Frequently Asked Questions

What kinds of coverage do most employers offer their employees?
Generally health, dental, life, and disability coverage is offered by most employers.

What is a covered medical or dental expense?
A covered expense is a charge for a service as allowed and authorized by the group health or dental insurance plan. For example, a hospitalization for an appendectomy would be covered, as opposed to elective cosmetic surgery, which under most plans would not be covered. A covered expense is paid for or reimbursed up to the particular plan's maximum. Often a copayment, deductible or coinsurance is charged.

What is a deductible?
A set amount of money that you pay each year for certain kinds of medical services before your health insurance coverage begins to pay for covered services. Insurers may have more than one deductible within a plan design. For example, a plan may have a prescription drug deductible as well as one for durable medical equipment.

What is coinsurance?
Coinsurance is a fixed and pre-determined percentage of covered medical charges that you are responsible for paying. The coinsurance amount will be specified in your schedule of benefits. One example of coinsurance would be: your health plan covers 80% of certain medical charges, and you are responsible for the remaining 20%.

What is a copayment?
A copayment is a fixed amount you pay each time you receive a covered service, such as a doctor's office visit, a prescription, day surgery, or if you are admitted as an inpatient.

What are out-of-pocket costs?
Aside from the premium, there are other kinds of expenses - called out-of-pocket costs - which you may incur. Your out-of-pocket costs will most likely depend on the sort of coverage you have, the kind of medical service you receive, where the service is provided, and by whom.

What kind of services does a dental plan cover and how does it work?
Dental insurance plans cover such services as the ones listed below. Such plans often include the use of deductibles, coinsurance and maximums to control the cost of the program. A typical dental insurance plan covers the following services:

  • Preventive (exams and x-rays)
  • Diagnostic (cleanings, sealants and fluoride)
  • Basic Restorative (fillings)
  • Major Restorative (crowns, bridges, dentures)
  • Tooth Extraction
  • Endodontic (root canal)
  • Denture Repair
  • Emergency Services
  • Orthodontics (typically optional

What coverage does a vision plan provide for?
Vision insurance plans provide coverage for eye exams, prescription glasses (frames and lenses), and contact lenses. Laser corrective eye surgery discounts are generally included in plans. There is a wide variety of vision plans are available. In cases where an employer's medical plan covers eye exams, policies are available that cover hardware only.

What is a Primary Care Physician (PCP)?
A Primary Care Physician (PCP) is the doctor you visit when you're sick, for routine care, etc. - the "family doctor". Typically, PCPs are family medicine practitioners, pediatricians, internists, or general practitioners. With an HMO, your PCP is the doctor that gives you a referral to a see a specialist.

What is an indemnity plan?
Indemnity plans allow the insured to use any medical provider - a doctor, a hospital, and so on. These types of plans do not have networks of affiliated doctors or hospitals. Usually, you have a deductible, which is the amount of the covered expenses you must pay each year before the insurer starts to reimburse you.

Once you meet the deductible, most indemnity plans pay a percentage of what they consider the usual and customary (U&C) charge for covered services. The insurer may pay 80% of the U&C costs, meaning you would pay the other 20%, which is known as coinsurance. If a provider charges more than the U&C rates, you will have to pay both the coinsurance and the excess charges. For example: if the U&C fee for a medical service is $100, the insurer will pay $80. If your doctor charged $100, you will pay $20. But if the doctor charged more than the U&C - $105, say - then you will pay $25.

Policies typically have an out-of-pocket maximum. This means that once your expenses reach a certain amount in a given calendar year, the U&C fee for covered benefits will be paid in full by the insurer. You no longer pay the coinsurance. If your doctor charges you more than the U&C charge, however, you may still have to pay a portion of the bill.

What is a HMO?
HMO stands for Health Maintenance Organization. With an HMO, you need to choose a PCP that is within your health plan's network. If you need to see a specialist, your PCP will have to give you a referral if the health plan is to cover the cost.

When you choose a PCP, it's a good idea to ask about hospitals and specialists with which he or she is affiliated. You can find out more about a particular doctor, including his or her credentials, by contacting your health plan, either directly or via the Web, or by calling the doctor's office.

