Mark Lauria Insurance Agency realizes that finding the right insurance at the
right price can be time consuming and sometimes difficult. We have put together
a list of "Frequently Asked Questions" we get from our customers from time to
time to help you.
Please feel free to read the "Frequently Asked Questions" and if you need additional
assistance or would like an Insurance Quote feel free to contact us: 1-718-370-8400
Do you know what "no fault" or PIP (Personal
Injury Protection) means?
This is medical and ancillary coverages such as, loss of salary and In-home help.
In New York: This does not provide any coverage for the vehicle. In New
York this coverage follows the insured vehicle and all it's passengers. In New Jersey: This coverage follows an insured person, no matter whether
in their vehicle or someone else.
Myths
• No Fault coverage does not mean you are not responsible in an accident.
• Red cars do not cost more to insure.
Why do I need auto insurance?
Your car has two unique qualities. First, it is probably one of
the most expensive things you own. Insurance protects your investment and guarantees
you a way of coping with the expense of accidents, vandalism or theft, as well
as securing your financial responsibility to the bank or other institution lending
the money to buy your vehicle. Second, when you drive, you are operating a powerful
machine, weighing one ton or more and capable of moving at over 100 miles per
hour. You are responsible for the safety of your passengers, your fellow drivers,
other people's property, pedestrians and yourself. Insurance helps you live up
to that responsibility by ensuring your ability to cover the costs of potential
damages or injuries. You are also required to be financially responsible by state
laws, which are best satisfied through your insurance coverage. In fact, in most
states insurance is a prerequisite to registering your car. So if you want to
drive your own vehicle, you must be insured.
What are the different types of policies and what
do they cover?
Auto insurance is divided into several different types of coverage:
General liability covers damage you may cause to other people's
property and injuries to the people themselves.
Collision covers damage to your own vehicle in an accident.
Comprehensive (i.e., fire, theft and other non-collision damage)
covers fire damage to your vehicle, break-ins, vandalism or theft, as well as
natural disasters (earthquake, hail, hurricane, flood, etc.--unless the vehicle
is overturned, then it is considered a collision).
Medical payments insurance, usually in the range of $5,000 to
$10,000, covers medical expenses for injuries. This "good-faith" coverage guarantees
immediate medical payments for you, your passengers and other parties, regardless
of who is at fault. It also covers you and members of your household in any accident
involving an automobile, whether you are on foot, on a bicycle, in a friend's
car, etc.
Uninsured motorist (UM) and underinsured motorist (UIM) coverage
protects you if you are injured in an accident with others who themselves carry
insufficient or no liability insurance.
Extra coverages include expenses for towing, labor, temporary
replacement vehicles, etc. These are generally defined as add-ons or endorsements
to your policy.
Why and how are policies priced for different drivers?
Drivers are grouped according to the level of risk each one poses--i.e.,
the amount of loss incurred by insurers within various categories of policy holders.
For various reasons, drivers are categorized by:
Sex--Men have more accidents on the road than women.
Age--Drivers under 25 (and, for some insurers, under 30) are
considered at higher risk of having an accident.
Marital Status--Married drivers tend to have fewer accidents
than single drivers.
Personal Driving Record--Years of driving experience, accidents,
speeding tickets and drunk-driving offenses are all factors in determining how
much of a risk you pose as a motorist.
How You Use Your Vehicle--If you commute by car during rush hours,
you're at greater risk of having an accident than if you only drive for errands
and recreation on the weekends. Drivers who use their own vehicles for business
also are considered to be at greater risk.
Type of Vehicle--The value, size, weight, age of your vehicle--even
the cost of replacement parts--are essential to determining the price of your
insurance. Larger, heavier vehicles are considered at lower risk than smaller,
lighter ones. Plus, more expensive cars are costly to have repaired than economy
models.
The cost of your insurance policy is based on the average cost
of covering actual losses, spread out over your particular "rating group" as a
whole. Of course, you may never have an accident or have your car stolen, and
therefore will never need to be compensated. But others in your category may not
be so lucky. Your premium will help to pay for their losses, just as their premiums
would help to pay for yours. In other words, you are investing a little today
in case you need a lot tomorrow; your investment is pooled with others, and the
pool pays for your loss.
Do all states require some kind of liability insurance?
No. Some states, while not mandating auto insurance, have "financial
responsibility laws" that require all drivers to be able to pay for any damage
or injury they may cause. However, carrying liability insurance is still the best
way for you to meet your state's financial responsibility requirements.
What happens if I have an accident with an uninsured driver?
First, call the police to the scene to be sure all pertinent information
is properly recorded. Your nerves will be shaken right after an accident, and
it helps to have a calm and knowledgeable person walking you through the necessary
details.
Then, contact your agent immediately and ask about filing a claim.
