Below are some of the questions we have been asked most often. Whether you have a question about family health insurance or COBRA short term health insurance alternatives, you will find many of the answers you’re looking for in our FAQ guide.
Choose from our most frequently asked questions:
You may also find our Glossary useful.
Health Compare wants my Social Security Number? Is that safe for me to enter?
Your SSN helps the carrier determine if you’re qualified for the plan you’ve applied for. We understand that entering this info is a little scary (we’ve had to do it ourselves), but we’re using industry-standard encryption.
What if I can’t remember a date?
Don’t worry! Just take your best guess. Obviously, the closer you can get, the better. Just make sure that you specify in the “Additional Information” section that you’re unsure. The insurance company may want to follow up later to confirm the date.
What is a deductible and how does it work?
A deductible is the amount you must pay out-of-pocket each year before the health insurance plan begins to pay for your claims. For example, if your plan has a $1,000 deductible, you will pay $1,000 in medical expenses out of pocket the insurance carrier pays. This deductible is an amount that is in addition to your monthly premiums (plans with higher deductibles usually have lower monthly premiums).
Co-payment? What’s that?
Ahh, yes, the co-payment. If you’ve never had health insurance or have never had a co-payment, they’re really pretty simple to explain. They are really nothing more than a charge you pay for a medical service or supply (like a prescription). The amount varies from plan to plan and from service to service, but you usually pay it at the time of service.
What is co-insurance?
Co-insurance is another way of saying “your share of the bill.” When a plan features co-insurance it means that after satisfying your co-pay requirement, you and the insurance company split the remainder of the provider’s bill along a pre-arranged percentage. For example, if your plan benefit says 20%, the insurance company pays 80% of the charge and you are responsible for the remaining 20%.
What are examples of qualifying events? What aren’t qualifying events? Qualifying events are:
- Termination of Employment (being laid off or fired)
- A reduction of hours that make you no longer eligible under your employer’s plan.
- You leave your job voluntarily (resignation).
- You retire.
- Your spouse (who was the employee covered under the plan) dies.
- You divorce or become legally separated (and you were covered under your ex’s plan).
- If you are a child and you lose your dependent child status under the employer’s group health plan.
It is NOT a qualifying event if:
- You were terminated from employment for gross negligence or misconduct.
- Your employer simply canceled their health insurance plan.
Now you can’t use money from your HSA to pay the premiums on your health insurance, but you can use it to pay for just about everything else (related to your health that is):
- Health insurance plan deductibles, co-pays and coinsurance.
- Psychiatric care
- Transportation costs associated with your health.
- Prescription and over the counter drugs.
- Dental expenses (including braces).
Obviously, no one plan fits everyone. Here are some things to consider:
Are you looking for coverage in case something big happens (you know like an accident or major surgery), or do you want more comprehensive coverage that includes things like routine doctor visits and prescription drugs? As a rule of thumb, the more comprehensive the coverage, the more expensive the premium will be.
Do you need something in the short-term or something for a longer period? If you’re between jobs and just need health insurance for a few months, you might want to think about short term coverage.
You can pay now or you can pay later. By this, we mean that most plans work as sort of a trade-off. Lower monthly premiums mean higher deductibles (that must be paid before costs are covered) and higher co-pays for things like doctor visits. Higher monthly premiums usually mean lower deductibles and co-pays. It’s important to try and determine how often you’ll be using your insurance – if you don’t expect to use it often, you may want to go with a lower monthly payment (with higher costs when you do use it) rather than a plan where you’re paying a lot of money each month for something you don’t’ use all that often.
Do you like your current doctor or your child’s pediatrician? If so, make sure that he or she is covered by the particular insurance you are considering. If this does not matter to you, you will have a wider range of insurance options from which to choose.
Yes. Each eligible Qualified Beneficiary can make a different election to continue benefits under COBRA. You can choose to keep your health insurance benefits, but not those of your spouse if it makes sense to do that (for example if they are covered under a plan at their work). Likewise, you can continue your child’s health insurance but cancel dental coverage. It is really what will work best for your particular circumstance.
Sure. Just select “Child(ren) only coverage” and enter your child(ren)’s information in the applicant section.