What is a POS plan?
A Point-of-Service (POS) plan is an HMO with an opt-out provision. How the plan functions - like an HMO or like an indemnity plan - depends on what the individual plan member decides to do at the "point of service." To illustrate: when medical care is needed, the individual plan member essentially has two choices. The plan member can choose to go through his or her primary care physician (PCP), in which case services will be covered under HMO guidelines. Usually a copayment will be required.

If the plan member chooses to obtain services from a provider inside the network but without their PCP's referral, or seeks care outside of the network, then the services will be reimbursed according to out-of-network rules. Usually paying a deductible and coinsurance will be required. As people who belong to POS plans are responsible for deciding where to seek care, it is very important that they understand the financial implications of their choices.

What is a PPO plan?
A Preferred Provider Organization (PPO) plan is a form of managed care that closely resembles an indemnity plan. A PPO negotiates arrangements with doctors, hospitals, and other providers of care who will accept lower fees from the insurer for their services. As a result, your cost sharing will be lower than if you were to seek care outside the network of providers.

If you go to a doctor within the PPO network, you will typically pay a copayment. In addition your coinsurance will be based on the lower charges for PPO members. For example, the insurer may reimburse you for 90% of the cost if you go to a provider within the network. If you choose to go to a provider out of the network, the insurer may only reimburse you for 70% or so of the cost. Also, with an out-of-network provider, you may have to pay the difference between what the provider charges and what the plan will pay.

What is a Consumer Driven Health Plan?
A consumer driven health plan is a high deductible health plan that is generally combined with one of two tax-advantaged spending accounts: a Health Savings Account or a Health Reimbursement Arrangement. These plans require a great degree more involvement on the participant's level in choosing when and where to seek care. Ideally the intention is to bring medical costs down, over time. If the participant feels monetary discomfort in paying for medical services, less costly care may be sought.

Plan members use money from their spending account to pay for medical care - including prescriptions. When the account money is fully depleted, plan participants must pay for medical care out-of-pocket until the plan's deductible is satisfied.

The high deductible health plan functions much like a traditional major medical plan after the deductible has been met. High deductible health plans that work in conjunction with Health Savings Accounts have very specific deductible minimums and plan requirements as specified in the Medicare Prescription Drug, Improvement and Modernization Act of 2003.

What is a referral?
A referral is an authorization for medical services to be performed by a specialist, given by the individual's primary care physician.

How to I file a claim with my insurance company?
These days it is common practice for your health or dental care provider to file claims electronically. However, if you have paid out-of-pocket for a covered service or have received a bill for a covered service, you simply need to submit the bill or receipt along with a claim form (provided by your insurer).

What is an EOB?
An EOB is an Explanation of Benefits. Health and dental insurers often provide EOBs after they have processed a claim for an insured member. In addition to the basic information on the insured individual, an EOB will have the date of service, type of service, amount the provider charged, amount the insurer paid, and any amount that the insured party is responsible for paying.

What is HIPAA?
The Health Insurance Portability and Accountability Act of 1996 is a federal law that protects individuals' rights to the privacy and security of their health information. HIPAA also establishes requirements and limits under which pre-existing conditions exclusions can apply. In other words, if you have a pre-existing condition, HIPAA helps minimize the impact of that exclusion on your access to health coverage.

What is a HIPAA certificate?
A HIPAA certificate provides proof of prior coverage to a new insurer, eliminating or reducing exposure to any pre-existing conditions clauses.

What is an FSA?
A Flexible Spending Account (FSA) is a tax-advantaged way to pay for health and/or dependent care expenses. Employees participating in an FSA elect to have a specified dollar amount deducted from their gross salary before taxes withheld each pay period. Employees can pay for certain out-of-pocket medical or dependent care costs with pre-tax dollars. Even taxpayers who do not itemize can get a tax break using an FSA. There are two main kinds of FSAs:

A Health FSA can be very useful, as no matter how comprehensive health or dental coverage may be, there are a certain number of expenses that may not be covered or only partially covered. To help with these out-of-pocket costs employers can offer a Health FSA.

A Dependent Care FSA is another type of FSA that employers offer. It allows employees to pay for certain dependent/child care expenses with tax-free dollars. Working parents may have significant day care expenses, and a growing number of working people are responsible for care of an elderly or disabled dependent. In either case, employees will most likely benefit from the tax advantages of a Dependent Care FSA.

