A CONSUMER’S GUIDE TO
Edition July 2003
Published by the
Vermont Department of Banking, Insurance,
Securities & Health Care Administration
Health insurance cost and coverage are
important issues for consumers throughout Vermont and nationally.
Choosing the best insurance policy to fit your needs can be a
difficult and stressful task. Some of us may have health insurance
provided by our employers, while others may have to purchase health
insurance on an individual or small group basis.
There are many types of health insurance
policies you can buy. It can be hard to figure out the difference
between managed care plans like HMOs, PPOs, POSs or indemnity
plans. In addition, there are public programs that pay for health
care, like Medicare and Medicaid, which you may have instead of, or
in addition to, other types of health insurance.
This booklet, developed by the Vermont
Department of Banking, Insurance, Securities and Health Care
Administration, helps you understand health insurance and how it
works. It explains the different types of insurance policies
available to you and what to expect once you have health insurance.
With a little knowledge, you can choose the right kind of coverage
for you and your family.
Should you have any further questions regarding
health insurance, or have problems with a company about its services
or a particular claim, you can ask for help from the Division of
Health Care Administration’s Consumer Assistance Section. Call or
Health Insurance Consumer Assistance Section
Division of Health Care Administration
89 Main Street Drawer 20
Montpelier, VT 05620-3601
Toll-free number: 800-631-7788
For the hearing-impaired (Vermont Relay
Health insurance is a general term used to
describe many kinds of insurance coverage. Generally, when people
say “health insurance”, they mean comprehensive medical insurance.
This kind of insurance usually covers most of the costs of keeping
you healthy and getting you healthy if you become ill.
Other types of
• Disability insurance. Disability policies provide
replacement income, a set schedule of payments, or coverage for
expenses if you cannot do your regular job.
• Long-term care insurance. Long-term care insurance
policies help pay for the costs of nursing home, home health, adult
day care and other similar types of care.
• Medicare supplemental insurance (“Medigap”). These
policies pay for expenses not covered by Medicare, like deductibles
and coinsurance. They may also pay for services that Medicare does
not cover such as prescription drugs.
• Accident and other limited insurance. Policies for
accidents, accidents and sickness, and accidental death and
dismemberment can pay benefits to the policyholder, surviving family
members, or to health care providers.
• Blanket insurance. This is a specific policy for
students or a similar defined group.
Please note that workers’ compensation coverage
and discount health plans are not considered health insurance.
If you have questions about any of these
coverage types, call the Division of Health Care Administration for
consumer assistance at 800-631-7788. For information on
employment-related injuries, call the Vermont Department of Labor
and Industry at 802-828-2286.
How can I get health
There are two basic ways of getting health
insurance. If you work, your employer may offer you and your family
health insurance as part of your benefits package, like vacation
time or overtime pay. If your employer does not offer such
benefits, or if you are self-employed or not working, you can buy
your own insurance directly from a health insurance company.
When you buy a health insurance policy, the
insurance company agrees to pay certain expenses listed in the
policy in exchange for a “premium” payment. Premiums are paid on a
monthly, quarterly or annual basis and remain at a specific dollar
amount for a set period of time, usually one year. If your employer
offers you health insurance, your employer will generally send the
premium to the insurance company. If you buy your own insurance,
you are responsible for paying the premium to the company.
Health insurance obtained
through your employer
Most Vermonters get health insurance coverage
through their employers. It is important to understand, however,
that employers who pay for your insurance do so voluntarily – no law
requires them to buy insurance for you. Employers have many options
when they choose to buy health insurance for their employees. For
example, your employer may pay for insurance only for you, or may
decide to offer insurance for you and your family. Employers also
have to decide how much of the premium they will pay. Some
employers pay the full cost for health insurance. Others require
employees to pay some or all of the monthly premium. The portion of
the premium that an employee has to pay is called a “contribution”.
Some employers “self-insure” the health benefit
plans that cover their employees. If your employer is self-insured,
it means that your employer, not an insurance company, is
responsible for payment of your covered health care services. These
plans may be administered by the employer itself, or the employer
may contract with an outside administrator (often a health insurance
company) to process claims. Self-insured plans are regulated at the
federal level by the Department of Labor. They are not subject to
state insurance laws or state mandated benefits.
It is sometimes hard to know whether you are
insured through a regular insurance company or your employer is
self-insured, since self-insured employers often contract with
insurance companies to administer benefits under the employer’s
policy. The best way to know is to call your employer’s human
resources or personnel department, or the person who handles your
company’s insurance plans, and ask.
If your employer is not self-insured, your
insurance will be offered through an insurance company. Plans
available to employers are either “large group” or “small group”
plans, depending on the size of your company (the “group”).
• Large Group insurance is available
to employers with 51 or more employees.
• Small Group insurance is available to employers with 1
to 50 employees or to those people who are self-employed.
Each of these provides comprehensive medical
insurance, but different state and federal laws may affect the exact
make-up of each type of plan. In both cases, your employer
generally has some ability to determine what benefits will be
offered and the type of plan offered (traditional indemnity or HMO,
for example), and can determine how much, if any, of the premium it
will cover (and therefore how much you will have to pay). The
employer can also decide whether to offer coverage to you alone, or
to you and your family (dependents).
insurance you can buy yourself
If you cannot get health insurance through your
employer, or if you are not employed, you may buy individual (also
called non-group) coverage for yourself and your family. Please
note that if you are employed and your employer offers you health
insurance coverage, you cannot buy individual coverage.
Special protections for small
group and individual policyholders
Small group policies and individual policies in
Vermont contain special protections for Vermont consumers that
• “Guaranteed issue.” Small group and individual policies
are “guaranteed issue.” This means health insurers must issue them
to all groups or persons eligible under Vermont law to buy such
policies, and the insurers must guarantee acceptance of every
eligible group member or individual.
• “Guaranteed renewable.” Health insurers may not cancel
your small group or individual coverage at the end of your policy
term (usually one year) because of the number of services you use,
as long as the premium is paid on time.
• “Community rating.” Vermont’s laws require all small
group and individual comprehensive major medical insurance policies
to offer at least three “tiers” of coverage, which are “community
rated.” This generally means that insurance companies cannot make
you pay more than anyone else buying the same type of policy because
of your health status or geographic location. The three most common
tiers of coverage are:
• Single coverage. This covers one
• Two-person coverage. This covers
two adults or one adult and one dependent.