If you followed all the recommended guidelines when you bought your policy, you
should be covered within the limitations of that policy. Remember, your insurance
policy is designed to protect you.
If the cost of your damages or injuries exceed the amount your
policy will pay out, it may be time to take legal action against the other party.
Even if you have no-fault insurance, sometimes the only way to be compensated
is to place blame and responsibility where it belongs.
Insurers often discount their rates in order to encourage good
driving practices and the use of safety and security precautions. Depending on
the insurance company, you can often lower your rates from 5 to 35 percent.
Sometimes the investment you make in your vehicle is worth the
discount, and sometimes it's simply worth some peace of mind. For example, the
purchase of anti-lock brakes merits a discount from nearly every insurer, but
the discount probably will not pay for the brakes (which cost several hundred
dollars) during the normal life of your vehicle. Anti-lock brakes are touted,
nonetheless, as a life-saving feature ó a serious consideration when safety is
a top priority. Insurers generally offer discounts for:
Safety Features--Anti-lock brakes, air bags and passive restraint
systems (i.e., automatic seat belts).
Defensive Driving--Clean violation record, driver's-ed courses
for teenagers and defensive driving or accident prevention courses for adults
(insurance discounts for the latter are required in some states).
Security Systems--Alarms, electronic locks and disabling devices.
Changing Driving Habits--Commuting by public transit, using a
company vehicle for work-related travel and car-pooling.
Buying Home Owners and Auto Policies from the Same Company--If
you own a home and an automobile and you are insured by two different companies,
check into the cost of carrying both policies by one insurer. Your agent can give
you guidance as to which insurers offer discounts.
You can also lower your insurance rates by requesting higher
deductibles of the amount of money you pay before you make a claim. Increasing
your deductibles on collision and comprehensive coverage will bring your rates
down. Moreover, you may not need collision and comprehensive coverage if you drive
an older car. Ask your agent which discounts are available to you.
"Exact" coverage is hard to define because there are different
policies and about 900 insurance companies writing most of the property/casualty
business in the United States. However, 80 percent of homeowners policies are
based on a standard form and that is the one described in this guide. All homeowners
policies cover two important areas: property and liability. Remember that you
have to have protection against the proverbial thief in the night and the person
who slips on your sidewalk by day.
What this means in insurance terms is that your homeowners policy
has two basic components. It covers your structures and possessions - property
insurance - and it furnishes protection against personal liability. Personal liability,
as its name implies, means you are legally obligated to pay money to another person
for actions caused by you, your family, or your property. That liability extends
to medical payments to others for injuries caused by you or your family.
Remember that policies vary but homeowners insurance usually covers
damage to both structures and personal property caused by:
Fire or lightning
Windstorm or hail
Explosions Riot or civil commotion
Aircraft
Vehicles
Smoke
Theft or vandalism (sometimes called malicious mischief)
Falling objects
Freezing of a plumbing, heating, air conditioning or other such
household system
In fact, your coverage is most likely even more comprehensive
than the above list. Many homeowners policies cover damage by "just about everything,"
unless the coverage is specifically excluded. In these cases, it is even more
important to understand what is not covered.
Most catastrophes are covered; for example, wind damage from hurricanes
and tornadoes come under the windstorm peril listed in the previous question and
so are included. Flood and earthquake damage, however, are not covered by a standard
policy.
Be careful not to be lulled into a false sense of geographic security.
Flood and earthquake activity is more widespread than many people realize. For
example, almost 90 percent of the U.S. population lives in seismically active
areas. Since 1900, earthquakes have occurred in 39 states and caused damage in
all 50. And if your home is located in a flood-prone area, you are 26 times more
likely to suffer a flood loss than a loss from fire.
You may want to check with your agent about special catastrophic
policies for normally excluded conditions like floods and earthquakes. Of course,
the cost of such extra coverage may reflect the high risk involved. If you live
along a shoreline, for example, expect to pay a higher premium for flood coverage
than someone living on a mountaintop would pay.
There may be other exclusions spelled out in your policy such
as neglect, intentional loss, "earth movement," general power failure and even
damage caused by war. If you neglect to take care of your property (e.g., a leaky
roof), you may not be covered. Obviously, if you intend to lose an object or damage
your property, there is no coverage.
One other exclusion that can be costly is the Ordinance or Law
exclusion. Building codes established by governmental bodies that drive up the
cost of rebuilding or repairing after a loss occurs may not be covered by your
insurance policy. Thus, if you discover when replacing damaged property that current
law demands higher grade or more expensive materials than the original ones being
replaced, the new materials may not be covered for the full price.
For example, if the current building code in your area requires
a higher grade of electrical wiring and after a fire you are replacing all the
wiring in your home, your policy may cover only the cost of replacing the older
wiring. The difference in cost between the old wiring and the new wiring required
by ordinance or law is your responsibility.
