What is individual and family health insurance?

This is health insurance made available to individuals and families rather than through an employer group.

Are maternity and pregnancy covered under individual health insurance policies?

Maternity/pregnancy is an option on some individual policies. If maternity/pregnancy is offered, generally there is usually a waiting period before benefits are made available.

I am completing an application. What if I can’t remember all of my medical history?

Ultimately, you are responsible for accurately completing the medical history portion of the application. If you aren’t sure, you may want to review past claims or make an appointment with your health providers to review you records.

Are individual health insurance companies required by law to issue policies to anyone who applies?

No. Insurance companies will underwrite the applications before the policy is issued. This is an investigation of your medical history and a verification of all information included on your application. During this underwriting process, the company will evaluate many different items such as age, health status, and even dangerous occupations. Once this is complete, the company can offer the policy as applied for, issue the policy with any exclusion(s), issue the policy with a higher premium, or decline the policy. Insurance companies will not sell you a policy if they think you pose a high risk.

Do all states have the same underwriting process?

No. Each state can process individual health insurance applications differently.

What period of time does the exclusion rider apply?

It can vary. Sometimes the exclusion is for the entire life of the policy and other times it may be a period of time.

What is a pre-existing health condition?

Pre-existing health conditions can be any illness, injury, or symptom you received or were recommended medical advice, consultation, diagnosis, care and/or treatment. (For example, if you received treatment or saw a doctor for allergies one year before the effective date of coverage; allergies would be considered a pre-existing condition).

What is a Pre-existing Waiting Period?

Pre-existing waiting periods vary in length. If your policy has a pre-existing waiting period, no benefits are available for any pre-existing conditions for a certain amount of time listed on your policy. The pre-existing waiting period can be up to one year.

When will my coverage start?

You can request any date after the application date, however, the insurance company will need time to process your application. This can vary according to the extent of underwriting needed. Sometimes the company may order your medical records which can slow down the process. Typically, the application process takes about 30-60 days.

I was declined coverage from an insurance company. Will another carrier consider coverage?

Yes, another carrier may offer you coverage. Each insurance carrier has their underwriting guidelines and may differ.

My policy has been active for several months. The insurance company is now requesting information about all health providers I’ve seen in the past.

The company is allowed to exclude benefits related to pre-existing conditions whether they were listed on your application or not for the first two years after the effective date of the policy. The company can look back and investigate during the first two years of your policy to determine if a claim was related to a pre-existing condition.

Can the insurance company rescind my health insurance?

The law permits the individual health insurance policies to have a two-year incontestability period. The insurance policy was issued based on information contained on your application. If the information was not provided completely and accurately, it will affect how the policy is issued. The company may have issued the policy with an exclusionary rider, higher premium, or it may have been declined.

If the company finds an error or omission on your application that may have affected their offer of coverage, the company will take action. They may rescind the policy. When the policy is rescinded, the policy will be null and void from the beginning. It is most important to fill out your application accurately and completely to avoid a rescission.

What is a temporary health insurance policy?

A temporary or short-term policy is a policy that covers you for a short and specified amount of time (a common one is 3 months). It can be used for someone that is in between jobs needing coverage until the new employer policy is active.

Can I renew a temporary policy?

When your term is expiring, you will need to complete a new application. Based on your health at that time, the company can either issue the policy or deny the policy.

What is a 401k plan?

A 401k is a retirement savings plan for employees. The employee elects to contribute pre-taxed pay to the savings plan in the form of mutual funds or other options set up by the employer. The contributions and investment earnings have the ability to increase (tax-deferred) until they are withdrawn and then will be taxed as ordinary income.

How does it work?

The 401k is established by employers (although not all employers offer this type of savings plan). Though the employee is contributing to the funds, the employer may opt to match all or a portion of what the employee contributes (for example, $.50 to every $1.00 the employee puts in).

The 401k contribution is subtracted automatically from an employee’s paycheck each pay period before taxes are imposed. The employee has the option of deciding how much money is taken out each period and how it will be invested. After those decisions are made, the rest is done automatically for the employee.

The money accumulates and is not to be taken out (though it can be, but you will be penalized) until retirement (usually the age of 59 1/2). The employee does not pay taxes while the money is accumulating, but once the money begins to be withdrawn, taxes will be applied to each withdrawal (small tax installments as opposed to a large sum).

What are the advantages?

The money devoted to 401k is tax-deferred, so one pays less tax on their current paycheck.

Employer contributions and growth of the savings is tax free until withdrawal. If an employee switches jobs, their 401k savings can be transferred to another business 401k plan.

Taking advantage of an employer match or contribution can be considered “free money” that you would be giving up otherwise.

What are the disadvantages?

It is difficult and expensive to access 401k money before retirement. Employer contributions do not become accessible to the employee until after a set number of years. The IRS sets a maximum contribution limit on 401k accounts.

What are the investment options?