• Family coverage. This covers two adults and any
dependent children, or one adult and more than one dependent child.
Other types of health
You may be eligible for one or more of the
following government health insurance programs:
• Medicaid is a state-sponsored health insurance plan paid
for by state and federal taxes. You must meet certain eligibility
requirements in order to get Medicaid coverage. Vermont’s Medicaid
programs include coverage for children (Dr. Dynasaur), coverage for
uninsured low-income Vermonters (Vermont Health Access Plan), and
coverage for low-income families with children or people who are
For information on
eligibility contact the Office of Vermont Health Access (OVHA) at
800-250-8427 or call your local Department of Prevention,
Assistance, Transition and Health Access (PATH) district office,
listed in your telephone book.
• Medicare is a federally funded insurance program for
people age 65 and older and certain disabled people under age 65.
Medicare has two parts:
• Part A covers hospital charges. You do not have
to pay anything for Part A coverage if you have paid into the
federal Social Security program for at least 40 quarters.
• Part B covers physician and other professional
health care services. You pay a monthly premium for Part B
coverage, which is deducted from your Social Security check
You may be eligible for Medicaid, even if you have a
• Medicare supplemental insurance is also available to pay
for benefits not covered by Medicare (Parts A & B). It is offered
through insurance companies and covers coinsurance, deductibles and
co-payments and may include additional benefits for services up to a
specific limit. In general, it pays for the portion of the cost of
services not covered by Medicare. It is therefore a “supplement” to
the basic Medicare policy. Your options in Vermont include seven
standardized plans (known as plans A, B, C, D, E, H and J), each of
which has specific benefits. These plans are also referred to as
“Medigap” plans because they cover the “gaps” in your Medicare
If you apply for a
Medicare supplement policy within six months of when you are 65 or
older and enroll in Medicare Part B, the insurance company must
accept you. Please note: effective January 1, 2003, all
insurance companies that offer Medicare Supplement policies to
people who are 65 years or older and eligible for Medicare, must now
offer the same policies to people who are under 65 years old,
disabled and eligible for Medicare, during all enrollment periods.
If you are a Medicare
beneficiary and you are not sure what choice is best for you, call
the 1-800-MEDICARE or visit the Medicare website at www.medicare.gov.
You may also contact the State Health Insurance Assistance Program
(SHIP) at 800-642-5119.
If you are eligible for Medicare, you have several
Medicare alone. You may choose not to buy
additional coverage. This means you must pay out of your own
pocket for services that are not covered by Medicare.
Medicare plus a Medicare supplemental insurance
policy. In addition to your Medicare coverage, you can
buy a Medicare supplemental insurance policy, which may pay
for some bills not covered by Medicare Parts A and B. The
exact items paid for by a Medicare supplemental policy depend
on which type of plan you buy.
Medicare plus Medicaid. Even if you have
Medicare, you may still be eligible for Medicaid coverage for
services not covered by Medicare.
The Different Types of Health
Comprehensive medical insurance is offered to
Vermonters, through employers or on an individual (non-group) basis,
through several different types of insurance plans. Some insurance
companies offer only one of these plans, while others may offer some
or all of them.
The most common types of insurance plans are:
- Indemnity (traditional Insurance
- HMO's (Health Maintenance
Organizations, or "managed care plans."
- PPO's (Preferred Provider Organzations)
- POS (Point of Service)
- MSA's (Medical Savings Accounts)
• Indemnity plans. These generally allow you to
use any doctor you choose. You are usually required to pay a set
amount each year, called a “deductible” before the plan begins to
pay a percentage of your medical expenses, called coinsurance.
Example: The plan
has a $1,000 annual deductible per person. Generally, once you meet
your deductible the insurance will pay 80% and you will be
responsible for 20% of the allowed charge, which is determined by
the insurance company. Most plans also have an annual out-of-pocket
maximum. The out-of-pocket maximum is the most that you will pay
for covered medical services in one year.
Please note that what
an insurer will pay — and what you may end up paying — could differ
depending on whether a provider “participates” with your indemnity
insurer. A “participating provider” has agreed to accept a certain
amount in payment from your insurer, so you will generally not be
charged anything other than your deductible or coinsurance amount.
If you go to a “non-participating provider”, the insurance plan will
only pay its portion (80% in this example) of what they determine is
the “usual and customary fee” for the particular service you
receive. You may also pay any difference between the amount billed
by the provider and the amount the insurance company determines is
the usual and customary fee. You should call your insurance
company’s member services department to find out if an individual
provider is participating or non-participating.
• MSAs (Medical Saving Accounts) are often offered
with indemnity health insurance plans. An MSA allows you to set
aside money to pay for out-of-pocket expenses such as insurance
deductibles, co-payments or co-insurance. An MSA also allows you to
pay for expenses such as dental care or eyeglasses that are not
covered by your health insurance.
MSAs must be combined
with a qualified, high deductible health insurance policy, which can
be less expensive to buy, but require the policyholder to pay more
out-of-pocket. All monies deposited into an MSA are pre-tax
dollars, so you only pay taxes on the amount you withdraw to pay for
certain medical expenses. An MSA can only be used for specified
To establish an MSA,
you must first have health insurance on a small group or
self-employed basis, which includes an MSA option. An MSA is a
tax-exempt trust or custodial account available through financial
institutions such as a bank, but it may also be offered though an
insurance company. You do not need IRS approval to start an MSA
account; however, the IRS sets the rules and regulates MSAs. You
can use the account to pay the premiums for the accompanying
insurance plan, as well as to pay your deductible, which is
typically between $1,500 and $2,500 for an individual and between
$3,000 and $5,000 for a family.
Even indemnity plans sometimes require you to get "prior
authorization" before getting certain types of services.
Check your policy if you're not sure, or call your insurer's
customer service number on the back of your card.
• HMOs (Health Maintenance Organizations) may also
be called “managed care plans.” HMOs attempt to control the cost of
health care by managing your care. This means that you must choose
a “primary care provider” from a network of providers who have
agreed to participate in your HMO. You then go to your primary care
provider for all services. If your primary care provider cannot
help you, he or she will give you a “referral” to go to a
specialist, who must also be part of the plan’s network of
providers. Most HMOs require you to pay a small amount ($10 or $15,
for example) each time you get medical services. Once you have paid
your co-payment, the plan pays for everything else that is covered
by your policy.