Employees may elect to participate in one or both types of FSA accounts. By participating in an FSA, employers and employees can reduce their tax liability.

What is an HRA?
A Health Reimbursement Arrangement (HRA) is commonly used to pay for qualified medical expenses, but may also be used to reimburse employees for the purchase of health insurance. Generally speaking, the employer does not specifically set money aside for covered individuals - instead, an employee is reimbursed for eligible medical expenses from general operating funds. HRAs are only available through an employer and must be funded solely by the employer. The employer owns the account.

If the employer chooses, money remaining in the account at year's end can be carried over to the next plan year. An employer may cap the carryover amount if the employer elects to allow carryovers. Employees are not allowed to contribute to an HRA.

What is an HSA?
A Health Savings Account (HSA) is a new way for consumers to pay for medical expenses. Effective January 1, 2004, almost anyone with a qualified high-deductible health plan can also have a Health Savings Account. HSAs can save you a good deal of money on your medical care in the short-term as well as provide a secure, solid way to save for future medical expenses. HSA funds are used to pay for expenses before your deductible is met as well as help to pay for allowable services not covered by your health plan. In addition, HSA funds help pay COBRA coverage during periods of unemployment, medical expenses after retirement, and long-term care expenses.

What is a stored value card?
A stored value card functions much like a debit card. The card is pre-funded with money from an employee's FSA or HRA. When the employee needs to pay for an allowable service or product - a doctor's office visit or a prescription - the card can be used to pay directly at the point of sale, saving the employee from spending the money out of their pocket and then having to submit forms for reimbursement.

What is COBRA?
The Consolidated Omnibus Reconciliation Act (COBRA), an amendment to ERISA, provides certain former employees, retirees, spouses, former spouses, and dependent children the right to temporary continuation of health coverage at group rates plus a 2% administration fee.  However, COBRA coverage is only available when coverage is lost due to certain specific events.  Group health coverage for COBRA participants is usually more expensive than health coverage for active employees, since the employer typically pays a part of the premium for active employees. COBRA participants generally pay the entire premium themselves - but it is usually less expensive than individual health coverage.

What is FMLA?
The Family Medical Leave Act (FMLA) of 1993 states that covered employers must grant family and temporary medical leave to employees under certain circumstances. An eligible employee may now take up to a total of twelve workweeks of unpaid leave during any twelve-month period for one or more of the reasons listed below:

  • the birth and care of the newborn child of the employee
  • placement with the employee of a son or daughter for adoption or foster care
  • care for an immediate family member (spouse, child, or parent) with a serious health condition
  • medical leave when the employee is unable to work because of a serious health condition

What is a Parking and Transit Plan?
Section 132(f) of the Internal Revenue Code allows qualified transportation expenses up to certain limits to not be taxed. Expenses such as qualified parking, vanpooling and transit passes can be reimbursed from this account. Irrevocable elections are not required - meaning the employee is permitted to make, revise and halt their elections.

This section of the tax code gives an employer a means to supplement and enhance their employee benefit offering, and at the same time reduce both the employer's and employee's tax liability. The employer and employee can exclude this reimbursement from wages for FICA purposes.

What is a state-mandated benefit?
States periodically enact legislation that requires insurers to cover certain services. Examples of some of these mandated benefits are well-child care, infertility treatment, alcoholism treatment and hospice care.

What is New Hampshire Senate Bill 110? And why do I have to fill out a Family Health Statement?
New Hampshire Senate Bill 110 is medical insurance reform legislation for small groups ( under 50 ) that became effective on January 1, 2004. The bill altered the definition of "small group" - from less than 100 eligible employees to less than 50 eligible employees. The insurer may now consider health status, geographic factors, age, industry, and number of employees when they are formulating rates. All eligible employees should complete the necessary form so that the most accurate rates can be delivered to the employer.

What is the Massachusetts ' same-sex marriage ruling, and how do I cover my spouse?
The Massachusetts' Supreme Court
ruled that same-sex couples had a constitutional right to marry. Effective May 17, 2004, the Commonwealth began issuing marriage licenses to same-sex couples. In Massachusetts, to enroll your same-sex spouse you would simply follow the same process as all other married couples do when enrolling in your company's health plan. Due to the federal government not recognizing same-sex marriage, a tax professional should be consulted regarding the tax treatment of benefits.