This is insurance that you purchase when you are not covered by an employer or other group – hence the name “individual”. There are hundreds of different individual and family plans available on the market, each with different features and price points.
There are many plan types, but broadly speaking they fall into three main types – PPO, HMO and Indemnity plans.
PPO plans are the most popular due to their low premiums and access to a wide network of providers. With PPO plans, you are free to use any provider within the plan network (these networks are typically large and encompass a wide variety of providers). PPO plans typically have deductibles, copays, and coinsurance to promote cost sharing between the insurance carrier and its member. It is through this cost sharing arrangement that PPO plans can offer competitive premiums.
HMO plans offer comprehensive coverage and often have low or $0 deductibles, copayments and coinsurance. These plans require you to have a primary care physician (PCP) who will manage all aspects of your healthcare. If you need to see a specialist, your PCP must refer you to one.
Indemnity plans usually give you more choices when it comes to picking a doctor or other providers. However, you may have to pay these providers up-front and then obtain reimbursement from the insurance company after the fact. So you have to ask yourself if you like paperwork as you’ll probably have more of it with an indemnity plan. Also, coverage is usually at a percentage of the cost of the service and you will most likely have a deductible to satisfy before any costs are covered by the insurance carrier.
No. You can cancel any time during the application process. Some states like California have a “free look” period. During this “free look” period you may cancel your coverage for a full refund of any premiums you may have paid.
Well, it is just what the name suggests – insurance that is in effect for a short period. It is usually up to six months, but it can be up to a year. This could be a good solution for you if you are between jobs or you are waiting for other insurance to kick-in. The application is usually simpler than if you were applying for individual or family health insurance, and the plans work to protect you against major illnesses and accidents. They generally do not provide for preventative care like check-ups or immunizations. Also, be aware that if you end up with a major health problem while you are covered by a short-term plan, it will be very difficult for you to obtain longer-term individual or family insurance later due to this pre-existing condition.
When people know that they have longer-term health insurance on the way, they often get short-term coverage to fill the gap between one coverage and the other. Some of these people are between jobs, recent college graduates, or on strike.
It is usually pretty quick. Supply a credit card, get approved and most plans start within 24 hours. Of course, you can also select a start date up to 30 days in the future.
Once you have it in writing (that you have replacement coverage), contact the company that issued you the short-term coverage and cancel it.
We have done a lot of these, so we can pretty much tell you if you qualify or not after you have filled out your application.
No. You can cancel any time during the application process. However, some insurance carriers may charge a non-refundable application fee.
Each insurance carrier is different, however one thing they all have in common is if they did charge you for your policy and you do not end up qualifying, they will refund your money.
Sure. Just enter your child’s information in the applicant section.
No. Pick the ones that work best for your needs and budget
No. These are basic plans that are used to protect you in the event of a major illness or medical emergency and do not typically have the benefits of a more comprehensive plan.
No. Most short-term plans have a minimum of 30 days.
At the end of your short-term plan coverage, most plans will allow you to re-apply for another term. You can usually do this just one time, however.
A POS (or Point of Service) plan is a bit of a hybrid between a PPO plan and an HMO plan. Like an HMO plan, you’ll probably have to pick a primary care physician who will take care of most of your healthcare needs and refer you to specialists. This doctor – from the plan’s network of providers – is usually not subject to the plan’s deductible, so coverage can begin immediately. There is also usually coverage for preventive care.
Services from a non-network provider will cost more (as they are not covered to the same degree) and you may also have to pay the entire balance up-front and submit a claim to your insurance company for reimbursement of the allowed amount.
One of the main benefits of health insurance is that insurance carriers negotiate medical fees with healthcare providers. In-network doctors, hospitals and other providers typically have made agreements with the insurance carriers to treat their members at reduced rates. Because of this, insurance carriers prefer that members use in-network providers. Out-of-network providers are pretty much what you’d expect: providers who do not have an agreement with the insurance company. Their costs are generally not covered by your insurance, or if they are covered, they are covered at a higher cost.
