• Q: What is a Preferred Provider Organization (PPO)?
  • A: A Preferred Provider Organization (PPO) provides a list of contracted "preferred" providers from which to choose. You receive the highest monetary benefit when you limit your health care services to those providers on the list.
  • If you go to a doctor or hospital that is not on the preferred provider list (referred to as going "out-of-network"), then the plan covers a smaller percentage of your health care expenses or may cover none of your health care expenses based on the contract wording of the plan.
  • Important Points to Remember About Preferred Provider Organizations:
    • You receive the highest monetary benefit when staying within the PPO network.
    • You may have the option to go outside the PPO network at a higher monetary cost to you.
    • Check to make sure that any referral doctors or specialists are part of the PPO network before scheduling services.
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  • Q: What is a Health Maintenance Organization (HMO)?
  • A: Membership in a Health Maintenance Organization (HMO) requires plan members to obtain health care services from doctors and hospitals affiliated with the HMO. It is common practice in HMOs for the plan member to choose a primary care physician who treats and directs health care decisions and who coordinates referrals to specialists within the HMO network. The doctors and hospital personnel may be employees of the HMO or contracted providers. Since HMOs operate in restricted geographic regions, this may limit coverage for plan members if medical treatment is obtained outside the HMO network or coverage area. California HMOs are required to cover medically necessary emergency services even when outside of their coverage area. The intent of managed care products is to create less costly delivery of health care services while maintaining quality health care. HMOs offer access to a comprehensive package of covered health care services in return for a prepaid monthly amount (premium). Most HMOs charge a per-visit co-payment depending upon the type of service provided.
  • Important Points to Remember About Health Maintenance Organizations:
    • You must obtain health care services from HMO providers, except in certain emergency situations.
    • Your choice of primary care physician is important because he/she directs your care. Also, your primary care physician often coordinates referrals to specialists within the HMO.
    • Your options may be limited by the geographic restrictions of the HMO network.
    • You may be charged a co-payment each time you utilize an HMO covered service.
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  • Q: What is COBRA and Cal-COBRA?
  • A: The Consolidated Omnibus Budget Reconciliation Act (COBRA) is federal law that extends your current group health insurance when you experience a qualifying event such as termination of employment or reduction of hours to part-time status. The extension period is 18 months and some people with special qualifying events may be eligible for a longer extension. To be eligible for COBRA, your group policy must be in force with 20 or more employees covered on more than 50 percent of its typical business days in the previous calendar year.
  • Indemnity policies, PPOs, HMOs, and self-insured plans are all eligible for COBRA extension; however, federal government employee plans and church plans are exempt from COBRA. Individual health insurance is also exempt from COBRA extension, which may be another reason to pursue participation in group health plans, if possible.
  • Cal-COBRA is a California law that has similar provisions to federal COBRA. With Cal-COBRA the group policy must be in force with 2-19 employees covered on at least 50 percent of its working days during:
    • the preceding calendar year, or,
    • the preceding calendar quarter, if the employer was not in business during any part of the preceding calendar year.
  • Eligibility for Cal-COBRA extends to indemnity policies, PPOs, and HMOs only. Self-insured plans are not eligible. Unlike COBRA, church plans are eligible under Cal- COBRA. It is important to note that both COBRA and Cal-COBRA do not apply to individual health insurance. As of January 1, 2003, the extension period for Cal-COBRA has been changed from 18 months to 36 months. If you become eligible for Cal-COBRA after January 1, 2003, you will have the benefit of Cal-COBRA coverage for a full 36 months instead of the prior 18-month coverage extension. California Insurance Code (CIC) Section 10128.59 provides a similar extension under Cal-COBRA for those who have exhausted their 18 months on federal COBRA (or longer in special circumstances) for a total extension that cannot exceed 36 months. For the special Cal-COBRA extension to apply, you must have become eligible for COBRA after January 1, 2003, and the employer’s master policy must be issued in California. If the group master policy is not issued in California, then the employer must employ 51% or more of its employees in California and have its principal place of business in California for their California employees to take advantage of Cal-COBRA.
  • Important Points to Remember About COBRA and Cal-COBRA:
    • COBRA is federal law that extends your current group health coverage after a qualifying event. Individual policies do not qualify for COBRA.
    • COBRA law applies to group policies in force with 20 or more employees covered on more than 50 percent of its typical business days in the previous calendar year.
    • Indemnity policies, HMOs, PPOs, and self-insured plans are COBRA eligible. Federal government employee plans and church plans are COBRA exempt.
    • Cal-COBRA is California law that closely follows federal COBRA.