Even if you live in a fairly new home, laws and building codes
are constantly being updated. Coverage to include ordinance or law requirements
can be added to your homeowners policy with an endorsement - an addition that
could save you money in the long run.
Yes, they are both your property so they are both covered. The
value of the real property - your home, garage, shed and other structures - is
generally based on the value of the main structure, the house itself. Thus, if
the house were insured for $75,000, the shed, detached garage and other auxiliary
structures would be covered for 10 percent or $7,500 worth of damages. Additional
property protection features may include living expenses should your home not
be habitable for a period of time.
Your personal property is also covered by a homeowners insurance
policy. Personal property includes the contents of your home and personal belongings
used, owned, worn, or carried by you or members of your household - basically,
everything and the kitchen sink! This coverage is also based on the house coverage,
and there are limits on the losses that can be claimed. Higher limits can be purchased
for both real and personal property.
State laws may dictate how losses are to be figured, which means
the same insurance company may use one method in one state and a different method
in another. The common methods are:
Actual Cash Value - The replacement cost of the item minus depreciation.
For example, a new television set may cost $500. If your 7-year-old TV set gets
damaged in a fire, it might have depreciated 50 percent. Therefore, you would
be paid $250 for that set.
Replacement Coverage - The cost of replacing an item without deducting
for depreciation. So today's cost for a TV set with features similar to the 7-year-old
one damaged by fire would determine the amount of compensation. If it still costs
$500 today, that would be the replacement coverage.
Replacement value should not be confused with market value. The
market value is what your house, for example, would actually sell for and is generally
more than the replacement cost. This is because replacement value does not include
the land - which almost always does not need to be replaced.
Check your policy. If you prefer replacement coverage and do not
already have it, this coverage can be added to your policy. Typically, the difference
in premiums is 10 to 15 percent to upgrade from actual cash value coverage to
replacement coverage. However, it is well worth it to protect your investment
in your possessions. Your agent can advise you of the costs involved.
Remember that homeowners insurance is designed to cover general
personal possessions, not valuable collections like antiques, jewelry or original
art. Insurance companies deliberately limit their coverage of expensive possessions
so that household premiums are more affordable to everyone. After all, if they
had to cover museum-level art collectors under standard homeowners policies, we
would all end up paying higher premiums to cover those expensive items.
Yes, perhaps in this case the term "homeowners" is misleading
because this is a package of insurance coverage that extends to all your possessions
no matter where they are. If you take a round-the-world vacation and lose a valuable
item, as long as the loss is by a covered event or peril, the location does not
matter.
The liability component also extends well beyond the boundaries
of your home. Should you be found legally at fault for injury or loss to another
individual, whether you unfortunately caused a tumble down a San Francisco hill
or a fall in an Indiana barn, that is personal liability which again is addressed
in your homeowners policy.
As in the property section of your homeowners policy, there are
limits and exclusions to personal liability. Your business activities, for example,
are not covered under a homeowners policy. You are also not covered for injuries
or damage you purposely cause. So if a fight with a neighbor turns physical and
you end up bopping him on the nose, your homeowners insurance will not cover the
injury or any resulting suit. Your policy lists specific exclusions and limits.
Can coverages be added to a Homeowner? Yes, coverages that can be added to homeowners insurance include: • In Home Businesses
• Floatters (Jewelry, Furs, Fine Arts, Antiques, Collections)
• Increased Special Limits
Does the average homeowner need fine arts?
Yes, most people have some sort of collectable whether it be Norman Rockwell art
or hummels. No it is not an expensive cover.
Yes, because the chance that you could suffer a loss begins with
the first day of business. You can't get help after the fact. If you suffer a
loss and have no insurance or have improper or insufficient coverage, there is
very little, if anything, your insurance agent can do to help you. You must be
prepared for the risks that are inherent in any business and the losses, sometimes
catastrophic, that they can cause. Also, many states and local jurisdictions require
that businesses be insured to begin operating. And if you rent space for your
business, your landlord probably requires that you be adequately insured as well.
Every business has some property. And, when you think about it,
your business is your property. Just like your home and your car, your business
needs to be protected from loss, damage and liability. In addition, your business
is your source of income, so you need protection from the potential loss of that
income. Generally, there are two types of insurance - property and liability.
Property insurance covers damage to or loss of the policyholder's property. And
if somebody sued for damages caused by you or your possessions (other than a vehicle
covered by your insurance policy), the cost of the suit - both defending it and
settling it if necessary - would be covered by your liability insurance.