This is a Preferred Provider Organization plan. In simple terms it means you will have your choice of doctors (and other providers like laboratories) selected from the insurance company’s network of preferred doctors and hospitals. These groups have contracts with the insurance company to provide services to members at a discounted rate. With a PPO plan you can generally see any provider in the network without having to get an authorization from a primary care doctor (as would be required in an HMO plan). You will also be able to see out-of-network providers, though at a higher cost to you.
You may have a deductible to pay before costs are covered and you’ll probably have co-pays of various amounts for different services
HMO stands for Health Maintenance Organization and it is a common managed care plan. They usually have more comprehensive benefits, but along with that less choice in picking doctors and less control in making healthcare decisions. As part of an HMO, you will chose a primary care physician (PCP) who will take care of most of your needs and act as a gatekeeper to the rest of the system. Should you need the care of a specialist, you will visit this doctor first for a referral.
You will probably have coverage for preventative healthcare and you may not have a deductible before costs are covered. Paperwork and co-payments are minimal but you must use the providers within the HMO network.
Since you’re applying for an HMO, you’ll need to choose a doctor or Primary Care Physician (PCP). Don’t worry, you can change your doctor after you’ve been approved by the insurance company
With an indemnity plan, you can choose your doctors, hospitals and other providers. That is the good news. The bad news is that this comes at a price – both financially and in terms of convenience.
You will probably have to pay an annual deductible before the benefits of the insurance kick in. Then the insurance company will pay a percentage of what they (though not necessarily the doctor) considers a “usual, customary and reasonable rate” for the service you received. As an example, let’s say your doctor charges $200.00 for an office visit. The insurance company has determined that $150.00 is a usual, customary, and reasonable charge and they pay 80% of that amount (which would be $120.00). You will still owe the doctor $80.00, which is the difference between the amount he or she charges ($200.00) and the amount paid by the insurance ($120.00).
In addition, this type of plan may require you to pay the entire amount up front and then submit a claim and wait for reimbursement.
An HSA stands for Health Savings Account. It lets you save and pay for medical expenses with pre-tax dollars (meaning you don’t pay taxes on them).
Now, you need to use the HSA in conjunction with a HSA-eligible insurance plan, but if you do, you can find some nice tax savings.
With your HSA you can withdraw money for qualified medical expenses and not have to pay tax on that money. Withdrawals for non-medical expenses are allowed, but you pay tax on that money and you may be subject to a penalty fee.
Any funds not used remain in the account accruing interest tax-free.
You own the account and can use your HSA to save for retirement on a tax-deferred basis (like an IRA).
An HSA is a savings account – in fact, it stands for Health Savings Account. It has been designed by the federal government to encourage savings for healthcare, and does so by offering some significant tax advantages. These accounts are used along with HSA-eligible high-deductible health insurance plans.
Let’s look at how this works:
- Usually HSA-eligible, high-deductible health insurance plans have lower monthly premiums than plans with lower deductibles. So you can save money each month (which you might want to put in your HSA). Now, be aware, not all plans with a high-deductible are HSA eligible.
- Contributions (up to a certain amount) that go into the HSA go in pre-tax – which can be nice come April 15th.
- Use money from the HSA to pay for eligible medical expenses.
- Invest the funds in the HSA at your discretion. Interest is also tax-free (although there are penalties for withdrawing money for reasons other than paying eligible medical expenses). Unused money in the account stays in the account, year after year.
Well, a few reasons, most of them having to do with money:
- You can deduct 100% of the contributions from your taxable income.
- Interest accrues tax-free.
- You pay no taxes or penalties when you make a withdrawal for qualified medical expenses.
- It’s used with a high-deductible HSA-eligible health insurance plan, which usually has a lower monthly premium than other types of plans (so you can save money in the short term).
Well, sure. Nothing seems to be free (except maybe advice). The deal is that different HSA administrators charge different fees – some might be an initial set up fee, a monthly fee or a check fee. Take a look at the different HSA administrators and figure out what will work out best for you.
It depends upon the HSA administrator you choose for your account. Most will allow you to invest in mutual funds, money market funds, CDs and/or interest bearing accounts. Before you select an HSA administrator, check to see what they offer by way of investment opportunities.
Simple. Select an HSA-eligible plan. Fill out the application. Once your plan is approved you can select any HSA administrator. That’s it.