There are a variety of different options available to employees. Options mainly take the form of several mutual funds. The funds include a money market, bond funds of different maturities, company stock, US savings bonds and a few others. Employees choose where to invest their savings and how future savings will be used. The employee can choose to devote funds to a specific area by time frame (bi-monthly, quarterly, etc.) and is typically allowed to stop contributions at any time.

How much can I contribute?

In 2009, the cap for individual contributions is $16,500. But that’s not the only limit. The total amount contributed by both you and your employer can’t exceed $49,000. If, however, you’ll be age 50 or older by the end of the year, the contribution limits are higher: $22,000 and $54,500 respectively. If you are considered a “highly compensated employee,” then your contributions could be restricted, regardless of age.

What constitutes a 'highly compensated' employee?

According to the 2009 rulebook, a highly compensated employee makes more than $110,000 a year. The IRS doesn’t want 401k plans to favor a company’s top brass. Consequently, employers must make annual assessments to ensure that their highly compensated employees (HCEs) aren’t contributing a far greater percentage of their salaries to the 401k plan than lesser paid employees. If the employees who earn less than $110,000 a year at your company are contributing to the 401k plan at a lower rate than HCEs, your contribution limits may be lowered.

If switching jobs, should I rollover my 401k or switch to an IRA?

Some professionals say that the only reason you would want to roll into another 401k is if you want to take out of it early. IRAs give you more control of your assets. There are thousands of investment plans, but not even ten options for each 401k plan. Spreading out your assets is always a mantra of money professionals. It is suggested you put your money into a self-directed IRA and then try and contribute as much money as possible into the new job’s 401k.

How long can a company hold onto contributions?

The employer must deposit their contributions no later than 15 days after the end of each month. It could take as long as six weeks before money from your paycheck will show up in your 401k.

At what age can I take out of my 401k?

The most common number seems to be 59 ½ years of age without getting hit by the 10% early withdrawal fee. If one is 55 or older and have retired from their job, they can begin to tap into their 401k without incurring any penalties. This is deemed a ‘separated from service’ exception. It doesn’t matter if you quit, leave, or are fired; you can even begin working somewhere else.

What are hardship withdrawals?

Some companies will let the employee permanently withdraw their money from their 401k in order to pay one of the below listed expenses. It is not recommended because you will have to pay income taxes on the money plus a 10% penalty. Acceptable reasons for early withdrawal will be outlined by your company. Common examples are:

  • To pay medical expenses
  • To pay college tuition
  • To cover funeral expenses
  • To avoid an eviction or foreclosure
Can I borrow from my 401k?

Most plans do allow you to borrow from your 401k. And it can be tempting. (After all, you’re borrowing from yourself.) You can generally borrow half your vested balance or $50,000, whichever is less. But think long and hard before tapping this nest egg. For starters, you’re going to miss out on that tax-deferred compounding. But that’s not the only downside. Employers often halt your match while a loan is outstanding. And if you get laid off, fired or leave the job for any other reason, chances are that that loan is going to be called in fast.

What happens if you can't repay the loan?

You’ll owe income taxes plus a 10% early withdrawal penalty.

How do I know what my group Health plan covers?

When you enroll, you will receive a benefit summary that lists most covered services. If you have a coverage question that is not answered in the benefit summary, contact the Customer Service Center.

Are prescription drugs part of my coverage?

Most plans cover prescription drugs. Check your benefit Summary for your prescription coverage. Present your ID Card to any designate Pharmacies in your network.

I am expecting a baby next month. How do I add my child to my policy?

You have 30 days from the birth of the baby to enroll your child for coverage. You must contact your benefits or personnel department to add your baby.

My child is graduating high school and attending college, will he/she still be covered and for how long?

Yes, all dependents that are of full time student status and submit proof will be covered. The age limit will vary from carrier to carrier.

Under the HMO Program, how do I choose a doctor? Can I switch if I decide I want someone else?

You can use the searchable online Provider Directory to find and choose a Primary Care Physician. You can change your PCP, up to once a month, by contacting the Insurance Company.

If I lose my ID card, can I get another one and how long will it take to receive it?

You can contact Customer Service Center to order a new one and it will be mailed to you in approximately 7-10 business days.

What is the difference between PPO and HMO?

Often the PPO will cost a little more because of its flexibility in choosing and seeing specialists than does the HMO. With the PPO, one can see any doctor one wishes or visit any hospital one chooses, usually within a Preferred Network of Providers. Conversely, an HMO requires one to see only doctors or hospitals on their list of providers. HMOs generally require one to choose a PCP who will direct care and refer you to specialist if need be. Whereas with a PPO a referral is not needed.

What is a co-pay?

A type of insurance policy where the insured pays a specified amount of expenses for health care services such as doctor visits and prescription drugs at the time the service is rendered.

When can I enroll for the group health plan?

Usually there is a waiting period set by the employer that you have to meet before you are eligible for the health plan. You can also enroll at open enrollment every year.

Can I change from HMO to PPO at anytime of the year?

This usually is not possible during the year but can be done at open enrollment.