It can be. Many small businesses are now insured under package
policies that cover the major property and liability exposures as well as loss
of income. A common package policy used by many small businesses is called the
Business owners Policy (BOP). Generally, these package policies provide the small-business
owner more complete coverage at a lower price than separate policies for each
type of insurance needed. Your agent can help you decide which policy or policies
are right for your business. Additional coverage for property, liability or perils
or conditions otherwise excluded (e.g., flood protection) can be purchased as
endorsements to a standard policy or as a separate, second policy called a difference-in-conditions
(DIC) policy. Because businesses vary, it is impossible to have a standard policy
to cover all contingencies. Also, some businesses, regardless of their size, do
not fit the profile of a standard business owners policy. For example, restaurants,
wholesalers and garages have special liability needs that are not met in the standard
business owners policy. Your insurance agent can advise you of the best policy
(or policies) to protect you and your business.
There is no one answer to this because each business is different.
You can consult with your agent on the monetary limits needed to cover your potential
for loss. Obviously, a one-person accounting firm will need to purchase less insurance
than a store with a substantial inventory. But each will need to make sure that
all necessary business property is covered, that the limits of liability are sufficient
to protect the owner and the employees, and that loss of income is protected.
This cover is the most often under insured claim. Take the time to make sure before
a loss.
In addition, each business has unique needs and situations that
must be handled. If the store happens to be located on a flood-prone area, the
owner should invest in flood insurance. The accountant may wish to purchase reconstruction-of-accounts-receivable
insurance to cover the loss of accounting records. The costs of reconstructing
those records, money borrowed because of delayed payments due to the records being
lost, and lost payments from those clients whose records cannot be reconstructed
are all covered.
Liability protection also will vary from business to business.
A retail business is more at risk for potential suits than a business that is
not open to the public. Also, in some states, courts tend to respond more positively
to lawsuits, increasing both the likelihood of successful lawsuits and the amount
of damages awarded. In today's lawsuit-conscious society, higher liability limits
are extremely important and relatively inexpensive. Your agent can help you decide
how much coverage is needed for your particular business.
Property insurance can be purchased on the basis of the property's
actual value, on its replacement cost, or on an agreed amount. The differences
between the three are:
Actual Cash Value
The replacement cost of the item minus depreciation. For example,
a new desk may cost $500. If your 7-year-old desk gets damaged in a fire, it might
have depreciated 50 percent. Therefore, you would be paid $250 for it.
Replacement Coverage
The cost of replacing an item without deducting for depreciation.
So today's cost for a desk of a size and construction similar to the 7-year-old
one damaged by fire would determine the amount of compensation. If it costs $500
today, that would be the replacement coverage.
Agreed Amount
Art objects, antiques and other unique items are usually insured
at an amount agreed upon when the policy is being written. An appraiser values
the goods to be insured and the business owner and the insurer agree upon an amount
that the insurer will pay if the goods are destroyed due to an covered peril.
Check your policy. If you prefer replacement coverage and do not
already have it, this coverage can be added to your policy. Inflation-guard coverage,
which automatically increases your insurance amount a certain percentage, protects
against rising construction costs. Your agent can advise you of the costs involved.
Basic property insurance policies generally cover losses caused
by fire or lightning and the cost of removing property to protect it from further
damage (e.g., removing inventory or equipment from a damaged building so it won't
be stolen). "Extended perils," including windstorm, hail, explosion, riot and
civil commotion, and damage caused by aircraft, automobiles or vandalism, are
usually covered in a standard policy. Other important perils, often not covered
and considered "optional" in almost all standard policies, include earthquake
and flood damage, building collapse, and glass breakage. Property insurance can
be written as either "named peril" policies or so-called "all risk" policies.
A named peril policy provides coverage for those perils specifically named in
the policy. An all risk policy covers loss by any perils not specifically excluded
in the policy. The term "all risk" does not mean that all perils will be covered
and, to avoid confusion, is often replaced with the term "special form" or "special
causes of loss" coverage. Check with your agent on the perils covered by your
policy. If you wish, additional coverage can be added.
No business can afford to be unprepared for a lawsuit. Liability
insurance protects your business assets when the business is sued for something
the business did (or failed to do) that contributed to injury or property damage
to someone else. Liability coverage extends not only to paying damages but also
to the attorneys' fees and other costs involved in defending against the lawsuit
- whether valid or not.
The standard business owners policy provides liability coverage,
as does a separate policy known as a commercial general liability (CGL) insurance
policy. Generally, commercial liability insurance, whether purchased in a separate
policy or as part of a standard business owners policy, will cover bodily injury,
property damage, personal injury or advertising injury. The medical expenses of
a person or persons (other than employees) injured at the business or as a direct
result of the operations of the business are also covered.
Usually excluded from both types of liability insurance policies
are suits by customers against a business for nonperformance of a contract and
by employees charging wrongful termination or racial or gender discrimination
or harassment.
Check with your agent about the best liability protection covering
all types of situations that may arise in your business.
There are many different types of health
insurance. Each has pros and cons. There is no one "best" plan. The plan that's
right for a single person may not be best for a family with small children. And
a plan that works for one family may not be right for another.
