BSI Corporate Benefits, L.L.C. | Frequently Asked Questions

Questions

 
  1. What exactly is insurance?
  2. Why do I need health insurance?
  3. Who will pay your bills if you have a serious accident or a major illness?
  4. What is an HMO?
  5. What is a primary care physician (PCP)?
  6. What are the advantages of HMOs?
  7. Are there disadvantages to HMOs?
  8. How do I find out if a provider is in my HMO network?
  9. What happens if my doctor leaves my HMO?s network?
  10. Am I required to use in-network hospitals in an emergency?
  11. What if I need emergency care and I am outside of the HMO?s service area?
  12. What is a PPO plan?
  13. What is a preexisting condition?
  14. What is creditable coverage?
  15. What are Health Savings Accounts (HSAs)?
  16. Who is eligible to open an HSA?
  17. Who can contribute to my HSA?
  18. How much can be contributed to an HSA?
  19. Is the money I contribute to my HSA tax free?
  20. What are eligible health care expenses that can be paid from my HSA?
  21. What happens to my HSA if I change jobs?
  22. What is a self-funded health care plan?
  23. Who handles the administration of a self-funded health care plan?
  24. What is a deductible?
  25. What is coinsurance?
  26. What is maximum out-of-pocket?
  27. What is an office visit copay?
  28. Are copayments credited against my annual deductible requirements?
  29. What events trigger a special enrollment period?
  30. How do I add a new dependent to my coverage?
  31. What happens to my group health coverage if I leave my employer?
  32. How long after my coverage ends should a carrier provide me with a certificate of creditable coverage?
  33. How do I change the beneficiary on my life insurance policy?
  34. Can I name someone other than a relative as the beneficiary of my life insurance policy?
  35. Can I donate my life insurance policy to my favorite charity?
  36. What is term life insurance?
  37. What is whole life insurance?
  38. What is disability income insurance?
  39. What is the definition of disability?
  40. What is the difference between "Own Occupation" and "Any Occupation"?
  41. Does it cost me more to deal with an agent than it would if I dealt directly with an insurance company?

Answers

1. What exactly is insurance?

Insurance is a contract that allows parties to share risk. Basically, a person pays their premiums in exchange for the insurance company's commitment to pay a predetermined amount of money for any or all problems (claims).
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2. Why do I need health insurance?

Today, health care costs are high, and getting higher.
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3. Who will pay your bills if you have a serious accident or a major illness?

You buy health insurance for the same reason you buy other kinds of insurance, to protect yourself financially. With health insurance, you protect yourself and your family in case you need medical care that could be very expensive. You cannot predict what your medical bills will be. In a good year, your costs may be low. But if you become ill, your bills could be very high. If you have insurance, many of your costs are covered by a third-party payer, not by you. A third-party payer can be an insurance company or, in some cases, it can be your employer. Top of page

4. What is an HMO?

HMO stands for Health Maintenance Organization, a managed care plan where you have the ability to choose your primary care physician (PCP) from a list of network providers. Your PCP is responsible for management of all aspects relating to your health care. If you require care from any network provider other than your PCP, you may need a referral from your PCP to see that provider. You must obtain care from a network provider in order to have your claim paid through the HMO. Treatment received outside the network is generally not covered.
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5. What is a primary care physician (PCP)?

A primary care physician is a contracted physician (general or family practitioner, internist, pediatrician and sometimes obstetrician/gynecologist). HMOs use PCPs to serve as the initial screening, testing, treatment and referral source for members. Generally, the PCP assumes continuing responsibility for the overall course of treatment of the member. PCPs often act as gatekeepers for HMOs, determining if a member's illness requires treatment by specialists, and/or hospital care. A member usually selects a network PCP at time of initial enrollment with an HMO and can change PCPs with prior notification to the HMO.
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6. What are the advantages of HMOs?

Typically, HMOs have fewer out-of-pocket costs for the enrollee, including smaller co-payments and deductibles. HMOs also provide preventive care and may cover prescription drugs. When visiting network providers, claims are filed directly to the HMO. In addition, every HMO licensed in Michigan must have formal procedures to appeal decisions in which you disagree.
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7. Are there disadvantages to HMOs?