The total amount you can put in each year is subject to the IRS Regulations. For the 2009 tax year, you may contribute up to $3,000 for individuals, and up to $5,950 for families.
Yes – it’s very easy. In most cases, you’ll be given a debit card or a checkbook. When you are paying for a qualified medical expense, all you have to do is use one of these to make the payment. That’s it. No submitting receipts, no approvals needed. (However, you might want to save your receipts, just like you would for other things you deduct from your taxes).
It can be as safe as you want it to be. Funds are held in trust by a bank, insurance company or other trustee and are invested how you want them to be invested. Usually you can choose between CDs, money market funds, interest bearing accounts or mutual funds. Of course, each of these carry a different level of risk, from none at all (in the case of an FDIC-insured interest bearing account) to the risk inherent in mutual funds (with their corresponding possibility of a larger return). So really, it’s up to you and your risk tolerance.
In order for an HSA to work, you need to get the right type of plan – a plan that is considered HSA-eligible. These plans usually have lower monthly premiums and they must meet the following to be considered eligible:
The annual deductible (the amount you pay before the plan starts paying benefits) is subject to IRS Regulations. For the 2009 tax year, the deductible must be at least $1,150 for individuals and $2,300 for families.
The total amount paid out-of-pocket under the plan (things like the deductible and co-pays but NOT the premiums) must not be more than $5,800 for individuals and $11,600 for families.
At the end of the year you’ll get a statement that shows how much you put into your HSA that year. This goes to the IRS along with all of your other tax info and you can deduct this amount (provided it’s equal to or less than the maximum allowed) from the income you earned for the year.
Let’s say you’re self-employed. You may also be able to deduct all of the money you spend on premiums (as long as you are not eligible to participate in a group health plan offered by your spouse’s employer and the money you deduct does not exceed the net income from your business).
Of course, our lawyers want us to say “check with your tax advisor” to get the full lowdown on your specific tax situation.
COBRA (stands for Consolidated Omnibus Budget Reconciliation Act) is a federal law. It says that under certain circumstances (called Qualifying Events) in which you would usually lose your health insurance, your employer must offer the continuation of your group health care to you, as the covered employee, and to your qualified family members. This coverage can last anywhere from 18 to 36 months depending upon the Qualifying Event. Now, before you get too excited, be aware you will most likely have to pay the entirety of your premium, as well as an administrative fee.
- Sixty days from the later of these:
- The date after you have lost active coverage from your former employer, or
- The date of your Election Notice
KNOW THAT YOU CAN NOT EXTEND THE DEADLINE TO ELECT COBRA, so if you want COBRA, don’t wait.
All of the plans that are defined by COBRA Regulations as “health care” plans offered by your employer. However you can only continue the plans that you had when you lost your coverage as an active employee. That is, you cannot add plans (say dental) if you did not have them, and you cannot change plans (say from your employer’s PPO plan to an HMO plan).
A few things:
- You don’t pay your premiums in a timely fashion, as defined by the COBRA regulations.
- Your employer discontinues their group health plan.
- You obtain coverage from another employer or any other source.
- You become entitled to (that is enrolled in) Medicare benefits
This depends on the insurance carrier. Some plans, like short-term plans allow you to start right away – same-day coverage is available with select carriers. However, it is typical for coverage to take 3-14 days to start due to the time it takes for your policy to be medically underwritten.
Do not cancel your existing coverage until you receive an approval letter and insurance policy from the company you selected. Take the time to read through and understand the terms of the policy. Things to look out for are the effective date (when your coverage begins), premium amount, waiting period, benefits, limitations, exclusions, and riders (benefit limitations or extensions
The first payment is due 45 days after the date you sign your election form. After that, payments are due on the first of each month. COBRA regulations also allow a 30 day grace period, and payments must be postmarked no later than 30 days after the first of each month.
Usually when you complete an application, you will include a credit card number or provide an electronic check written to the insurance company for the first month’s premium. If they approve you, they will charge your card or cash your check. If you or your family do not qualify for coverage, or if you decide to cancel your application, any payment that was charged will be returned or refunded. Some Carriers will cash your check or bill your credit card up front, but they will refund the entire dollar amount if they do not approve you for their health insurance.
