guide to understanding insurance - caremark · pdf filehealth insurance programs overview...

Guide ToUnderstandingInsurance

Table of Contents

Introduction ...................................................................................................... 1

Health Insurance Programs

Overview ........................................................................................................... 2

Health Insurance ............................................................................................... 2

Traditional Indemnity Plans ............................................................................. 2

Self-Funded Insurance ...................................................................................... 3

Taft-Hartley Plans .............................................................................................. 4

Managed Care Plans ......................................................................................... 4

Health Maintenance Organizations ................................................................ 5

Preferred Provider Organizations ................................................................... 5

Public (Government) Health Plans

Supplemental Security Income ........................................................................ 6

Social Security Disability Income ...................................................................... 7

Medicare ............................................................................................................ 7

TRICARE ............................................................................................................. 10

Civilian Health and Medical Program of the Veterans Administration ........ 11

Medicaid ............................................................................................................ 12

State Children’s Health Insurance Program .................................................... 13

Children with Special Healthcare Needs ......................................................... 13

AIDS Drug Assistance Program ........................................................................ 14

Comprehensive Health Insurance Programs ................................................... 14

Laws That Affect Healthcare Benefits

Employment Retirement Income Security Act ................................................ 15

Consolidated Omnibus Budget Reconciliation Act ......................................... 15

Employee, Spouse, Dependent Child ............................................................... 16

Health Insurance Portability and Accountability Act ..................................... 18

Americans with Disabilities Act ........................................................................ 20

Note: In this book we talk about co-payment. Co-payment or co-pay means the amount a participant isrequired to pay for a prescription in accordance with a Plan, which may be a deductible, a percentage ofthe prescription price, a fixed amount or other charge, with the balance, if any, paid by a Plan.

IntroductionHow well do you know your healthinsurance plan? Do you know whether youhave private insurance or public insurance?Whether you have a group plan or anindividual plan? Can you see any doctoryou want, or must you see an approveddoctor? What expenses are you personallyresponsible for and what expenses will bepaid by your insurance? Will your benefitscontinue if your medical bills exceed$100,000? $500,000? And mostimportantly, what are your options forhealth plan coverage if you want tochange jobs? Will you be coveredimmediately under your new employer'shealth plan, or will you have to wait someperiod of time because of a preexistingcondition? Making sense of your healthplan is no easy matter; however, you oweit to yourself and your family to understandyour health plan as if your life dependedon it – because it could.

This booklet was developed to help you:

n Understand the numerous types ofhealth insurance coverage

n Understand current laws that may affectyour access to a health plan andhealthcare

n Evaluate your existing health plan toensure your immediate and futuremedical needs will be met

n Identify other health plans and programsthat may offer you more benefits orprovide you with health plan coverage ifyour current plan should terminate

This booklet is not intended to provide youlegal advice. You may wish to contact yourown legal advisor with regard to lawsaffecting healthcare and healthcareinsurance. If you would like additionalinformation about this booklet or itscontents, please contact the CaremarkCustomer Assistance Hotline at 1-800-331-7171. We hope you find thisbooklet helpful!

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Health Insurance ProgramsOverview

Healthcare delivery and financing havechanged considerably over the past 20 years.Technological advancements, including newequipment, supplies, and drugs, havesignificantly improved patients' quality of life.In the past, individuals were restricted toreceiving care in their doctor's office, or forserious illnesses, in the hospital. Today they areable to have their medical needs met in avariety of settings including outpatient clinics,ambulatory surgery centers or even in theirown home. Unfortunately, these new medicaladvances have also brought about asubstantial increase in healthcare expenses,causing a reevaluation of the manner in whichhealthcare is currently financed.

Health Insurance

Many health insurance organizations exist inthe United States. Blue Cross/Blue Shield plansare probably familiar to most individualsalthough there are many other privatecompanies through which private insuranceplans are available. The majority of individualshave private health coverage through anemployer. These group insurance policiesusually offer greater benefits at lower coststhan individual policies, because the risk isshared across the entire group. With this typeof insurance, the employer may pay all or partof the premiums. Individual insurance policiesare purchased from an insurance company bya person who pays the premium directly to theinsurance company. Several types of employergroup health coverage are available:traditional indemnity plans, self-funded plansor Taft-Hartley plans. When purchasing privateinsurance, two plans are available: a traditionalindemnity plan or a managed care plan.