    • Cal-COBRA law applies to group policies in force with 2-19 employees covered. Like COBRA, individual policies do not qualify for Cal-COBRA.
    • Only indemnity policies, PPOs, HMOs, and church plans are Cal-COBRA eligible.
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  • Q: What Is the Health Insurance Portability and Accountability Act (HIPAA)?
  • A: In 1996 the federal government passed into law the Health Insurance Portability and Accountability Act (HIPAA). HIPAA law provides eligible individuals who have recently lost their employer sponsored group health plan the opportunity to purchase health insurance coverage even if they have a pre-existing health condition. If you meet the definition of an eligible individual, all health insurance companies who sell individual plans must offer you health insurance regardless of your medical history. This requirement to issue insurance is called "guaranteed issue." You may not be declined coverage based on medical reasons. In order to qualify as an eligible individual you must meet the following conditions:
    • Your last health care coverage must have been under an employer sponsored group health plan, which includes COBRA or Cal-COBRA continuation coverage, for at least 18 months. This prior 18-month coverage is referred to as "creditable coverage."
    • All available COBRA or Cal-COBRA continuation coverage has been elected and exhausted. If you qualify for COBRA or Cal-COBRA you are required to accept the coverage and continue the coverage for the maximum time period allowed. (When an employer terminates its existing group health plan entirely, COBRA or Cal-COBRA coverage ends and is considered exhausted.)
    • You are not eligible under a group health plan, Medicare, Medi-Cal, and/or do not have other health insurance coverage.
    • You did not lose your most recent health coverage due to nonpayment of premium or fraud.
  • 16 State of California Department of Insurance Once COBRA or Cal-COBRA has been exhausted, you have 63 days to file an application to purchase a guaranteed issue HIPAA policy with an insurance company or health plan. All carriers that sell individual health care policies must offer their two most marketed individual plans to HIPAA eligible individuals regardless of your health status. If you accept a conversion policy or a short-term policy after exhausting COBRA or Cal-COBRA, you give up your HIPAA eligibility. It is important to understand that a conversion policy is not a HIPAA policy. When applying for a HIPAA policy you can present a Certificate of Creditable Coverage from your insurance company or health plan as part of the application process. The Certificate of Creditable Coverage is a written statement from your insurance company or health plan showing the length of time you have been covered. The Certificate can be used as proof of your 18 months continuous creditable coverage when applying for a HIPAA policy. Although HIPAA is federal law, as of January 1, 2001, California state law generally conforms with HIPAA.
  • Important Points to Remember About HIPAA:
    • HIPAA gives eligible individuals who have lost group coverage the opportunity to purchase individual health coverage.
    • HIPAA eligible individuals are not subject to medical underwriting.
    • HIPAA policies must be issued to eligible individuals on a guaranteed issue basis regardless of any pre-existing medical condition.
    • You have only 63 days after COBRA or Cal-COBRA has been exhausted to file an application to purchase a HIPAA policy.
    • HIPAA policies are not conversion policies. Accepting a conversion or short-term policy terminates your HIPAA eligibility.
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  • Q: How does a Health Savings Account (HSA) work with a High Deductible Health Plan (HDHP)?
  • A: HSA (Heath Savings Accounts) combine with a High Deductible Health Plan and are an economically sound approach to healthcare. Rather than pay a lot of money for insurance premiums today which you may not use, pay less for insurance and put the remaining money into a health savings account to spend tax free for medical expenses as needed.
  • HSAs don't replace a normal or typical health insurance policy. They are designed as an optional supplement to an eligible High Deductible Health Plan (HDHP). HDHPs are typically far less costly than traditional health plans.
  • Because the HSA is tied to a HDHP, you will "pay as you go" for medical care, using your tax-free HSA dollars, until you spend up to the deductible. Once you meet the deductible, the health insurance pays for most of your medical expenses for the rest of the year. You may choose your own doctor and level of care. By themselves, HSA's are savings vehicles - not insurance policies - so they don't restrict your access to coverage or your choice of providers.
  • A Health Savings Account (HSA) helps you save money on health care. They also save money for most employers, while giving workers healthcare protection. By making you a part of the medical services decision process, HSAs are designed to help you manage medical expenses and reduce the continuing raising of health care expenses. Equally as important, the money you save remains part of your retirement account, even if you leave your present employer. In short, if you don't use all the money in your HSA for medical expenses, it can accumulate as tax-free savings for your retirement. One final benefit, HSAs can pay for many more procedures than were ever allowed before by government sponsored programs.
  • See more information on California (HSA) Health Saving Account and HRA (Health Retirement Account compatible plans.

 

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