Once you have been accepted, there are many ways to pay your monthly or quarterly payments – you can use your credit card, automatic debits to your checking account or plain old-fashioned checks. It really depends upon the particular carrier, the plan and what works best for you.
“PMG” stands for Participating Medical Group while “IPA” stands for Independent Practice Association. As for the location of this code, it’s simply the first three characters of your PCP number. If your number was “ABCDEFG”, the PMG/IPA code would be “ABC.”
Anyone who was an eligible spouse or dependent, and was enrolled in the health insurance plan at the time of the qualifying event can be covered under COBRA.
Since COBRA is a law, it is very specific. Your employer is required to inform you of and explain to you your rights under COBRA – both when you sign up for employer sponsored health insurance and when a qualifying event happens (like being laid off). When you qualify, the employer has 30 days to notify the COBRA Administrator of your Qualifying Event, and then the COBRA Administrator has 14 days to send you information about the costs and benefits of continuing coverage (your COBRA Election Document).
Maybe. It depends upon if an insurance company would consider you a good risk. If you are in good health (with no pre-existing conditions), you could probably find a less expensive plan than your COBRA coverage. It’s worth a shot to talk to an insurance agent or broker.
NOTE: HIPAA law indicates that pregnancy can no longer be considered a pre-existing condition.
Yes, under certain, limited conditions. If you become disabled within the first 60 days of COBRA coverage you can extend your coverage for an additional 11 months, for a total of 29 months. You must obtain a ruling from the Social Security administration and submit the Social Security Award Letter to the plan within 60 days (from the date of the letter) and this must happen before your normal continuation period (18 months) expires. Be aware that you may have to pay up to 150% of your normal premium cost to exercise this right under the law.
Also, if a spouse and/or dependent child experience a second qualifying event they can extend coverage for an additional 18 months. Second qualifying events would be: the death of a covered employee; divorce or legal separation from a covered employee; a covered employee becoming entitled to Medicare; the loss of dependent child status under the former employer’s group health plan. Know that this second qualifying event only works if it would have caused your spouse or child to lose coverage. If a second qualifying event happens, you (or they) will need to notify the plan.
Just contact your COBRA administrator. Please note that the COBRA Administrator usually requires a written request to cancel COBRA coverage.
Basically you have to follow the rules established by your plan. Contact the plan’s administrator to get the details.
It varies depending upon the qualifying event. In addition, coverage may be extended for an additional period based on State Continuation Laws (such a law exists in California for example). At the minimum, COBRA will last 18 months. Here’s a chart to help keep things straight:
The dollar amount depends upon your plan of course. Most employers subsidize a portion of their group plan’s premium as a benefit of employment. Under COBRA, you will be responsible for the total amount of the premium plus an administration fee (you may be required 102% of the health insurance premium).
No. A change in insurance carriers is not a COBRA Qualifying Event, so COBRA does not apply. In addition, COBRA does not apply if the employer cancels its health care plans.
Usually the answer is no. If the employer is no longer offering a health insurance plan to current employees, you won’t qualify for COBRA. However, retirees and their families may be eligible for COBRA coverage, because of the bankruptcy. Please consult with your legal counsel for advice.
The employer is subject to penalties: they can be fined $100 per day for failure to notify you of your COBRA rights; they could lose their tax deduction for their group health insurance plan; and they can be held liable for damages, legal fees, and medical costs.
If your employer had at least 20 employees for more than half the previous calendar year, and offered a health insurance plan they do. If they had less than 20 employees they don’t. Also, if you worked for certain churches or the Federal, State or Local Governments, COBRA does not apply. If you work for the government, you’re covered by a different but similar law, so check with your HR department.
As long as you are within the 60 day COBRA Election Period. However, if you formally waive your COBRA coverage during your election period, then change your mind, the former employer and insurance carrier are not required to reinstate your coverage from the date coverage was lost. The COBRA law states that they may reinstate the coverage from the date you revoke your formal waiver.
It really depends upon your individual situation. If a group health plan is not available to you, you should consider individual health insurance. Individual health insurance is often less expensive and offers you more choice of plan options.