One important difference between HMOs and indemnity
plans is that HMOs usually pay for preventive services, like routine
physicals, for no more cost to you than your usual office visit
co-payment. HMOs provide services within a defined geographic
area. Generally speaking, you must live or work within the HMOs
area. HMOs will pay for limited services outside of their areas
under certain circumstances (usually emergency services).
• PPOs (Preferred Provider Organizations). These plans are
a cross between an indemnity plan and an HMO. They are less
restrictive than HMOs, but more restrictive than an indemnity plan
in terms of both access and cost. A PPO plan will give you the
choice of getting care from either a network or a non-network
provider, but you will pay more if you go out of network, either
through a higher co-payment or a higher percentage of coinsurance.
Example: You have
the choice of Doctor Kildare or Doctor Casey. Doctor Kildare has
joined the PPO network; Doctor Casey has not. Here’s what might
happen depending on which doctor you use (and your plan’s
co-payments and coinsurance requirements):
Your co-payment for an office visit
(your share of the doctor's bill)
20% of the bill
50% of the bill
• POS (Point-of-Service) Plans. POS plans are sometimes
offered by HMOs to give their members more choice of providers, but
at an additional cost. Under a POS plan, HMO members pay only their
usual co-payment for covered services obtained from their primary
care providers or through referrals to specialists within the HMO’s
network. They are free to use out-of-network providers, too, but
will usually pay a higher co-payment or some kind of deductible in
addition to the co-payment. Premiums for belonging to a POS plan
are usually higher than for belonging to an HMO.
What You Should Know about Managed
Care in Vermont
What is “managed care”?
In a managed care plan you choose your primary
care doctor or other health care provider (often called a “primary
care provider”) from the plan’s provider list (called a “network”).
This person coordinates all decisions about the medical care you
will get from your plan. Usually you will need to call your primary
care provider’s office first to get a referral before going to
another provider or to the hospital.
Most managed care plans are full insurance
policies offered by HMOs (health maintenance organizations) or PPOs
(preferred provider organizations). Many indemnity insurers “carve
out” some of their benefits and administer them through managed care
companies. For example, you may have an insurance contract that
allows you to go to any of the company’s participating providers,
but will still require you to go through a managed care company to
use your mental health benefits. In that case, you would have to
work directly with the managed care company to get your mental
health benefits. And you may be subject to different rules on how
to get those services and whom you could get them from.
Vermont has a “patient bill of
Vermont has a broad set of consumer protections
for people insured through managed care plans. Known as “Rule 10,”
these protections include the right to information about how your
plan works and the right to covered services under the terms of your
contract. Other areas covered by Vermont’s patient bill of rights
The right to
emergency services. If you have a medical problem that you
reasonably believe poses serious risks to your health, managed care
plans have to pay for your visit to an emergency room, even if it
later turns out there was no emergency.
Reasonable access to
the plan’s providers. Managed care plans are required to have
enough providers, both primary and specialty care, to care for all
of their members. This means that you should be able to see
providers relatively close to your home and without having to wait
an unreasonable time to get an appointment.
Access to specialty
services. Plans must allow you to see specialists as necessary.
This includes the use of “standing referrals” to specialists if you
have a condition requiring ongoing care. Plans must also allow
specialists to coordinate your care if you have life-threatening,
degenerative or disabling conditions.
Direct access by
women to gynecological health care services. Plans must allow women
to see their network gynecological health care providers (OB/GYNs or
Planned Parenthood, for example) without a referral from their
primary care provider at least twice a year for reproductive and
gynecological health care services, plus any necessary follow-up
Continuity of care.
If you are pregnant and in your second or third trimester when you
join an HMO, or if you have a life-threatening, disabling or
degenerative condition, the plan must allow you to continue using
your out-of-network provider for up to 60 days after your
enrollment. You get the same 60-day transition period if your
provider is in the plan’s network, but decides to leave.
information. When you enroll, or upon request, plans must give you
basic information about how their plans work and what services are
covered. You will also get a handbook that clearly describes in
detail what you need to do to get services.
medical records. Managed care plans must ensure the confidential
handling of your personal health care information. They must also
allow you to see your medical records, and to copy them for
Because of federal laws that prohibit the state
from regulating certain types of employer-sponsored health benefit
plans, not every person with health insurance in Vermont benefits
from Rule 10 or other regulatory protections. If your employer’s
plan is “self-insured” you will not necessarily have these
The Division of Health Care Administration can
give you detailed information and publications about Rule 10 and
what to expect if you are insured by a managed care plan. It can
also help you find out whether Rule 10 and other Vermont laws and
regulations affect your health insurer. Call Consumer Assistance at
WHAT ARE THE
DIFFERENT PARTS OF A POLICY?
When you buy a health insurance policy, you
will usually get several different documents, all of which work
together. First of all, you will get a “contract.” (If you are one
of the many Vermonters who get insurance through an employer, your
employer gets the contract. You will be given a “certificate of
coverage” instead). The contract or certificate is very important,
since it describes in detail what kind of coverage you have. You
may also get an “outline of coverage” which tells you about specific
conditions that apply to your individual or group policy, like
deductibles, co-payments and limits on certain types of services.
You should also get a member handbook, which gives a more general
description of how your plan works and what you must do to get
The Insurance Contract
The insurance contract is the binding agreement
between an insurance company and your employer or you. If your
employer purchases group insurance, the insurance company must
provide a certificate that summarizes the contract to each
subscriber. You have the right to see the contract itself at your
employer’s personnel office. If you buy your own insurance, you
will get a copy of the contract directly from the company.
In looking at your contract and accompanying
materials, you should pay special attention to the following
This section explains, as precisely as possible, the meanings
intended for terms used in the policy. These definitions are the
key to understanding the extent of coverage your policy provides.
The policy may describe the covered services in one section, or may
break them into several sections, such as “inpatient care,”
“outpatient care” or “medical services,” “home care,” and “emergency
care.” These sections explain exactly what services are covered.