Yes. An HMO may not provide coverage if you receive health care services from a doctor, hospital or other health care provider outside its network or service area, and you may need a referral to see a specialist. HMOs might not be your best choice if you travel regularly, want to cover dependents that live in another community, or have a specific physician you want to see that is not part of the HMO's provider network. Also, you have no guarantee that doctors and hospitals in your HMO's provider network will stay in the network.
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8. How do I find out if a provider is in my HMO network?

Generally, at the time of initial enrollment in an HMO a provider directory is provided to a member. In addition, at any time a member may request an HMO to provide its provider directory. As an HMOs provider network is subject to change, contacting the HMO's member services department will be able to provide current provider information. In addition, some HMOs provide current information regarding their provider network through its web site.
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9. What happens if my doctor leaves my HMO's network?

If your primary care physician, or plan physician with whom you are undergoing a course of treatment, leaves the HMO network, you may be allowed to:

  • Continue an ongoing course of treatment for 90 days.
  • Continue postpartum care directly related to a pregnancy if the member is in the second or third trimester of pregnancy at the time of the physician's termination.
  • Continue treatment, if the patient is determined to be terminally ill prior to the physician's termination through the remainder of the patient's life for care directly related to the treatment of the terminal illness.

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10. Am I required to use in-network hospitals in an emergency?

No. You are not required to use the HMO's network hospitals, providers or facilities in the case of a medical emergency. However, if your HMO determines your condition was not an emergency, it could refuse to pay the emergency room charges.

An HMO is required to provide coverage for medically necessary emergency health care services provided to an enrollee for the sudden onset of a medical condition that includes signs and symptoms of sufficient severity, including severe pain, such that the absence of immediate medical attention could reasonably be expected to result in the following:

  • Serious jeopardy to the individual's health
  • Serious impairment to bodily functions
  • Serious dysfunction of any bodily organ or part.

An HMO cannot require a physician to transfer a patient before the physician determines that the enrollee has reached the point of stabilization. An HMO cannot deny payment for emergency health services up to the point of stabilization provided to a patient because of either of the following:

  • The final diagnosis
  • The HMO did not give prior authorization before emergency health care services were provided

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11. What if I need emergency care and I am outside of the HMO's service area?

HMOs are required to provide coverage for medically necessary emergency care outside of its service area. If you receive emergency care outside of the HMO's service area you should contact your HMO within 48 hours.
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12. What is a PPO plan?

A PPO (Preferred Provider Organization plan is a plan where preferred providers of service (including doctors and hospitals. have a contract with an insurance company or a health plan to offer service for their policyholders. Generally, the preferred service provider agreed to accept an insurance company's usual and customary payment. If you have a PPO contract, and do not use the preferred service providers, you may find yourself paying more for services rendered by the physician or hospital.
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13. What is a preexisting condition?

This is normally a physical or mental condition for which medical advice, diagnosis, care or treatment is recommended or received before the effective date of the policy. The definition can vary from policy to policy.
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14. What is creditable coverage?

The concept of creditable coverage is that individuals should be given credit for previous health coverage when moving from one employer group health plan to another, from an employer group health plan to an individual policy, or from certain kinds of individual coverage to an employer group health plan.

Most health coverage is creditable coverage, including prior coverage under a group health plan (including a governmental or church plan) , health coverage (either group or individual) , Medicare, Medicaid, a military-sponsored health care program such as TRI-CARE, a program of the Indian Health Service, a State high risk pool, the Federal Employees Health Benefit Program, a public health plan, and a health benefit plan provided for Peace Corps members, a stand alone prescription drug plan, or a foreign country's government health plan.
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15. What are Health Savings Accounts (HSAs)?

HSAs are tax-exempt accounts set up by an employer or individual to pay eligible health care expenses including insurance policy deductibles, co-payments and other out-of-pocket medical expenses. An HSA must be established with a high deductible health plan so that the HSA is used to pay routine expenses and the plan is used to pay more significant expenses.

