Types of Health Insurance Plans

Following is a summary of several types of health insurance plans sold as group and individual health insurance. The actual health insurance benefits will vary from policy to policy. Therefore, it is important to read and understand your insurance contract. The term provider is commonly used in health insurance and in this guide to refer to physicians and other providers of medical care.

Comprehensive Health Insurance

Two categories of services and supplies covered by all comprehensive health insurance policies.

• Hospital Benefits include expenses associated with stays at hospitals and other covered facilities, such as skilled nursing facilities, nursing homes, and outpatient surgery centers. Benefits for hospital services often require that the individual or their physician contact the insurer or the employer to obtain prior approval for the number of days of hospital stay. Without this approval, the benefits may be reduced.
• Physician or Provider Benefits include services provided by licensed physicians and other medical providers.

There are a number of other charges and services generally excluded from coverage under most health insurance plans. Following are examples of common exclusions:

• Services determined by the insurer to be medically unnecessary.
• Services considered experimental by an accepted medical authority.
• Services related to cosmetic surgery.
• Services for mental or nervous disorders, vision, hearing.
• Services that are provided without charge.
• Services provided due to war.
• Services provided as a result of a work-related injury.
• Services provided by a relative.
• Services related to normal pregnancy and routine well-baby care (these are generally excluded from individual policies and included in group policies).

Alaska law mandates that the following specific charges or services be covered in health insurance plans sold in Alaska.

• Coverage for newly born or adopted children for at least 30 days, if coverage includes dependents.
• Coverage for treatment of alcoholism or drug abuse.
• Low dose mammography screening if the contract covers mastectomies and prosthetic devices and reconstructive surgery.
• Treatment of phenylketonuria.
• Coverage for not less than 48 hours after vaginal birth and 96 hours after a cesarean birth, if the contract covers the costs of childbirth.
• Coverage for prostate cancer screening and cervical cancer screening.
• Coverage for diabetes treatment and education.
• Coverage for reconstructive surgery following mastectomy.

Limited Benefit

Limited benefit plans are offered as independent, noncoordinated benefits provided under a separate policy and paid without regard to any other insurance plan. Examples of these types of plans include hospital indemnity policies that pay a fixed amount for each day of hospital confinement, and specified or dread disease policies that only pay for medical expenses associated with a specified disease (such as cancer or heart disease).

Specified Disease

These types of insurance policies typically offer a lump sum payment to offset medical or incidental, non-medical, expenses associated with a first occurrence of cancer or other dread disease such as heart disease. Benefits are not usually designed to directly cover actual medical expenses, although hospital confinement coverage may be available. These policies require you to wait a certain period of time after purchasing the policy before benefits will be paid and they also generally require that you survive a certain period of time (usually 30 days) after the initial diagnosis before benefits will be paid. Specified disease insurance is not a substitute for comprehensive medical insurance.

Medicare Supplement

Medicare supplement (also called Medigap) insurance is sold to people covered under Medicare helps pay for medical costs that Medicare Parts A & B do not pay, such as the deductible and coinsurance amounts. Medicare supplement insurance is regulated by both state and federal laws. This coverage can only be provided through standard health plans that vary in the amount and type of coverage provided. Coverage is available to individuals without medical underwriting beginning on the first day of the first month in which the individual is both 65 or older and enrolled in Medicare Part B. The Division of Insurance produces, on an annual basis, a rate comparison guide that outlines the basic characteristics of Medicare supplement insurance, describes the standard health insurance plans, and shows the current premium rates charged by the insurers selling this insurance in Alaska. There is also a pamphlet entitled “A Guide to Health Insurance for People with Medicare” produced by the National Association of Insurance Commissioners and the federal government that summarizes the Medicare and Medicare supplement programs. Both publications are available from the Alaska Division of Senior Services or Division of Insurance.

Comprehensive Major Medical

A comprehensive major medical policy provides coverage for almost all types of medical care services and supplies and has high benefit limits. These policies cover hospital, provider, and other services subject only to the required deductible, coinsurance, and benefit maximums. Unlike basic medical, individuals are required to share in the cost of their medical expenses. These policies have replaced most of the basic medical insurance policies.

Long-Term Care

Long-term care insurance policies provide nursing home or home health care benefits for individuals with a prolonged physical illness, disability or mental disorder, medical condition, or a deficiency affecting activities of daily living or lifestyle. Benefits are provided as a reimbursement for services, but subject to a fixed dollar maximum per day. Usually a waiting period called an elimination period of 0, 30, 90, 180, or 360 days is required before the plan will pay benefits. Long-term care insurance may be available as a rider to a life insurance or annuity policy, as well as a separate health insurance policy.

Dental Insurance

Dental insurance covers costs associated with the care of teeth. Benefits for preventive services, such as cleanings and exams are generally limited to once every six months. Most plans contain coinsurance and deductible cost-sharing requirements. The coinsurance provisions will vary based on the type of procedure.

Vision Coverage

Vision coverage provides benefits for glasses, contact lenses, and eye examinations up to a specified amount per year. Vision benefits are often subject to a set schedule of benefits and limits on the frequency of services. A typical vision plan covers the cost for one examination per year, with coverage for glasses and contact lenses limited to once every two years.