Even if your doctor thinks you may need a service, it may
not always be covered by your insurance policy. Check your
policy or call your insurance company to find out before you
have any service provided.
This section details what is not covered by your policy under any
amendments. An endorsement or amendment to your policy can add,
remove or change the standard coverage described in the contract.
Sometimes amendments or endorsements appear in the contract you
receive, and sometimes the insurance company sends them to you
separately. For example, if the law is changed to require coverage
of a certain type of disease that is not covered by a policy, your
insurer will send you an endorsement or amendment that becomes part
of the policy you already have. Endorsements are subject to the
other terms and conditions of your contract, like co-payments or
deductibles and coinsurance.
rider usually includes one or more new benefits that can be bought,
at additional cost, to expand the services covered under your health
insurance contract. An example of a rider includes coverage for
prescription drugs, if they are not covered in your standard
policy. Occasionally, a rider will reduce coverage, which may also
reduce your premium.
coverage. This document or section of your contract details any
particular conditions that apply to your coverage. It also explains
how much you will have to pay for services. For example, it will
tell you the amount of your deductible(s) or co-payment(s).
Your rights and
obligations. The contract will usually include sections
explaining your or your employer’s obligation to pay premiums to
keep the policy in force. It will also tell you under what
circumstances the contract may be canceled, and what rights you may
have at that time.
What kinds of
services are usually covered?
Your health insurance policy will give you lots
of information about what services your insurance company will
cover. In most cases, the insurer will only cover medically
necessary services, which means that the care must be consistent
with generally accepted medical practices, as recognized by other
health care providers in the same or similar medical specialty to
diagnose, treat or manage specific medical conditions. The following
is a summary of the coverage you should expect if you have a
comprehensive health insurance policy. Please check your own
policy for variations and further details.
• Inpatient care. This usually includes stays in a
general hospital for short-term, acute care. Most policies do not
pay for private-duty nurses, private rooms or non-medical items
(such as television rentals).
• Medical services. These generally include the
services of physicians and other health care providers (including
specialists) for routine office visits, lab services, diagnostic
procedures like x-rays and CT scans, maternity care, ambulatory
surgery and emergency care.
• Mental health and substance abuse services.
These services must be provided with the same types of deductibles
or co-payments that are applied to other health care services. A
health insurance policy cannot limit the number of visits you get
for these services, or cap the amount of reimbursement for those
services, unless the same visit limits or caps apply to all health
services provided under the contract. Alcoholism is covered under
substance abuse treatment.
• Certain types of chemotherapy treatments.
Medically necessary growth cell stimulating factor injections that
are part of a prescribed chemotherapy regimen must be covered.
• Coverage of disabled children, regardless of age, who
cannot care for themselves. Policies generally must cover
unmarried children who cannot care for themselves and who are
dependent on the insured person for support.
• Coverage for newborn children for the first 31 days
after their birth. Newborn children are automatically covered
under your policy for the first 31 days of the newborn’s life if you
already have coverage for other dependents. You must notify your
insurance company within those 31 days, and pay any additional
premiums due, in order to keep the coverage in place after those 31
days. If you have single coverage (that is, coverage for yourself
only) and have a child, you must notify your insurance company and
pay the premium necessary to add your child as a dependent within 31
days of the child’s birth. If you do so, the coverage is
retroactive to the day the baby was born.
• Diabetes education and treatment. Treatment for
diabetes must be covered subject to the same contract limits as
other services provided under the health insurance contract (that
is, subject to the same deductible, co-payments or coinsurance).
The diabetes law applies to both insulin dependent and non-insulin
dependent diabetics. In addition to requiring coverage for insulin,
this law requires insurance companies to pay for diabetes-related
equipment, supplies, education, training and nutrition therapy.
• Mammograms for women. Women aged 50 and older
are covered for an annual mammogram. For women under age 50,
mammograms are covered upon recommendation of their health care
• Maternity care. Policies must cover the costs
associated with maternity care. Maternity stay guidelines and
newborn discharge guidelines are part of Vermont law to help
providers and consumers understand their full coverage rights.
• Payment for PKU (an inherited metabolic disease)
supplies and medication. Plans must pay for foods that are
medically necessary for treating inherited metabolic disease at a
minimum level of $2,500 per person per year.
• Craniofacial disorders. Plans must pay for
medically necessary treatment of specific musculoskeletal disorders,
including temporomandibular joint syndrome (TMJ).
Remember: Contracts are usually written
in a very formal, legal way. If you have questions about whether a
particular type of service is covered, you should call your health
insurer’s member services department for more information. You can
also call the Vermont Health Care Administration toll-free for
Consumer Assistance at 800-631-7788.
While every policy has different
exclusions, the following is a list of typical services,
treatments and conditions that health insurance policies often
do not pay for:
Services that were not
pre-authorized. If you are covered by an HMO, you may be
required to get a referral from your primary care provider
before getting certain types of services (usually specialty
services). Even indemnity policies often require some type of
“pre-authorization” (like a second opinion) before paying for
certain services, like inpatient hospital care. If you fail
to follow the required steps for either type of policy, your
health insurer may refuse to pay for some or all of those
Services covered by another insurance
policy. Policies usually exclude any health care services
for which you received other types of insurance payments (for
example, under a workers’ compensation policy, or another type
of insurance policy, like your car insurance, that may cover
the same services).
Cosmetic surgery. Most policies
exclude payments for surgery that is primarily intended to
improve your appearance, like a face lift or a “nose job.”
Dental care. Most health
insurance policies do not pay for routine dental care
services, including check-ups, filling cavities, treating gum
disease, or fitting crowns or false teeth.
Experimental or investigational
procedures. Most policies do not pay for procedures that
are not yet accepted by the medical community as treatment for
particular diseases or conditions. A plan’s decision not to
pay for a treatment that it considers experimental or
investigational can be appealed to an independent review
organization for a final determination.
Because of differences in federal and state laws, Vermont's
health insurance laws do not generally apply to anyone who
receives health insurance coverage through:
- Self-insured health plans
- Medicare or Medicaid; or
- Workers' Compensation policies
You have certain responsibilities to make sure
you keep your insurance coverage. These include the following:
• You must fill out the health
insurance application fully and accurately.