HSAs were created to replace Medical Savings Accounts (MSAs), another special account used to pay eligible health care expenses. Effective January 1, 2004, no new MSAs may be opened under federal law. However, existing MSAs may continue to be operated, or may be rolled over into an HSA. HSAs allow employers and consumers to set aside funds on a tax-free basis to pay health care expenses, including expenses that may not be covered by traditional health insurance. For example, HSAs may be used for vision and dental services, prescription drugs, over-the-counter drugs, long-term care services and certain health insurance premiums in retirement.
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16. Who is eligible to open an HSA?

HSAs are open to anyone who:

  • Is covered under a qualifying high deductible health plan
  • Is not covered by any other heath plan that is not a high deductible health plan (with some exceptions.
  • Is not entitled to benefits under Medicare (generally, has not yet reached age 65.
  • May not be claimed as a dependent on another's tax return

A HSA qualified high deductible health plan must have a minimum deductible of $1,100 for single (self-only) coverage and $2,200 for family coverage (2007). Out of pocket expenses must be limited to $5,500 for single coverage and $11,000 for family coverage (2007). The plan may provide first dollar coverage for preventive health.

You cannot be covered by any other health insurance that reimburses you for health expenses you incur, unless it is another HSA qualified high deductible health plan. However, the maximum annual contribution to the account remains in force.
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17. Who can contribute to my HSA?

Contributions may be made by the individual, an employer or a family member.
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18. How much can be contributed to an HSA?

The annual HSA contribution is limited to the amount of your health plan's deductible, subject to a cap of $2,850 for single coverage and $5,650 for family coverage (2007). Individuals over age 55 can make additional catch-up contributions until they enroll in Medicare.
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19. Is the money I contribute to my HSA tax free?

Amounts contributed to an HSA, interest earned on the account and amounts used to pay eligible expenses are not taxed. However, amounts used to pay non-eligible expenses are taxed and may result in additional penalties.
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20. What are eligible health care expenses that can be paid from my HSA?

An HSA may be used to pay for the diagnosis, cure, mitigation, treatment or prevention of disease; prescription and over-the-counter drugs; qualified long-term care services and insurance costs; COBRA coverage, qualified Medicare expenses (but not Medicare Supplement insurance) ; qualified health insurance costs for retirees; and more.
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21. What happens to my HSA if I change jobs?

You may take an HSA with you when you leave your employer.
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22. What is a self-funded health care plan?

Self-funded or self-insured health care plans pay benefits from a fund established by an employer or organization. Self-funded plans are not insurance plans. Self-funded health care plans are created under federal law and come under the authority of the federal government.
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23. Who handles the administration of a self-funded health care plan?

An employer with a self-funded plan normally hires a third-party administrator (TPA) to collect premiums, pay claims and handle other paperwork. Many insurance companies contract as TPAs for self-funded health care plans. This can disguise the fact that your plan is self-funded. The administrator's name appears along with the employer's on your benefits booklet and claim forms, just as if it were your insurance company. Your employer provides the money, decides what benefits to offer and what claims to pay. The TPA follows your employer's instructions.
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24. What is a deductible?

It is a predetermined amount of money that a person commits to pay before the insurance company is responsible for any benefit payments. This is done so that people will make sure that any problem that an insured might have really needs medical assistance. It is a way for insurance companies to keep premium costs down.
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25. What is coinsurance?

Coinsurance is the portion of medical costs that are shared by both the Insured (the patient) and the insurer. For example, if you have an 80% to $5,000 coinsurance, the insurer is responsible for 80% of the next $5,000 in covered medical expenses and the insured is responsible for 20% of that same $5,000 in covered medical expenses.

* In the above mentioned policy with $1,000 deductible and 80% coinsurance to $5,000: If a covered event occurred that had a total cost of $10,000, the insured would be responsible for the first $1,000 (deductible). Of the next $5,000 in covered expenses, the insured would pay another $1,000 (coinsurance). After deductibles and coinsurance are satisfied, insurance companies pay 100% of all other covered expenses. For this example the insured would pay $2,000 and the insurer would pay $8,000.
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26. What is maximum out-of-pocket?