Traditional Indemnity Plans

Q1. What are the types of coverageoffered?

A1. Typically, indemnity plans offer basichospitalization and major medicalcoverage. Basic hospitalization is usuallylimited to in-patient services, whilemajor medical can include doctor andnursing services, x-rays and diagnosticservices, durable medical equipment,chiropractor services, and prescriptiondrugs. Some policies may stipulate thatsome drugs (usually non-injectables) arecovered under the prescription drugbenefit. Some policies also offerhomecare and hospice coverage.

Q2. What limitations do I have regarding a choice of provider?

A2. This plan generally has no restriction onyour selection of doctor, hospital andother healthcare providers. However,these plans may pay a predeterminedamount for services based upon theplan's rule of usual and customary ratesfor the provider's geographical location.You may be financially responsible forthe difference between the amountbilled by the provider and the amountpaid for the service by your plan.

Q3. What costs will I be responsible for?

A3. Typically, you will be responsible for allor part of a premium (depending uponwhether this is an individual or groupplan), a deductible co-payment (ifapplicable), and coinsurance. As ageneral rule, the lower the deductibleand coinsurance, the higher thepremium. Most plans limit yourcoinsurance after you have paid thedeductible and a certain amount

2Caremark Customer Assistance Hotline 1-800-331-7171

"out-of-pocket." For example, yourplan may stipulate an annualdeductible, a coinsurance amount anda maximum out-of-pocket (includingthe deductible). Before any services canbe paid by the insurance plan, youmust pay the deductible. After thatobligation has been fulfilled, the policywill reimburse the provider a certainpercentage based upon your policy.After meeting your out-of-pocketexpenses, you are no longer responsiblefor your coinsurance, and the plan willreimburse 100% of covered servicesuntil this policy period ends. Forexample:

Plan A Plan BMonthly premium $300 $600Annual deductible $1,000 $500Coinsurance 20% 10%Maximum out-of-pocket $3,000 $1,000

Q4. Are there any other costs I mightbe responsible for?

A4. You may be responsible for the cost ofany non-covered services, as well as anyamounts the provider bills in excess ofthe plan's usual and customary charge.

Q5. What about annual or lifetimemaximum benefits?

A5. While basic hospitalization plans don'tgenerally have annual or lifetimemaximum benefits, the majority ofmajor medical and prescription drugplans do. Benefit levels for prescriptiondrug plans are usually based on amonthly or annual benefit, if there is abenefit limit. Major medical planstypically have a lifetime maximum. Thedifference between a $50,000 and a$500,000 lifetime maximum issignificant, especially if you have achronic medical condition. Check your

health plan description carefully todetermine if you have any benefitlimitations.

Q6 Can I be excluded from coveragedue to a preexisting condition?

A6. It depends. Under the Health InsurancePortability and Accountability Act(HIPAA), a preexisting condition clausemay not last for more than 12 months(18 months for late enrollees). If youhave had continuous coverage withouta break of 63 days or more, you maybe able to "credit" your previous healthcoverage against the waiting period ofyour new insurance plan. Twelvemonths of continuous coverage beforeyour new plan began would allow youto begin receiving benefits immediately;a lesser amount (for example, 6months) is still significant, as it wouldallow the waiting period to be reducedby that time period. If HIPAA rules donot apply, preexisting conditionexclusions typically range from 3 to 18months, during which time you wouldbe completely responsible for paymentfor services associated with yourpreexisting condition.

Q7. Who handles complaints about myindemnity insurance carrier?

A7. The state Department of Insurancehandles complaints regarding indemnityinsurance carriers.

Self-Funded Insurance

Q8. What is self-funded insurance froman employer?