• You must pay the premiums as they
• You must review and return your policy within 10 days
(31 days for Medicare supplemental insurance) if you want to cancel
• You must follow your plan’s requirements for getting
care. For example, if you are covered by an indemnity plan, this
means notifying the company of a claim within the time period
required by the policy. If you are covered by an HMO, PPO or POS
plan, this usually means getting care from your primary care
provider or getting referrals or prior authorizations before seeing
Claims Processing Tips
If you are insured through an HMO, you will
rarely, if ever, see the actual bill for your health care services.
Once you have paid your visit fee or co-payment at the doctor’s
office or hospital, the rest of the billing is taken care of between
the provider and the HMO themselves.
Insurance companies pay claims for
indemnity-type policies differently. Most health care providers
will submit claim forms directly to your insurance company for
reimbursement. However, some providers may want to be paid by you,
and then you are responsible for getting reimbursement from your
insurance company. You will have to submit your copy of the
hospital or physician claim form, together with any necessary
supporting documentation, for approval by the company. Supporting
documentation can include the doctor’s office notes, lab reports, or
operative reports, depending upon what service was provided.
Once the insurance company receives the claim
form, it reviews the claim and tells the provider what it will pay
for the services. The insurance company also sends you, the
insured, a form known as an “EOB” (“Explanation of Benefits”) that
tells you the same thing about your claims.
It is very important for you to look at your
EOBs and any doctors’ bills you get. You should make sure the
services listed on an EOB match the services you received. If a
service is not covered, or is only partially covered (if, for
example, you have to pay a 20% coinsurance), the EOB will help you
understand what you will be billed by the doctor or hospital after
the insurance company pays its share.
If you have a question about what your insurance company
has paid or denied, call its Member Services Department and
ask for more information. That number should appear on your
insurance ID card. it is also helpful to have your ID card in
front of you when you talk to the company, as well as copies
of your bills and the company's EOB's.
The insurance company cannot always explain your bill. If
you have questions about the bill itself, call your doctor's
or hospital's billing office, and ask them to explain the
When is my insurance company allowed
to stop coverage?
An insurance company can cancel your coverage
under certain limited circumstances. These include:
• Failure by you (or your employer, if you get coverage
through your job) to pay for the policy. Vermont law requires
insurance companies to give you at least 14 days notice after the
payment becomes due before they cancel a policy for non-payment.
• If you intentionally include wrong
information on your application for insurance.
• If your employer offers you insurance, he or she can
choose to cancel the group policy, although the employer must notify
you of the cancellation (usually 30 days in advance). You can also
lose your insurance policy if your employer no longer meets the
rules that qualify it for a particular type of group policy.
• If your employer has been paying for your insurance, but
goes bankrupt and fails to pay premiums.
• If the insurance company no longer
offers that particular type of coverage.
• If your employer is no longer a member of an association
through which you used to buy your insurance.
• If your employer fails to meet any participation or
contribution requirements for group insurance.
Can I change my
individual or small group policy?
Yes. Vermont is a “guaranteed issue” state.
This means that you can change health plans without being denied
coverage. However, your new insurer might limit the coverage you
get for any “pre-existing conditions” you have. Before canceling
any existing health insurance coverage, be sure to check with your
current insurer and certificate to find out if you are required to
maintain coverage for a specified length of time before you may
What are pre-existing condition
Under certain circumstances, an insurance
company may refuse to cover illnesses or health problems discovered
or treated in the six months before you bought coverage.
Pre-existing condition exclusions are limited by law and cannot
exceed 12 months from the date the policy is issued. In other
words, even if the company refuses to cover you for a particular
pre-existing condition, it may only do so for a maximum of one
year. After that time, it must start covering you for treatments
related to that illness or health problem.
By law, companies that sell individual
insurance and small group policies cannot always impose these
“pre-existing condition exclusions.” Please note:
• If you are buying individual insurance directly from the
company, the new insurer must cover you for pre-existing conditions
if you had at least nine months of continuous health coverage from
another company, and it has not been more than 63 days since that
coverage ended. If you switch individual policies or insurance
companies, this applies only if your coverage stays substantially
• If you are covered through a new small group plan paid
through your employer, or if you lose small group coverage because
you leave your job and then decide to buy individual coverage
yourself, the new insurance company must cover you for your
pre-existing conditions if you have had at least 9 months of
continuous health insurance coverage, and it has been no more than
90 days since you had that insurance.
• If you had some prior health insurance coverage, but not
the full 9 or 12 months required for the type of policy you are
buying, you will get some “credit” for that coverage, although the
insurer can still prohibit coverage for a pre-existing condition for
some amount of time.
If you have never had insurance before buying a
policy (whether directly or through your employer), you will
probably have to wait between 6 and 12 months before the insurance
company will cover any pre-existing health condition. If you have
been covered by other insurance prior to your new coverage, your
insurer may cover all your health problems as soon as you get your
new policy, or at least within a shorter period than the usual 12
months exclusion period.
You should also know that under federal law, if
you are covered by a group-sponsored health plan (both large and
small group), pregnancy is never considered to be a pre-existing
condition. That means if you are covered by a group policy, you
should never be denied coverage for pregnancy-related services just
because you bought a new insurance policy after you became
Can my insurer raise my rates?
Health insurers cannot increase your rates
simply because you use services, or your health status changes.
However, insurers are permitted to raise premiums as overall costs
increase. Insurance companies must get the Department’s approval
before raising their rates, and must notify you before the increases
I get my insurance through my
employer. What happens if I lose my job or if I die? Can I or my
family continue my health coverage?
If you lose your job voluntarily or
involuntarily (unless the job ended as a result of misconduct),
Vermonters have the right to continue group health insurance
coverage for themselves and their dependents for up to six months
under the Vermont Continuation of Coverage Program.
The Vermont Continuation of Coverage Program is
also available in the following circumstances:
• When job loss is the result of the
death of an employee, or
• When a spouse or dependent child
as the result of a
divorce or legal separation from the employee, or
• When a dependent child has reached the maximum dependent
age (e.g. up to either their eighteenth or nineteenth birthday or up
to twenty-five years old in the case of a full time student).
To continue group benefits under the Vermont
Continuation of Coverage Program, the employee must have been
covered for the three months preceding termination under the
company’s health insurance plan. You will now have to pay the
entire premium yourself.
