Health Insurance In America? Read Our Jargon Buster For New Expats
Getting sick or injured in the United States can be painful, not just in terms of the ailment itself, but the hit your wallet can take when seeking treatment. Even for emergency treatment, you can expect to fork out considerable sums for care.
A night’s stay in hospital can cost USD$4,000 and surgery can set you back USD$50,000.Anecdotes abound of healthcare providers charging thousands for an x-ray and hundreds for medication or even just a quick evaluation. A broken arm could cost USD$20,000.
American healthcare is as complicated as it is costly. Essentially medicine is a private business in the country, meaning that hospitals and clinics are run for a profit, which comes as a surprise to European expats who are used to medicine being a public service. Whereas the UK’s NHS runs a free service and many countries only charge a minimal fee to those who can afford it, Americans expect to be confronted by a large bill whenever they seek treatment.
Whilst the quality of care can be incredibly high, the cost can leave patients with a lifetime of debt and is the leading cause of bankruptcy in the country. This means the majority of US citizens subscribe to health insurance in order to gain access to treatment. They pay a monthly premium to a healthcare insurer who, if they fall ill, will pay the majority of their costs.
The 2010 ‘Obamacare’ act made it easier for low income families to access health insurance, lowering the monthly premium by an average of 76%, saving them an estimated USD$1.2 billion on the cost of treatment. The majority of residents in America still rely on their employer for health cover, with around 60% being insured with schemes that come come as a perk of their jobs.
Expats arriving in America will need to understand this complex system, the details of which can also vary from state to state. Travel insurance will not cover expats for long-term conditions, and even private policies will exclude treatment for pre-existing conditions or dental and optical consultations.
Since most expats arriving in America are doing so in order to seek or take up work, the majority will accept coverage based on whatever policy the business offers as standard, which may cover the entire family. On the other hand, the vast amounts of small print that accompany these policies may leave you facing surprise bills for seemingly commonplace procedures.
We’ve taken on the complexities of the health insurance system and come up with a handy cheat-sheet, giving expats a glossary to explain the most confusing terms likely to pop up in policy documents
Your insurance company will expect you to pay a certain sum each year in medical expenses before they start to pay out. The time in which you receive treatment at your own cost before crossing this threshold is known as the accumulation period.
Insurance companies negotiate deals with their providers, agreeing a discounted tariff for their services. A USD$200 service may be billed to your insurance company for USD$150, and you may be required to pay a contribution to this fee.
The Obamacare bill has outlawed this practice for new policies, but older policies may still have a maximum limit on the amount of money that can be paid out in any given year.
Certificate of Coverage
This policy document is the one that describes everything you are entitled to, what you are not covered for, and all the small print that will affect your claims.
Even after you have passed the accumulation period and paid co-payment charges, you may still be required to pay a percentage of the cost of treatment you receive.
A flat fee for specific services or products. Doctors’ appointments may cost USD$20 before you’ve even sat down and before you’ve paid for any medicines. Certain brands or classes of drugs may also incur a flat fee cost.
Some policies require holders to pay a fixed amount on services before paying out to cover part or all of the remaining costs.
The hospital, clinic or organization hired by your insurance company. You must use this provider in order to qualify for insurance payouts.
Exclusions are specific conditions, illnesses or injuries that your policy will not pay out for, or treatments they will not provide.
Exclusive Provider Organization
EPO policies are tied to a strict list of doctors and hospitals. If you are treated by anyone not on this list you will be paying out of your own pocket.
Experimental or Investigational Procedures
Your policy will not pay for any procedure, drug, technique, therapy or operation that your insurer does not regard as fully tried and tested.
In certain circumstances, an employer may decide to continue covering the cost of certain treatments that are under way, even after the policy has expired.
Health Reimbursement Account
This is a kind of policy frequently seen in employer-provided schemes. With an HRA, you pay for treatment out of your own pocket and your employer reimburses you a proportion of the cost. The advantage is that you will pay no premiums and you know the maximum cost of any treatment you receive.
The problem with these policies is that you cannot stay with the scheme if you move jobs and there tends to a be a long list of limitations and restrictions on the treatments available.
Health savings account
An HSA allows the holder of a High Deductible Health Plan to save money in a tax-free account and make withdrawals when they need to pay for treatment. In some circumstances, withdrawing money from the account can incur tax charges of up to 20%.
High Deductible Health Plan
These policies involve lower monthly payments but higher deductibles should you need to make a claim. Some HDHP schemes will offer additional benefits before making a claim, whilst others are geared toward coverage for ‘catastrophic illnesses’.
The most common form of healthcare cover in the USA, Healthcare Maintenance Organizations connect employers with an approved network of doctors, hospitals and other practitioners.
Although you can pay to join an HMO, federal law requires all businesses with more than 25 employees to provide HMO cover for their staff.
Depending on the exact policy you may need to pay a small premium each month, or your employer will pay the full amount. In most cases you can enjoy preventative medicine such as tests, vaccinations, scans and check-ups free or for a lower price.