For example, if your family includes just
two adults, it may be less expensive for each of you to have individual coverage
than for just one of you to have a family plan. If you have children, or if you
might have children soon, you need a family plan. Because your situation may change,
review your health insurance regularly to make sure you have the protection you
need.
Choosing a health insurance plan is like
making any other major purchase: You choose the plan that meets both your needs
and your budget. For most people, this means deciding which plan is worth the
cost. For example, plans that allow you the most choices in doctors and hospitals
also tend to cost more than plans that limit choices. Plans that help to manage
the care you receive usually cost you less, but you give up some freedom of choice.
Cost isn't the only thing to consider when
buying health insurance. You also need to consider what benefits are covered.
You need to compare plans carefully for both cost and coverage.
Although there are many names for health
insurance plans, the information here groups them as three main types:
For each group, choose the statement 1 or
2 that best describes how you feel:
Having complete freedom to choose doctors
and hospitals is the most important thing to me in a health plan, even if it costs
more.
Holding down my costs is the most important
thing to me, even if it means limiting some of my choices.
I travel a lot or have children that live
away from me and we may need to see doctors in other parts of the country.
I do not travel a lot and almost all care
for my family will be needed in our local area.
I don't mind a health insurance plan that
includes filling out forms or keeping receipts and sending them in for payment.
I prefer not to fill out forms or keep receipts.
I want most of my care covered without a lot of paperwork.
In addition to my premiums, I am willing
to pay for the cost of routine and preventive care, such as office visits, checkups,
and shots. I also like knowing that I can get an appointment for these services
when I want one.
I want a health plan that includes routine
and preventive care. I don't mind if I have to wait for these services to be scheduled
for an available appointment with my doctor.
If I need to see a specialist, I probably
will ask my doctor for a recommendation, but I want to decide whom to go to and
when. I don't want to have to see my primary care doctor each time before I can
see a specialist.
I don't mind if my primary care doctor must
refer me to specialists. If my doctor doesn't think I need special services, that
is fine with me.
If your answers are mostly 1: You want to
make your own health care choices, even if it costs you more and takes more paperwork.
Fee-for-service may be the best plan for you.
If your answers are mostly 2: You are willing
to give up some choices to hold down your medical costs. You also want help in
managing your care. Consider a health maintenance organization.
If your answers are some 1's and some 2's:
You might want to look for a plan such as a preferred provider organization that
combines some of the features of fee-for-service and a health maintenance organization.
The differences among fee-for-service plans,
HMOs, and PPOs are not as clear-cut as they once were. Fee-for-service plans have
adopted some activities used by HMOs and PPOs to control the use of medical services.
And HMOs and PPOs are offering more freedom to choose doctors, the way fee-for-service
plans do. 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.
Managed care influences how much health care
you use. Almost all plans have some sort of managed care program to help control
costs. For example, if you need to go to the hospital, one form of managed care
requires that you receive approval from your insurance company before you are
admitted to make sure that the hospitalization is needed. If you go to the hospital
without this approval, you may not be covered for the hospital bill.
This is the traditional kind of health care
policy. Insurance companies pay fees for the services provided to the insured
people covered by the policy. This type of health insurance offers the most choices
of doctors and hospitals. You can choose any doctor you wish and change doctors
any time. You can go to any hospital in any part of the country.
With fee-for-service, the insurer only pays
for part of your doctor and hospital bills. This is what you pay:
A monthly fee, called a premium.
A certain amount of money each year, known
as the deductible, before the insurance payments begin. In a typical plan, the
deductible might be $250 for each person in your family, with a family deductible
of $500 when at least two people in the family have reached the individual deductible.
The deductible requirement applies each year of the policy. Also, not all health
expenses you have count toward your deductible. Only those covered by the policy
do. You need to check the insurance policy to find out which ones are covered.
After you have paid your deductible amount
for the year, you share the bill with the insurance company. For example, you
might pay 20 percent while the insurer pays 80 percent. Your portion is called
coinsurance.
To receive payment for fee-for-service claims,
you may have to fill out forms and send them to your insurer. Sometimes your doctor's
office will do this for you. You also need to keep receipts for drugs and other
medical costs. You are responsible for keeping track of your medical expenses.
There are limits as to how much an insurance
company will pay for your claim if both you and your spouse file for it under
two different group insurance plans. A coordination of benefit clause usually
limits benefits under two plans to no more than 100 percent of the claim.
Most fee-for-service plans have a "cap,"
the most you will have to pay for medical bills in any one year. You reach the
cap when your out-of-pocket expenses (for your deductible and your coinsurance)
total a certain amount. It may be as low as $1,000 or as high as $5,000. Then
the insurance company pays the full amount in excess of the cap for the items
your policy says it will cover. The cap does not include what you pay for your
monthly premium.