Under federal law, COBRA allows continuation of
group health coverage for employees or their families who lose
coverage as a result of either a voluntary or involuntary
termination of employment, reduced hours, death or divorce. It
applies to companies that provide health plans for twenty or more
people. The period of continuation of coverage may vary between
eighteen and thirty-six months depending on your situation. If you
choose to continue your coverage under COBRA, your employer can
charge you an additional 2% on top of your premium as a processing
At the end of the continuation of coverage
period, you or your family may be offered a “conversion” plan by the
insurance company. The new policy may be different than the one
available under the company plan.
What happens if I am covered by another
plan, or my spouse’s plan, in addition to my own group policy?
The purpose of coordinating benefits is to make
sure that there is only one insurer who is responsible to pay the
primary benefits, while the secondary carrier is responsible to pay
deductibles or any remaining covered balances, subject to the terms
and conditions of your health insurance policy. This process is
described in the policy itself, and follows standards published by
the National Association of Insurance Commissioners (NAIC).
How long are my children covered under
Dependent children are generally eligible for
coverage until their eighteenth or nineteenth birthdays if they are
not married. Employer health plans may also offer a student rider
(see top of page 5) that generally extends coverage up to age 25 if
they are full-time college students (taking at least 12 credits per
What happens after my child turns 18
or 19, or stops going to college full-time?
When your child is no longer covered as a
dependent on your employer-sponsored health policy, and your
employer has more than 20 employees, generally he or she would have
the right to continue that coverage for up to 36 months under
If your child has been covered as a dependent
on an employer-sponsored health policy with fewer than 20 employees,
he or she has the right to continue that coverage for up to 6 months
under the Vermont Continuation of Coverage Program.
In both situations, the premiums will be the
responsibility of the child. At the end of the continuation
period, the insurer may offer a conversion plan, which may provide
different coverage than the policy provided through the employer
What happens if my child has a
disability? Will he lose his coverage when he turns 18 or 19?
Not necessarily. If a child was covered under
the parents’ insurance prior to turning 18 or 19 years of age, and
due to a disability is unable to support him or herself, the
insurance company must continue covering the over-age child, as long
as the parents remain his or her sole support because of the
disability. The company can periodically ask you for proof that
your child’s condition is ongoing, but no more than once a year.
Information from a physician may be required.
I’m getting a divorce. What happens to
my insurance? Can my children still be covered under my ex-spouse’s
Divorce is considered a ‘qualifying event’ in
terms of eligibility for continuation of group coverage if your
ex-spouse’s employer has more than 20 employees and you have been
covered through an employer-sponsored plan. In this case, you and
your children can continue coverage through COBRA in the
employer-sponsored plan for up to 18 or 36 months, depending on your
situation. You will have to pay the premium yourself. After your
group coverage ends, you then have the right to buy a policy
directly from the insurance company, although the coverage may be
different than the group’s plan. If you have group coverage through
an employer with fewer than 20 employees in the health plan, you may
extend your coverage for up to six months under the Vermont
Continuation of Coverage Program. You will have to pay the premium
If you have group coverage through an employer
with fewer than 20 employees in the health plan, you may extend your
coverage for up to six months under the Vermont Continuation of
Coverage Program. You will have to pay the premium yourself.
If your spouse bought a policy directly from
the insurance company, rather than getting coverage through an
employer, you will now have to buy insurance for yourself and your
children in the same way. Under Vermont law, insurance companies
that sell individual policies must accept anyone who wants to buy
When you go to court, you should make sure that
a section of your separation agreement or divorce decree clearly
states which spouse is responsible for carrying insurance for the
divorced spouse and any dependents, and who is responsible to pay
for it. The agreement or decree should also clearly state who is
responsible to pay for your out-of-pocket health insurance costs
(deductibles, coinsurance or co-payments).
I have a new job with an employer who
provides health insurance. But, I have been told that I will have
to wait three months before I will be covered by the plan. Is this
Yes. Some employers impose a “waiting period”
before new employees are covered by their health insurance plans.
The waiting period is usually one to three months, although it can
I only work part-time. Can I still get
insurance through an employer-sponsored plan?
Yes. Employers have the option of including
part-time employees (those who work 17 hours per week or more) in
any health plans they provide their full-time employees. You should
check with your employer directly to find out whether they will
My employer offers something called a
“flexible spending account.” What is it, and how can it help me
with my medical expenses?
A flexible spending account allows you to pay
for certain medical services with pre-tax dollars. Those dollars
can be used to pay for medical expenses not otherwise covered by
your health insurance such as co-payments, prescription eyeglasses
or dental work. Your employer, as part of a benefits package, may
offer a flexible spending account. If you choose to set up such an
account, you can ask your employer to withhold a specific amount of
money each week from your paycheck and put it into the account. At
the end of each year, your employer keeps any money from the account
that you did not spend – so calculate carefully!
Please note that a flexible spending account is
different than a Medical Savings Account (MSA) (see page 6) and is
subject to different IRS regulations. Ask your employer or insurer
Is my civil union partner entitled to
health insurance coverage under my policy?
The insurance provisions of Vermont’s civil
union law took effect on January 1, 2001. The civil union law
applies only to Vermont-regulated health insurance plans; it does
not govern federally regulated plans.
In the individual market, insurers subject to
Vermont law are required to offer civil union couples and their
families individual coverage equivalent to the coverage that they
offer to married couples and their families. If you purchase family
or two-person coverage in the individual market, you are entitled to
family or two-person rates.
The answer is not as simple for
employer-sponsored health insurance in the small group, large group,
and self-insured markets. Certain public employers, such as Vermont
state and local governments (but not the federal government), that
offer health insurance to married couples and their families are
required to provide the same health benefits to civil union
Insurers in the small and large group markets
are required to offer policies that include civil union coverage to
employers, but it is employers that ultimately decide who is
eligible to enroll in their plans.
Employers that offer self-insured plans
governed by a federal law called ERISA (Employee Retirement Income
Security Act of 1974) are not required to offer coverage to civil
union partners, but they may do so if they choose.
If you think your insurance carrier is required
to offer equivalent benefits and is not doing so, call the Division
of Health Care Administration at 800-631-7788. If you think your
employer is required to provide equivalent benefits and is not doing
so, you can contact the Attorney General’s Office toll-free at
Who Can Answer Questions and
Complaints About Health Insurance in Vermont?