The down side of HMO plans is that you will need to book an appointment with a ‘gatekeeper’ GP or family doctor who is part of the network. This doctor will detail what treatment you need and where you can get it, as approved by the terms of the scheme. If this doctor deems your problem to be too minor to warrant treatment, you won’t be getting anything for it and you’ll be paying full rate if you seek treatment outside of the network.
It’s worth remembering that emergency care is covered by HMO plans, regardless of where you get treated.
Unlike a number of other plans, indemnity plans allow the policyholder to shop around for the care that they want. Once you’ve spent a set amount on deductibles the policy will reimburse a set proportion of the costs of further treatment.
Although these policies afford greater freedom, they generally cost much more than other policy types.
The costs of tests and x-rays may be charged to you or proportionally covered by the policy depending on its terms. As a rule, dental x-rays aren’t covered by any policy.
Short-term policies exist to bridge the gap as policyholders move between jobs or wait for clearance on longer term policies.
These short-term policies have definite limits placed on the length that they can be held for.
This is the essential criteria that insurance companies work to when deciding whether or not to pay out on treatment. The company will look at your diagnosis and decide if the procedure or medicines offered are appropriate, consistent with the best care available and the cheapest. If a treatment fails to pass this test, the policy is unlikely to pay out.
The predecessors to Obamacare, these schemes offer treatment for low-income and vulnerable citizens.
Medicare provides insurance for over 48 million Americans, mostly elderly patients who have paid into the federally-run insurance scheme. A small number of Medicare patients are younger people with severe disabilities. As the scheme requires citizens to have paid contributions for ten years, it’s unlikely that expats will qualify for cover under the scheme.
Medicaid is run state-by-state as a means tested programme designed to guarantee health insurance for families on low incomes. The scheme is open to citizens or resident foreigners, but to qualify requires patients to satisfy specific criteria. Whilst all children are eligible for Medicaid treatment, adults must show evidence of disability, pregnancy, low income or limited assets.
Each state has slightly different ways of running Medicaid, with some requiring contributions toward treatment costs and others working free of charge. There is limited cover for dental or optical care.
This is the insurer-approved list of doctors, hospitals, clinics, specialists and other practitioners that will be covered by the policy.
Expect your doctor to only recommend treatments and referrals that have been approved and to pay full rate for anything not within the network.
The Patient Protection and Affordable Care Act (PPACA) is more commonly know as Obamacare. The 2010 legislation overhauled the medical system and gave greater access to healthcare for low income households and prevented overcharging based on gender or previous conditions.
Estimates from the Centers for Disease Control suggest than almost 11.5 million American now have insurance who did not have cover beforehand. Whilst ‘Obamacare’ isn’t a single scheme, its effects have impacted many parts of the health insurance market.
The comprehensive and complex statute prevents insurers from dropping policyholders when they get sick, requires coverage for preventative medicine and offers parents to keep children on their policies for much longer, along with a raft of other improvements.
An office visit is any trip you take to your doctor, which often incurs a flat fee charge and may or may not be covered on your policy.
Your insurer will have a definitive list of the healthcare providers it will pay for you to receive treatment from. There’s nothing to stop you from seeking a second opinion or getting treatment that is not covered by your policy, but the insurance company will not reimburse you for these costs.
Point of Service
POS policies mean that you need a referral from a designated doctor in order to qualify for any treatment. Refusing to play by the rules can be costly.
Preferred Provider Organization
You won’t need to coordinate all your treatments through one doctor, but you will need to stick to a prescribed list of approved providers.
There is a wide variety of these policies available, with many at the cheaper end of the spectrum.
When you first apply for a health insurance policy, the company will analyse information about your age, gender, lifestyle and pre-existing conditions in order to calculate how much to charge you in premiums.
The changes brought about by Obamacare have made this process a much fairer system.
Schedule C and Schedule K-1
Because healthcare costs can represent a significant proportion of household costs they can be deducted from income for tax returns.
Both these documents relate to reporting income for tax purposes when applying for insurance.
Some policies include restrictions on the geographic area in which you can seek treatment. You may be limited to providers in the same state or within a certain distance from your home address.
Utilization review/Medical review
A group of doctors and nurses working for the insurance company may investigate your case, looking into your claims and the treatments provided to you.
Payments may be refused if your case is deemed to be unnecessary or the treatment inappropriate.
Vision Care Coverage
A separate policy designed to provide eye checks, glasses and contact lenses.
After taking out your policy, you may need to wait 12 months or longer until the scheme will cover expenses incurred by pre-existing conditions.
This stipulation is sometimes waived depending on how much you claimed on previous policies.
In return for cheaper premiums customers may elect to waive coverage for specific conditions or pre-existing conditions.
Obamacare makes it a legal requirement for all insurers to provide regular check-ups, vaccinations and screenings to all children covered by a policy. Similar mandatory services are included for the care of pregnant women and new mothers.
Article by Andy Scofield, Expat Focus International Features Writer
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