Some services are limited or not covered
at all. You need to check on preventive health care coverage such as immunizations
and well-child care.
There are two kinds of fee-for-service coverage:
basic and major medical. Basic protection pays toward the costs of a hospital
room and care while you are in the hospital. It covers some hospital services
and supplies, such as x-rays and prescribed medicine. Basic coverage also pays
toward the cost of surgery, whether it is performed in or out of the hospital,
and for some doctor visits. Major medical insurance takes over where your basic
coverage leaves off. It covers the cost of long, high-cost illnesses or injuries.
Some policies combine basic and major medical
coverage into one plan. This is sometimes called a "comprehensive plan." Check
your policy to make sure you have both kinds of protection.
Most insurance plans will pay only what
they call a reasonable and customary fee for a particular service. If your doctor
charges $1,000 for a hernia repair while most doctors in your area charge only
$600, you will be billed for the $400 difference. This is in addition to the deductible
and coinsurance you would be expected to pay. To avoid this additional cost, ask
your doctor to accept your insurance company's payment as full payment. Or shop
around to find a doctor who will. Otherwise you will have to pay the rest yourself.
Questions to Ask About Fee-for-Service Insurance
How much is the monthly premium? What will
your total cost be each year? There are individual rates and family rates.
What does the policy cover? Does it cover
prescription drugs, out-of-hospital care, or home care? Are there limits on the
amount or the number of days the company will pay for these services? The best
plans cover a broad range of services.
Are you currently being treated for a medical
condition that may not be covered under your new plan? Are there limitations or
a waiting period involved in the coverage?
What is the deductible? Often, you can lower
your monthly health insurance premium by buying a policy with a higher yearly
deductible amount.
What is the coinsurance rate? What percent
of your bills for allowable services will you have to pay?
What is the maximum you would pay out of
pocket per year? How much would it cost you directly before the insurance company
would pay everything else?
Is there a lifetime maximum cap the insurer
will pay? The cap is an amount after which the insurance company won't pay anymore.
This is important to know if you or someone in your family has an illness that
requires expensive treatments.
Health Maintenance Organizations (HMOs)
Health maintenance organizations are prepaid
health plans. As an HMO member, you pay a monthly premium. In exchange, the HMO
provides comprehensive care for you and your family, including doctors' visits,
hospital stays, emergency care, surgery, lab tests, x-rays, and therapy.
The HMO arranges for this care either directly
in its own group practice and/or through doctors and other health care professionals
under contract. Usually, your choices of doctors and hospitals are limited to
those that have agreements with the HMO to provide care. However, exceptions are
made in emergencies or when medically necessary.
There may be a small co-payment for each
office visit, such as $5 for a doctor's visit or $25 for hospital emergency room
treatment. Your total medical costs will likely be lower and more predictable
in an HMO than with fee-for-service insurance.
Because HMOs receive a fixed fee for your
covered medical care, it is in their interest to make sure you get basic health
care for problems before they become serious. HMOs typically provide preventive
care, such as office visits, immunizations, well-baby checkups, mammograms, and
physicals. The range of services covered vary in HMOs, so it is important to compare
available plans. Some services, such as outpatient mental health care, often are
provided only on a limited basis.
Many people like HMOs because they do not
require claim forms for office visits or hospital stays. Instead, members present
a card, like a credit card, at the doctor's office or hospital. However, in an
HMO you may have to wait longer for an appointment than you would with a fee-for-service
plan.
In some HMOs, doctors are salaried and they
all have offices in an HMO building at one or more locations in your community
as part of a prepaid group practice. In others, independent groups of doctors
contract with the HMO to take care of patients. These are called individual practice
associations (IPAs) and they are made up of private physicians in private offices
who agree to care for HMO members. You select a doctor from a list of participating
physicians that make up the IPA network. If you are thinking of switching into
an IPA-type of HMO, ask your doctor if he or she participates in the plan.
In almost all HMOs, you either are assigned
or you choose one doctor to serve as your primary care doctor. This doctor monitors
your health and provides most of your medical care, referring you to specialists
and other health care professionals as needed. You usually cannot see a specialist
without a referral from your primary care doctor who is expected to manage the
care you receive. This is one way that HMOs can limit your choice.
Before choosing an HMO, it is a good idea
to talk to people you know who are enrolled in it. Ask them how they like the
services and care given.
Questions to Ask About an HMO
Are there many doctors to choose from? Do
you select from a list of contract physicians or from the available staff of a
group practice? Which doctors are accepting new patients? How hard is it to change
doctors if you decide you want someone else? How are referrals to specialists
handled?
Is it easy to get appointments? How far in
advance must routine visits be scheduled? What arrangements does the HMO have
for handling emergency care?