Who do I call if I
have questions about health insurance in general?
The Division of Health Care Administration
provides toll-free access to Consumer Assistance to help people with
health insurance questions and problems. You may call Consumer
Assistance at 800-631-7788 during normal business hours, 7:45 a.m.
to 4:30 p.m., Monday through Friday, except state and federal
I’ve heard that Vermont has a “Health
Care Ombudsman.” Who is that, and how can the Ombudsman help me?
In Vermont, the Office of the Health Care
Ombudsman was established to help consumers understand and use the
health care system effectively. The Ombudsman’s office assists
consumers in many ways. Like the Division, the Ombudsman offers
information and educational materials about health insurance in
general, but does not have regulatory authority. More importantly,
it can help individuals file complaints against any health care
insurer, as well as advocate on behalf of individual consumers in a
variety of settings. The Ombudsman’s office can be reached
toll-free at 800-917-7787 or 802-863-2316.
Who do I call if I have a question
about my health insurance policy?
All health insurance companies have customer
(or member) service departments that you can call with general
questions about your policy, or if you have particular questions
about the company’s decisions (for example, a denial of payment).
Many problems can be resolved at this level, often during your
initial telephone call. And if they can’t help you over the phone,
they will explain to you exactly what you need to do to file a
Your insurance identification card should have
the number of your insurer’s customer service department or check
the yellow pages for assistance. The Vermont Health Care
Administration also can provide telephone numbers of insurers’
service departments by calling Consumer Assistance at 800-631-7788.
I have tried calling the company’s
customer service department and I am still not satisfied. What else
can I do?
Every health insurance company in Vermont must,
by law, allow you to file formal complaints for review by the
company. Most companies request that you do this in writing,
although, when necessary, they will accept complaints over the
telephone. The timeframes for review and decision of an appeal are
specified in your contract.
If your complaint relates to emergency
services, urgently needed medical care or mental health or substance
abuse services, insurers must respond more rapidly. Please refer to
your contract or contact the insurance carrier.
Your doctor’s office or another representative
of your choice can help you file complaints against an insurance
My insurance company still refuses to
pay for my services, even after I’ve filed my complaint. Is there
anyplace else I can go for help?
Vermont law allows certain types of health
insurance decisions to be “appealed” to people outside of the
insurance company. Appeals are allowed if the service you are
requesting would be covered by your policy. Also, you can file an
appeal only if you have exhausted the health insurer’s required
internal review process. Please read your contract’s section on
appeals or contact the health insurer for details.
If your complaint is about mental health or
substance abuse services, you can appeal the plan’s denial to the
state’s Independent Panel of Mental Health Providers, a committee of
Vermont mental health and substance abuse professionals appointed by
the Commissioner of the Department of Banking, Insurance, Securities
and Health Care Administration. The Panel can reconsider and, in
appropriate cases, reverse adverse decisions. It cannot, however,
change the insurance contract between you and your insurer (for
example, by requiring the insurer to pay for services not covered
under the contract). To file an appeal, call the Division of Health
Care Administration at 802-828-2900 or toll-free at 800-631-7788.
If your complaint is about physical health
services (non-mental health or substance abuse services) you may
file a request with the Division for consideration of a further
appeal by an Independent Review Organization. To file this request
for an appeal, call the Division of Health Care Administration at
802-828-2900 or toll-free at 800-828-7788.
If you are insured through Medicaid (including
Dr. Dynasaur and VHAP), you have the right to a fair hearing before
the Human Services Board. Call the Office of Vermont Health Access
(OVHA) toll-free at 800-250-8427 to find out if your problem is
eligible for this kind of review.
Glossary of Terms
An insurance policy
that provides benefits for injury or sickness directly resulting
from an accident. No benefits are paid for illness only.
Annual “Out-of-Pocket” Maximum
The most you will
have to pay in any given year for all services received under an
insurance policy. This amount includes co-payments, coinsurance and
deductibles. If you exceed this amount, the insurance company will
pay all other expenses for the remainder of that year.
The portion of a
provider’s charges for which the insured person is billed after the
insurance company pays the “usual and customary” charges it deems
appropriate for the services received (after the person has paid any
applicable co-payment or coinsurance).
The formal document
received by an employee that describes the specific benefits covered
by the policyholder’s health care contract with the insurer. The
certificate contains co-payment and/or deductible requirements,
specific coverage details, exclusions and the responsibilities of
both the certificate holder and the insurance company.
(Consolidated Omnibus Budget Reconciliation Act of 1986)
This federal law
allows employees (and their dependents) who had health insurance
coverage through their employer to purchase and continue the
coverage under certain circumstances for a limited period of time
after the employment ends.
An insured person’s
share of the cost of services; most frequently part of an indemnity
plan. Coinsurance is usually expressed in a percentage form, such
Coordination of Benefits
A provision in a
health insurance policy that applies when a person is covered under
more than one group medical program. It requires the payment of
benefits to be coordinated by all insurers who cover that person in
order to eliminate over-insurance or duplication of benefits.
The set dollar amount
an insured person is required to pay for each medical service
received, or each doctor or hospital visit. Under a co-payment
schedule, the insured pays only the co-payment for the service
received; the health insurer pays the rest of the fees charged.
dollar amount an insured must pay for health care services before
the insurance policy begins to pay for services. A policy may
contain a deductible that applies to each covered member and a limit
on the total deductibles a family will pay.
A contract that
reimburses an insured for some or all of the costs of caring for
teeth, oral surgery, and gums; most benefits under a dental policy
are for preventative or maintenance services.
An individual –
usually a child or a spouse – who relies on another person for
support and who obtains health coverage through that person (usually
a spouse, parent or grandparent).
A type of insurance
that provides the policyholder with replacement income when he or
she is unable to perform the major duties of his or her regular
occupation, or an occupation for which the policyholder is qualified
by reason of education, training or experience.
Retirement Income Security Act of 1974)
The federal law that
mandates reporting and disclosure requirements for self-insured
health plans. It also prohibits states from regulating insurance
plans offered by employers to their employees if the employer is
or circumstances listed in the policy for which the health insurer
will not pay.
