Using Private Health Coverage

Private health coverage pays for a portion of your medical costs when you see a doctor or other healthcare provider or go to the pharmacy. You or your employer pays a private company a monthly premium to be in a plan. The plan has a set of services that it has agreed to pay for under certain circumstances. When you go for medical care, the plan pays part of the cost of approved services. Every health coverage plan will have a different way of organizing costs and will cover different sets of services. For example, one plan might cover prescription drugs and yearly checkups, while another might not cover either. One plan might require you to see a primary care provider, while another might allow you to see a specialist right away. When you sign up for a plan, you’ll get a booklet, called your evidence of coverage, with details specific to your plan. Reading through this booklet carefully can save you time, money, and frustration.

Coverage for Spouses, Domestic Partners, and Dependents

Both individual and group plans may offer coverage to spouses, domestic partners, and dependents. Two California laws that went into effect in 2005 (AB 205 and AB 2208) make fully-insured employer-sponsored plans offer the same benefits to domestic partners as they do to spouses. The law does not apply to self-insured plans. To find out which type of plan you are participating in, ask your employer.

Note that in California, to become a domestic partner, you must be in either a same sex relationship, or an opposite sex relationship where one partner is 62 or over and eligible for Social Security retirement benefits or Supplemental Security Income (SSI) based on age. Some plans, however, have a broader definition and will offer spouse-like benefits to other opposite sex couples. You can find general information on domestic partnerships from the California Secretary of State.

The Affordable Care Act of 2010 requires that insurance companies allow children to stay on (or be added to) their parents’ insurance policies until they turn 26, if they can’t get insurance through a job. This applies to insurance plans that supply dependent coverage.

DB101’s sections on COBRA and Continuation Coverage and HIPAA & California Protections have more information on protections for spouses, domestic partners, and dependents when your health coverage changes.

Costs

The amount you pay depends on the type of plan you have and on the details of the policy. You or your employer will have to pay a premium, which is a set amount of money you have to pay to be part of a plan.

Example:
You have a policy with a $100 monthly premium. You have to pay $100 every month in order to be covered by that policy.

In addition to your premiums, you may have to pay:

  • A deductible: a set amount of money that you pay out of your own pocket each year before the insurance company will begin to pay for services.
Example:
You have a policy with a $250 yearly deductible. You go to the doctor and get a bill for $200. You have to pay all of that out of your own pocket. You go back to the doctor the next month and get another bill for $200. You pay for $50 of that and have now met your deductible for the year. Your policy will help pay for the remaining $150 of that second bill, and the full cost of any other covered medical costs you have during that year.
  • A copayment (copay): a small amount of money you pay for each medical visit or service. Copays are usually between $5 and $40.
Example:
You have a policy with a $10 copay for office visits and a $5 copay for each prescription. Every time you go to the doctor, you pay the doctor’s office $10. Each time you get a prescription filled, you pay the pharmacy $5.
  • Co-insurance: A set percentage of the cost of the visit or service.
Example:
You have a policy that pays for 80% of medical services. You have a doctor’s visit that costs a total of $200. The policy will pay for $160 (that’s 80% of $200) while you pay for the remaining $40.

Limits

Your policy may have a limit on how much money you have to spend in a year. This is called an out-of-pocket maximum. The out-of-pocket maximum does not count the premiums you pay and certain other costs may or may not be counted.

Example:
Your policy has an out-of-pocket maximum of $5,000 a year. Before you have paid $5,000 in expenses out of your pocket, the plan pays for 80% of a bill for a doctor visit. Once you’ve spent more than $5,000, the plan will pay for the entire bill for covered services.

Companies may have limits on what services they will help pay for. These limits are called exclusions and may include items such as cosmetic surgery, comfort items, and reproductive issues. Insurance companies may also have a lifetime or annual maximum amount of money they will pay while you are on their plan.

Keeping Your Coverage

There are laws that protect you when you are losing access to employer-sponsored health coverage. If you or your dependents are losing coverage, read DB101’s section on COBRA and Continuation Coverage. If you’re switching from one plan to another, initially joining an employer-sponsored plan, or signing up for individual coverage, DB101’s section on HIPAA & California Protections has more information.