Does the HMO offer the services I want? What
preventive services are provided? Are there limits on medical tests, surgery,
mental health care, home care, or other support offered? What if you need a special
service not provided by the HMO?
What is the service area of the HMO? Where
are the facilities located in your community that serve HMO members? How convenient
to your home and workplace are the doctors, hospitals, and emergency care centers
that make up the HMO network? What happens if you or a family member are out of
town and need medical treatment?
What will the HMO plan cost? What is the
yearly total for monthly fees? In addition, are there co-payments for office visits,
emergency care, prescribed drugs, or other services? How much?
Preferred Provider Organizations (PPOs)
The preferred provider organization is a
combination of traditional fee-for-service and an HMO. Like an HMO, there are
a limited number of doctors and hospitals to choose from. When you use those providers
(sometimes called "preferred" providers, other times called "network" providers),
most of your medical bills are covered.
When you go to doctors in the PPO, you present
a card and do not have to fill out forms. Usually there is a small co-payment for
each visit. For some services, you may have to pay a deductible and coinsurance.
As with an HMO, a PPO requires that you
choose a primary care doctor to monitor your health care. Most PPOs cover preventive
care. This usually includes visits to the doctor, well-baby care, immunizations,
and mammograms.
In a PPO, you can use doctors who are not
part of the plan and still receive some coverage. At these times, you will pay
a larger portion of the bill yourself (and also fill out the claims forms). Some
people like this option because even if their doctor is not a part of the network,
it means they don't have to change doctors to join a PPO.
Questions to Ask About a PPO
Are there many doctors to choose from? Who
are the doctors in the PPO network? Where are they located? Which ones are accepting
new patients? How are referrals to specialists handled?
What hospitals are available through the
PPO? Where is the nearest hospital in the PPO network? What arrangements does
the PPO have for handling emergency care?
What services are covered? What preventive
services are offered? Are there limits on medical tests, out-of-hospital care,
mental health care, prescription drugs, or other services that are important to
you?
What will the PPO plan cost? How much is
the premium? Is there a per-visit cost for seeing PPO doctors or other types of
co-payments for services? What is the difference in cost between using doctors
in the PPO network and those outside it? What is the deductible and coinsurance
rate for care outside of the PPO? Is there a limit to the maximum you would pay
out of pocket?
Medicare is the Federal health insurance
program for Americans age 65 and older and for certain disabled Americans. If
you are eligible for Social Security or Railroad Retirement benefits and are age
65, you and your spouse automatically qualify for Medicare.
Medicare has two parts: hospital insurance,
known as Part A, and supplementary medical insurance, known as Part B, which provides
payments for doctors and related services and supplies ordered by the doctor.
If you are eligible for Medicare, Part A is free, but you must pay a premium for
Part B.
Medicare will pay for many of your health
care expenses, but not all of them. In particular, Medicare does not cover most
nursing home care, long-term care services in the home, or prescription drugs.
There are also special rules on when Medicare pays your bills that apply if you
have employer group health insurance coverage through your own job or the employment
of a spouse.
Medicare usually operates on a fee-for-service
basis. HMOs and similar forms of prepaid health care plans are now available to
Medicare enrollees in some locations.
The best source of information on the Medicare
program is the Medicare Handbook. This booklet explains how the Medicare
program works and what your benefits are. To order a free copy, write to: Health
Care Financing Administration, Publications, N1-26-27, 7500 Security Blvd., Baltimore,
MD 21244-1850. You also can contact your local Social Security office for information.
Some people who are covered by Medicare
buy private insurance, called "Medigap" policies, to pay the medical bills that
Medicare doesn't cover. Some Medigap policies cover Medicare's deductibles; most
pay the coinsurance amount. Some also pay for health services not covered by Medicare.
There are 10 standard plans from which you can choose. (Some States may have fewer
than 10.) If you buy a Medigap policy, make sure you do not purchase more than
one.
You need to shop carefully before deciding
on the best policy to fit your needs. You may get another booklet, Guide to
Health Insurance for People with Medicare, to help you in making the right
choice. To order a free copy, write to: Health Care Financing Administration,
Publications, N1-26-27, 7500 Security Blvd., Baltimore, MD 21244-1850.
Another good source of information on the
same topic is The Consumer's Guide to Medicare Supplement Insurance. To
order a free copy, write to: Health Insurance Association of America, 555 13th
St., N.W., Suite 600 East, Washington, D.C. 20004.
Medicaid
Medicaid provides health care coverage for
some low-income people who cannot afford it. This includes people who are eligible
because they are aged, blind, or disabled or certain people in families with dependent
children. Medicaid is a Federal program that is operated by the States, and each
State decides who is eligible and the scope of health services offered.
General information on the Medicaid program
is given in the Medicaid Fact Sheet. For a free copy, write to: Health
Care Financing Administration, Publications, N1-26-27, 7500 Security Blvd., Baltimore,
MD 21244-1850. For specifics on Medicaid eligibility and the health services offered,
contact your State Medicaid Program Office.