The statement sent to
an insured by the health plan listing services provided, the amount
billed, and the payment made.
health care payment system (also known as “indemnity” insurance)
under which physicians and other providers receive a payment that
does not exceed their billed charge for each unit of service
provided. Under a fee-for-service insurance plan, insureds usually
may choose to go to any provider they want, as long as the provider
is willing to accept the insurance company’s payments.
The period of time
after a premium becomes due in which you can still pay for the
insurance and keep it in force. Vermont law requires health
insurers to give you at least 14 days’ notice before canceling a
policy because you failed to make the payment by the regular due
Guaranteed Issue Policy
Small group and
individual policies cannot be denied to any eligible Vermonter who
wishes to purchase one.
Guaranteed Renewable Policy
A health insurance
policy that continues in force and is renewed regularly as long as
the premium is paid on time.
bought directly by an individual not eligible for group coverage
through an employer or association. Also called non-group
Lifetime Benefit Maximum
The total amount an
insurance company will pay for health care services over your
lifetime. If the cost of the benefits you receive since enrolling
in a plan exceeds this amount, your coverage ends and no additional
services will be covered.
Long-Term Care Insurance
This type of
insurance is designed to help pay for some or all long term care
costs, including care in a nursing home, adult day care facility or
at home. Benefits are paid when the insured person needs assistance
with activities of daily living, or when the insured person suffers
from a cognitive impairment.
Benefits that health
insurance plans are required by state or federal law to provide to
policyholders and eligible dependents.
Generally a health
care delivery system that links doctors, hospitals and an insurance
plan to deliver care to the plan’s members with the intent of
improving quality and reducing costs. Health insurance can “manage
care” in a number of ways, including requiring members to choose a
primary care provider, to obtain the primary care provider’s
permission to see a specialist and to use only providers with the
plan’s network of providers.
A jointly funded
state and federal program that provides health insurance to certain
eligible people. Eligibility for Medicaid is based on income,
requirements of special-needs children and other criteria.
A federally funded
health insurance program for people 65 years of age and older,
certain younger disabled people and people with end stage renal
Insurance or Medigap
An insurance policy
available to persons covered by Medicare that provides coverage for
services or expenses not paid by Medicare such as deductibles or
The group of
physicians, hospitals and other providers who contract with an
insurance company to provide services to members of HMO, PPO or POS
A provider, hospital,
pharmacy or other facility is “in-network” when it has contractually
accepted the health insurance company’s terms and conditions for
payment of services.
hospital, pharmacy or other facility that has not contracted with
the health insurance plan to provide services to the plan’s
Outline of Coverage
The document given to
each health plan member that summarizes the benefits, co-payment,
coinsurance, deductibles and other requirements for obtaining
services covered by the health plan that are listed in full detail
in the contract.
Participating (“Par”) Provider
A provider who has
agreed to accept a certain level of payment from an indemnity plan
for treating the plan’s insureds. The provider may be a hospital,
pharmacy, other facility or a physician who has contractually
accepted the terms and conditions as set forth by the health plan.
Insureds may not be required to use participating providers, but
usually pay more if they do not.
The requirement of
some health care plans that an insured obtain the plan’s approval
for certain services before the service can be received and paid for
by the company.
limitation or exclusion of benefits for pre-existing conditions. An
illness, medical condition, or injury that has been diagnosed, or
for which a person has been treated, before buying a new health care
The amount paid to an
insurance company in exchange for providing coverage for a specified
period of time under a contract. Premiums are usually paid for a
one-month period, but can be on an annual or quarterly basis.
The first health care
provider a managed care plan’s member is required to contact when he
or she needs health care services, usually a physician specializing
in primary care services. The PCP is responsible for knowing the
member’s complete medical history, performing routine health care
duties, and referring the member to a specialist when necessary.
Reasonable and Customary
(See Usual and Customary Charge)
given by a provider, usually a primary care provider, allowing a
managed care plan member to seek care from a specialist.
Optional coverage for
benefits not covered in a basic policy and purchased for an
additional premium. Riders may contain co-payments or deductibles
that differ from the base policy. Some of the more common riders
cover prescription drugs and durable medical equipment.
health insurance plan provided by an employer who assumes all of the
financial risk of providing health insurance benefits to employees.
The employer may contract the administration of its health insurance
program to an insurer or third party administrator (TPA).
Self-insured plans are exempt from regulation by state laws, but are
subject to certain federal requirements under ERISA.
A rider that extends
coverage for children beyond the usual age limit if the children are
enrolled as full-time students. The rider will include the new age
limit for coverage of the students.
responsible for payment of premiums or whose employment is the basis
for eligibility for membership in a health plan.
administer health benefits for an insurance company or self-insured
employer plans. TPAs typically handle claim payments, underwriting,
premium collection, case management, authorizations and customer
Usual and Customary Charge
A charge for health
care based on the going rate in a certain geographic area for
identical or similar services. This may also be referred to as
“reasonable and customary charge” or “allowed price.”
Vermont Continuation of
A Vermont law that
requires continuation of coverage for people who leave employer
groups with 20 or fewer employees. This law requires employers to
offer those employees the option to continue their group health care
coverage for up to six months.
Set periods of time
that an employer may make a new employee wait before enrolling in
the company’s health care plan. The health insurance policy cannot
impose a waiting period, but the employer may.
GENERAL INFORMATION &
Vermont Division of Health Care Administration
Consumer assistance, appeals
for denials of mental health and substance abuse services, and
external appeals of service denials: 802-828-2900 or
Office of Vermont Health Access (OVHA)
Medicaid program and eligibility questions, including Dr.
Dynasaur and VHAP: 802-241-2880 or toll-free 800-250-8427
Office of Health Care Ombudsman
Consumer questions or problems with health insurance:
802-863-2316 or toll-free 800-917-7787
Or, toll free for the deaf or hearing impaired: 888-884-1955 or
State Health Insurance Assistance Program (SHIP) - Medicare
General Medicare and Medicare Supplement questions:
Vermont Department of Labor & Industry
insurance questions 802-828-2286
PROVIDER LICENSING AND PRACTICE QUESTIONS
Vermont Board of Medical Practice
Complaints about licensed physicians: 802-828-2673
Secretary of State’s Office
Other Provider Licensing: 802-828-2363 or toll-free
Vermont Medical Society: 802-223-7898