The most money you will be required to pay a year for deductibles and coinsurance. It is a stated dollar amount set by the insurance company, in addition to regular premiums.
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27. What is an office visit copay?

Generally, this is an amount of money that an insured patient would pay to their doctor for that particular visit. In most cases, any costs incurred in that visit are covered 100% after the copay. Often, any lab tests (MRIs, blood work ups, etc.) are not included in that visit cost and are subject to deductibles and coinsurance.
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28. Are copayments credited against my annual deductible requirements?

No, for the most part, insurance policies with "office visit copays" handle office visits and hospital stays differently. Hospital stays are generally covered under the "Major Medical" portion of the policy and tend to be subject to deductibles and coinsurance.
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29. What events trigger a special enrollment period?

Special enrollment is required/allowed in two situations:

  1. You or your dependent lost other health coverage:
    • The employee or dependent must earlier have turned down coverage available through the group health plan because he or she had other coverage
    • If the other coverage was COBRA continuation coverage, special enrollment can be requested only after the COBRA coverage is exhausted
    • If the other coverage was not COBRA continuation coverage, the individual can request special enrollment when the other coverage ends because the individual is not longer eligible for it
    • If the employer sponsoring the group health plan stops paying its share of the premiums
  2. You get a new dependent through marriage, birth, adoption, or placement for adoption with you
    • If the triggering event is a birth, adoption, or placement for adoption, the child, the employee, and the employee's spouse are entitled to special enrollment, either individually or in any combination.

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30. How do I add a new dependent to my coverage?

New dependents receive health care coverage at the moment of birth, adoption or marriage. However, you will need to notify your employer within 31days of the change to have the dependent added to your coverage. You may be required to pay additional premiums. New additions have the same coverage as the subscriber and current dependents.
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31. What happens to my group health coverage if I leave my employer?

If your employer has more than 20 employees, it is subject to the federal Consolidated Omnibus Budget Reconciliation Act (COBRA) law and entitled to a minimum of 18 months of continuation coverage. Under each of these options, you will have to pay the full premium yourself even if your employer paid part of your premium while you were employed.
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32. How long after my coverage ends should a carrier provide me with a certificate of creditable coverage?

HIPAA provides that you receive a certificate automatically when coverage ends. Your old employer or insurer must issue the certificate within a "reasonable" period. In addition, upon your written request within 24 months after coverage ends, you must be issued a certificate whether or not you already received an "automatic" certificate.
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33. How do I change the beneficiary on my life insurance policy?

Changing the beneficiary on a life insurance policy is generally a simple matter. You'll need to contact your insurance company and follow its instructions for executing a change of beneficiary. Beneficiary change requests must be in writing, usually on a form that your insurer will provide.

Sometimes changing the beneficiary on your life insurance policy can be more difficult. If you have designated an irrevocable beneficiary, you are not allowed to make changes to this designation without first getting the current beneficiary's consent. If you live in a community property state, your spouse must give his or her consent before you can name anyone else as your beneficiary. If you are changing your beneficiary as a result of divorce, make sure you comply with the terms of your divorce decree. Your settlement agreement may require you to maintain life insurance coverage with your ex-spouse as beneficiary. In this case, you cannot legally change the beneficiary. Keep in mind, also, that if you designated your spouse as beneficiary while you were married, divorce does not change this. If you do not want your ex-spouse to receive the benefits of your life insurance policy (assuming that your divorce decree does not require you to maintain that coverage), you will need to execute a change of beneficiary.

Whatever you do, don't make the mistake of thinking that you can change the beneficiary of your life insurance policy via your will. A change of beneficiary specified in your will does NOT override the beneficiary designation of your life insurance policy. If you want to change the beneficiary, make sure you follow the procedures established by your insurance company.
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34. Can I name someone other than a relative as the beneficiary of my life insurance policy?

Although it is typical for an individual to name his or her spouse, child, parent, or other relative as the life insurance beneficiary, non-relatives can also be named. For instance, you can designate your estate, trust, business partner, lender, or domestic partner as beneficiary of your life insurance policy.