Disability Insurance
Disability insurance replaces income you
lose if you have a long-term illness or injury and cannot work. This is an important
type of coverage for working-age people to consider. Disability insurance does
not cover the cost of rehabilitation if you are injured. Check your major medical
insurance to see if it is covered there.
Some employers offer group disability insurance
and this may be one of the benefits where you work. Or you might be eligible for
some government-sponsored programs that provide disability benefits. Many different
kinds of individual policies are also available.
The Consumer's Guide to Disability Insurance
explains disability insurance and sources of disability income to help you decide
if you need this coverage. It will also help you compare your choices of policies.
For a free copy, write to: Health Insurance Association of America, 555 13th St.,
N.W., Suite 600 East, Washington, D.C. 20004.
Hospital Indemnity Insurance
This insurance offers limited coverage.
It pays a fixed amount for each day, up to a maximum number of days. You may use
it for medical or other expenses. Usually, the amount you receive will be less
than the cost of a hospital stay.
Some hospital indemnity policies will pay
the specified daily amount even if you have other health insurance. Others may
coordinate benefits, so that the money you receive does not equal more than 100
percent of the hospital bill.
Long-Term Care Insurance
Long-term care insurance is designed to
cover the costs of nursing home care, which can be several thousand dollars each
month. Long-term care is usually not covered by health insurance except in a very
limited way. Medicare covers very few long-term care expenses. There are many
plans and they vary in costs and services covered, each with its own limits.
More detailed information is given in A
Shopper's Guide to Long-Term Care Insurance. Contact your State Insurance
Department or write: National Association of Insurance Commissioners, 120 W. 12th
Street, Suite 1100, Kansas City, MO 64105.
Another good source of information is The
Consumer's Guide to Long-Term Care Insurance. For a free copy, write to: Health
Insurance Association of America, 555 13th St., N.W., Suite 600 East, Washington,
D.C. 20004.
There's no doubt that choosing among health
insurance plans takes time and effort. Now that you have read this information,
you know what questions to ask so you will be able to carefully compare various
plans and find the one that best fits your needs.
Coinsurance: The amount you are required
to pay for medical care in a fee-for-service plan after you have met your deductible.
The coinsurance rate is usually expressed as a percentage. For example, if the
insurance company pays 80 percent of the claim, you pay 20 percent.
Coordination of Benefits: A system to eliminate
duplication of benefits when you are covered under more than one group plan. Benefits
under the two plans usually are limited to no more than 100 percent of the claim.
Co-payment: Another way of sharing medical
costs. You pay a flat fee every time you receive a medical service (for example,
$5 for every visit to the doctor). The insurance company pays the rest.
Covered Expenses: Most insurance plans,
whether they are fee-for-service, HMOs, or PPOs, do not pay for all services.
Some may not pay for prescription drugs. Others may not pay for mental health
care. Covered services are those medical procedures the insurer agrees to pay
for. They are listed in the policy.
Deductible: The amount of money you must
pay each year to cover your medical care expenses before your insurance policy
starts paying.
Exclusions: Specific conditions or circumstances
for which the policy will not provide benefits.
HMO (Health Maintenance Organization): Prepaid
health plans. You pay a monthly premium and the HMO covers your doctors' visits,
hospital stays, emergency care, surgery, checkups, lab tests, x-rays, and therapy.
You must use the doctors and hospitals designated by the HMO.
Managed Care: Ways to manage costs, use,
and quality of the health care system. All HMOs and PPOs, and many fee-for-service
plans, have managed care.
Maximum Out-of-Pocket: The most money you
will be required pay a year for deductibles and coinsurance. It is a stated dollar
amount set by the insurance company, in addition to regular premiums.
Noncancellable Policy: A policy that guarantees
you can receive insurance, as long as you pay the premium. It is also called a
guaranteed renewable policy.
PPO (Preferred Provider Organization): A
combination of traditional fee-for-service and an HMO. When you use the doctors
and hospitals that are part of the PPO, you can have a larger part of your medical
bills covered. You can use other doctors, but at a higher cost.
Preexisting Condition: A health problem
that existed before the date your insurance became effective.
Premium: The amount you or your employer
pays in exchange for insurance coverage.
Primary Care Doctor: Usually your first
contact for health care. This is often a family physician or internist, but some
women use their gynecologist. A primary care doctor monitors your health and diagnoses
and treats minor health problems, and refers you to specialists if another level
of care is needed.
Provider: Any person (doctor, nurse, dentist)
or institution (hospital or clinic) that provides medical care.
Third-Party Payer: Any payer for health
care services other than you. This can be an insurance company, an HMO, a PPO,
or the Federal Government.