Yes they are. If you have a child or adopt a child within the period you have COBRA, that child is a qualified beneficiary and automatically has COBRA rights. Please note that a spouse or child added to the COBRA plan as a result of marriage, or open enrollment, may be covered under the plan, but they do not have “Qualified Beneficiary” status (that is, they do not have COBRA rights as Qualified Beneficiaries)
COBRA is for health care (medical, dental, vision, Flexible Spending Accounts, Health Reimbursement Accounts) – so other benefits from your employer (say life insurance and disability) are not covered under COBRA.
You can use the funds in this account to pay for qualified health care expenses (as defined by the Internal Revenue Service). However, these services and goods must have been provided on a date that you were covered under the FSA plan, and prior to the end of the current FSA plan year. If you received services before you were terminated, submit those claims as soon as possible. Please contact your HR Department for the specifics of your FSA plan, including deadlines for submitting claims. In addition, if you have funds in your Flexible Spending Account, talk to your HR department about enrolling in FSA COBRA.
- Myth 1: Most Americans today have sufficient health insurance coverage.
- Fact: According to data from CDC’s National Center for Health Statistics1 an estimated 43.8 million Americans were recorded as being uninsured in the year 2008; which is an approximate 2.8 million increase from the year 1997.
- Myth 2: If you aren’t eligible for and/or can’t afford COBRA there are no alternatives to finding affordable health insurance.
- Fact: Most consumers are not aware that there are alternatives to COBRA. These options are often less expensive and can be found through online sources such HealthCompare. Web sites like HealthCompare serve as a one-stop online guide to help individuals and families easily research, compare, buy and enroll in the right health insurance plan at the right price.
- Myth 3: A majority of the uninsured population is unemployed.
- Fact: In some instances, those that are employed are sometimes not covered due to part-time or freelance status. In other cases, certain firms may not offer such benefits because of company size or budget constraints. Additionally, sometimes employees have benefits available to them, but aren’t able to afford their monthly premium costs.
- Myth 4: People don’t need to start investing in health insurance at an early age.
- Fact: Young people should make health insurance coverage a priority – you can never be too prepared or careful. Without proper medical insurance, many young adults find themselves in financial debt, often due to unexpected accidents and/or emergency procedures. According to Out-of-Pocket Blog2, the average cost for an emergency appendectomy is approximately $10,000-12,000. Additionally, trying to get health insurance with a preexisting condition can be very difficult which is why enrolling at an early age can serve to be beneficial for the future.
- Myth 5: Employer-sponsored plans offer the best coverage for consumers.
- Fact: Employer-sponsored programs are often not the best options in terms of building a personalized plan – some plans actually cost more and provide services that you may not need. Consider seeking health insurance coverage through alternative sources to meet your individual budget and needs. Web sites such as HealthCompare are available to help connect consumers with the right plan at the right price.
- Myth 6: There aren’t any serious health consequences for those that remain uninsured.
- Fact: Over time, men and women can develop health problems that may go undiagnosed and/or untreated due to their lack of medical coverage. If left untreated due to lack of awareness, small issues can escalate to major health problems. According to The Journal of Public Health3, people with medical insurance are twice as likely to remain healthy.
- Myth 7: People without health insurance are not financially impacted by the burden of medical bills.
- Fact: Many people have declared bankruptcy because of the strain from medical bills. Often, due to the lack of insurance, people can’t afford to make out-of-pocket payments and are held liable for the full amount of services rendered.
- Myth 8: Health insurance can easily be acquired after being diagnosed with health problems.
- Fact: Those that have been diagnosed with serious health problems often have to be added to a waiting list. During this time, their conditions are evaluated and available coverage options, if any, are discussed.
- Myth 9: Purchasing health insurance over the Internet might not be the safest way to enroll in a new plan.
- Fact: Today, consumers remain cautious about dealing with online sites, especially those that require that they divulge any type of information. In the case of purchasing health insurance, Web sites like HealthCompare offer a unique advantage. In addition to offering direct phone access to the company’s U.S.-based Benefit Advisors team, HealthCompare is supported by the long-term success and commitment of parent firm, The Word & Brown Companies. These reasons alone should reassure consumers that they are conducting business with a reliable, credible company.