "formularies," lists of drugs your health plan will pay for. You may have to pay more out of pocket for a drug that's not on the formulary.

Be sure to read the sections on choosing providers, referral to specialists, the rules and costs related to using health care providers who aren't part of your health plan, and steps you need to follow for getting second opinions or emergency treatment.

Also take a look at the section on grievances and appeals. "One of the rights people have that they often don't know about is that they don't always have to take 'no' for an answer," says Rouillard. "You have a right to appeal any health plan decision and make a case for why the particular care you need is necessary for you."

Last but not least, after you read the booklet, file it where you can find it easily when you need it.

Need help?

If you don't understand something in your health plan agreement, ask someone in your human resources or benefits department if your employer has one. If your employer can't help, then call the health plan.

"If you have a question or concern, you should call the health plan," Rouillard adds. "Every health plan has a customer service department set up specifically to resolve problems."