Contract Provisions

If you are covered by a Major Medical policy, you may be lulled into thinking that you would not have to pay any more than your Out-of-Pocket Expenses no matter how severe the injury or illness......

Depending upon the provisions buried in your insurance contract, you may find out that you may pay out far more than your deductible and coinsurance on a large loss.

Listed below are eight contract provisions that could make your claim costs much greater than the deductible and coinsurance on a large loss.

Transplant	Like to Travel?
Intensive Care	Cost per Day?
Schedules	Ancient History
Exclusions	Creative Writing
Mental & Nervous	Lifetime Maximums? or None?
Maternity	Unlimited or fixed amount?
(PPO)	Large or Small Network?
Usual & Customary	Is your Health Insurer Cheap? If so, YOU pay!

Many Insurance Companies limit coverage for organ transplants by forcing you to have the procedures done with Providers of their choosing. This does not mean that it is a Provider on the Policy’s PPO. The hospital for the organ transplant procedure may even be out of State. The policy usually limits the coverage for transplants to a limit lower than the lifetime limit on the policy if the Transplant is done at a Hospital of your choosing. You may think that you have $1,000,000.00 or $2,000,000.00 in transplant coverage but in actuality you may only have a $100,000.00 limit if you choose your own Doctor and Hospital. Even if they are listed on the Policy’s PPO! Transplant procedures can easily exceed $100,000.00. I know that the likelihood of needing this coverage is rare. However, when you do need the coverage, you do not want to be told which Doctor and Hospital you have to use.

As you know, the intensive care rate at a hospital can be astronomical. Some insurance companies limit the amount they pay for Intensive Care to a multiple of the "average semi-private room rate". From personal experience, I can tell you that the rate for intensive care can be 10 times the rate for a semi-private room at the same hospital. The consequences of this restriction for Intensive Care Expenses can be devastating. Some companies have even limited the benefit for intensive care to a certain number of days per year.

"Schedules" are lists of medical procedures on the policy and what the insurance company will pay for each procedure. The Company will not pay any more than what is listed on the schedule. Any amount over the amount listed in the schedule is your responsibility. This is NOT a PPO! No Doctor agreed to these amounts.

The exclusions listed on a policy are not the same from Company to Company. This is the most important part of the policy contract since policies provide coverage for all illnesses and injuries except those listed in the exclusions. You must read the exclusions carefully. For example, some companies exclude benefits for injuries or illness caused by being under the influence of alcohol. Read your policy exclusions.

ALL insurance companies limit the benefit provided for Mental & Nervous Expenses. You must read your policy to find out how much coverage your policy provides. Some companies provide $2,500.00 a year with no outpatient coverage. Other companies will provide up to $25,000.00 Lifetime for inpatient and outpatient expenses. You may have heard that the government is eliminating this mental and nervous limitation. The limitation will be lifted on qualified plans for Groups, not Individual policies.

Maternity coverage is for the costs associated with prenatal care and routine delivery of a baby. Complications of a pregnancy are covered regardless of the maternity option on a policy. Some companies limit the amount of coverage for Maternity. If there is a limit, then the money spent for the maternity coverage option would be more effective if it were just put in your savings account. You must compare the annual cost of the optional maternity coverage to the actual additional benefit you will receive.

Most individual policies have some type of PPO network. The network is either going to be just a group of Hospitals, or a group of Hospitals and Doctors. You should have a list of the Hospitals that are members of your PPO network. A Doctor PPO is not recommended unless it is quite large. Ideally, you should select a company that has billing practices agreements with Doctors that are affiliated with a PPO Hospital. More Doctors, including specialists, are part of billing agreements. This means that it is more likely you will find a specialist for a particular problem if the need arises without having to set an appointment three months in advance. The key to making billing practices agreements work is to have a VERY Large Hospital network.

Usual & customary charges can have a great effect on the amount of money that you pay out for health care expenses. ALL insurance Companies use Usual and Customary charges in their claims payment. There are two major issues with usual and customary charges. They are:

Each insurance company uses a different formula in determining what they feel are usual and customary charges. When the company’s interpretation of usual and customary charges is far below the usual and customary charges made by health care providers, the difference comes out of your pocket. This is in addition to any reductions in coverage you may have by going outside of your Policy’s Hospital PPO. There are, however, ways to reduce the possibility of this occurring. They are as follows:

The larger the group of Hospitals, the better. Many insurance companies have billing agreements with Doctors that are affiliated with a PPO Hospital. The billing practices agreements are a lot less restrictive than a Doctor PPO.

The amount that a Provider bills to you is usually a lot higher than what your insurance company actually pays for the services.

You may be thinking: "So What? The insurance company is paying the provider."

Your Doctor or Hospital may be billing you their maximum rate regardless of any agreement with your insurance company. Some insurance companies do not even respond until they have to start paying. Now, once the insurance company starts paying they will most likely be paying the Provider a rate much lower than what you paid. The way your insurance company manages the claims is of critical importance especially if you have a high deductible health care policy.

It is extremely important that you select an Insurance Company that is going to manage ALL of the health care expenses. Not just the Company’s health care expenses, but y0our health care expenses.

You select the insurance company, pay a premium, and agree to the terms of the policy. You should reap the same benefits from their billing agreements as they do!

An example is in order to clarify this obscure, yet VERY IMPORTANT provision in your health insurance contract.

An insurance Company that applies the agreed rates to their expenses, not all of the expenses charged by the Provider:

Amount billed by Provider	$1,000.00
Amount the Insurance Company applies towards the $1,500 deductible	$1,000.00
Cost to you:	$1,000.00

An insurance company that applies the agreed rates to all of the expenses charged by the provider:

Amount billed by the Provider	$1,000.00
The amount the insurance company subtracts from the $1,000.00 to reach the contracted price for the services provided	-$400.00
The amount the insurance company would have paid per their agreement with the Provider	$600.00
This amount is applied towards the $1,500.00 deductible	$600.00
Cost to you per the insurance company's agreement with the provider	$600.00

In the first example, you have met $1,000.00 of your deductible, but you have to pay $1,000.00 to the Provider for services at their rate, not the agreed rate.

In the second example, you have met $600.00 of your deductible, but only have to pay the Provider $600.00 at the rate agreed to by the provider and the insurance company.

Once again, if your insurance company does not tell you what they are paying your providers, you are not getting the reduced rate. Only the Insurance Company is getting the reduced rate.

When an Insurance Company manages the entire claim, you get the insurance company's rate for your deductible and coinsurance expenses.