Before designating a beneficiary, you should also make sure that you understand all of the tax implications. Life insurance proceeds are generally not income taxable, but there may be other considerations. For example, naming your estate as the beneficiary of your life insurance policy will increase the size of your estate and may necessitate probate and create an estate tax liability.
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35. Can I donate my life insurance policy to my favorite charity?

Yes, you can donate your life insurance policy to charity. In fact, insurance can be a good way to leverage affordable premium payments into a substantial future donation. There are several different ways you can give your life insurance policy (or the death benefits from it) to charity. Each method has different advantages and disadvantages to both you and the charity.

One way to help your favorite charity is to simply name the charity as a beneficiary on your policy. When you die, the charity will receive the death benefits. A disadvantage of this approach is that you will not get to take the charitable income tax deduction for the premium payments that you make. With this method, there are no gift tax implications. The proceeds of the policy will be includable in your taxable estate, but you will receive an offsetting estate tax charitable deduction.

Another way to help your favorite charity is to donate an existing life insurance policy to the charity. You will be able to claim an income tax deduction for either the tax basis or the fair market value of the policy (whichever is less) for the year of the donation. You can then make deductible cash gifts to the charity, which the charity can use to make the premium payments. The proceeds of the policy may be includable in your taxable estate, but you will receive an offsetting estate tax charitable deduction.

A third way to donate a life insurance policy to charity is to donate money to the charity and have the charity buy the life insurance policy. You make income and gift-tax-deductible donations to the charity, and the charity makes the premium payments. The proceeds of the policy will not be included in your estate for estate tax purposes.

There are a number of different strategies from which to choose, as well as a number of tax rules and differing state laws that may influence your decision. If you are considering a substantial gift of life insurance to a charity, ask your attorney or tax advisor to help you decide on the best approach.
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36. What is term life insurance?

Term insurance provides protection for a specified period of time; a term of 1, 5, 10 or 20 years or up to age 65 is available. This type of policy only pays a benefit if you die during the policy term. Term insurance does not build cash value. If you stop paying your premium, the insurance expires. This insurance generally is less expensive than other types of life insurance.
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37. What is whole life insurance?

Whole life insurance is meant to be kept in force throughout your entire life. An important feature of whole life insurance is the accumulation of cash value. The cash value is the cash available to borrow against the policy, or the value of the policy paid to the policy owner when the contract is surrendered before maturity. Any withdrawal of cash value is treated as a policy loan and interest accumulates based on the loan amount. If you do not pay back the loan, the death benefit is reduced by the outstanding loan amount.
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38. What is disability income insurance?

Disability income policies are designed to pay you and cover your continuing living expenses during a period of disability. The benefits are specific and paid on a periodic basis. There are two types of disability income policies offered in Michigan: Short Term Disability Income and Long Term Disability Income. Some companies may offer both Short Term and Long Term benefits under one policy. Short Term Disability Income policies only provide disability benefits for a short period of time, i.e. 180 days. Long Term Disability Income policies are intended for longer periods of disability.
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39. What is the definition of disability?

There is no statutory definition of disability, but most policies will define disability as a sickness or injury not excluded under the terms of the contract. During a period of disability, the insured must be under the regular care of a licensed physician.
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40. What is the difference between "Own Occupation" and "Any Occupation"?

Own occupation means you are unable to perform the important duties of your regular occupation. Any occupation means you are unable to perform any gainful occupation for which you are reasonably suited by training, education or experience. Many disability policies are sold with a combination of the Own Occupation and Any Occupation definition. For example: during the first two years you are considered disabled if you are unable to perform the important duties of your regular occupation. If, after the first two years of disability, you cannot perform the duties of any gainful occupation for which you are reasonably suited, then you will be considered totally disabled.
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41. Does it cost me more to deal with an agent than it would if I dealt directly with an insurance company?

No. In dealing with an agent, you are dealing with the insurance company. Agents are appointed (approved) by insurance companies and are required to fairly and accurately represent them. There are no extra fees to be paid to us for our services. The benefit of dealing with an agent who represents several companies is that you get an even analysis of each company's products and options.
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