A8. Self-funded insurance is a way by whichemployers put money aside forpayment of the healthcare (self-fund)rather than buy a traditional indemnityinsurance policy for the group.

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Q9. Who offers self-funded plans?

A9. Many large employers offer self-fundedplans.

Q10. Are self-funded plans covered bythe same laws that governindemnity plans?

A10. No. Self-funded plans are governed bythe Employee Retirement IncomeSecurity Act (ERISA). This is a federallaw, not a state law.

Q11. Do self-funded plans offer the samebenefits as indemnity plans?

A11. Typically, the benefits of a self-fundedplan are very similar to those offered byan indemnity plan.

Q12. How will I know what benefits myself-funded plan offers?

A12. All self-funded plans are required togive the employee a Summary PlanDescription with detailed informationon what services are covered,deductibles, co-payments, maximumout-of-pocket, lifetime maximums.

Q13. Does HIPAA cover self-fundedplans?

A13. Yes, HIPAA does cover self-fundedhealth plans in the same way it coversindemnity plans.

Q14. Who handles complaints about aself-funded plan?

A14. The United States Department of Laborhandles complaints regarding self-funded plans.

Taft-Hartley Plans

Q15. What is a Taft-Hartley plan?

A15. A Taft-Hartley plan is another name fora union health plan.

Q16. What law covers a Taft-Hartleyplan?

A16. A Taft-Hartley plan is also covered byERISA and is required to do most of thesame the things that a self-funded planis required to do.

Q17. Does HIPAA cover a Taft-Hartleyplan?

A17. Yes, HIPAA does cover a Taft-Hartleyplan in the same way that it coversindemnity and self-funded plans.

Q18. Who handles complaints regardingTaft-Hartley plans?

A18. The United States Department of Laborhandles complaints regarding Taft-Hartley plans.

Managed Care Plans

As stated earlier, although advances in themedical field have greatly benefited patients,improvements in the quality of medical carehave come at a high cost. The primary goal ofmanaged care is to provide medicallyappropriate care in a cost-effective manner. Toachieve this goal, health plans manage youraccess to providers, treatment settings, andthe number and types of services you mayreceive as a covered benefit. For example, youmay have to choose from a limited list ofdoctors and hospitals; you may have to receivea referral from your primary care doctor beforeyou can see a specialist; or you may have toreceive prior authorization or a second opinionbefore you can receive a prescribed treatmentor products. Once only available from private insurance, managed care plans are now alsobeing offered by public health programs.


Health Maintenance Organizations

Health Maintenance Organizations (HMOs) aremanaged care plans in which the healthcareprovider is also the insurer: Kaiser and Cignaare two examples. This is typically the mostlimited type of managed care plan, regardingyour choice of provider. Care is monitored by aprimary care doctor, commonly known as agatekeeper. This individual is responsible for allreferrals, treatment plans, sites of service,treatment and review standards, and has afinancial incentive to provide medicallyappropriate care in a most cost-effectivemanner.

There are different operating plans of HMOs.The most common are: staff-model, group-model and network-model. A staff-modelHMO consists of a group of doctors who areeither salaried employees of a group practicethat is an important part of the HMO plan, orsalaried employees of the HMO. Healthcareservices in staff plans are delivered at HMO-owned health centers. There are two kinds ofgroup-model HMOs: a) the closed-panel plan,in which medical services are delivered in theHMO-owned health center or satellite clinic bydoctors who belong to a legally separatemedical group that only serves the HMO, andb) the plan in which the group of doctorsdelivers medical care. A network-model HMOis an organizational form in which the HMOcontracts with a network of medical groups toprovide healthcare services.

Q19. What are the advantages of thistype of plan?

A19. Typically these plans are comprehensive,providing all of the services (andpotentially more) that are offered underindemnity plans, or self-funded plans,while being less costly. You areresponsible for a premium (there is

usually no deductible), and a minimalco-payment per office visit. (The co-payment structure typically changes forhospital, ancillary and other services.)These plans usually don't havepreexisting condition waiting periods.

Q20. What if I choose to receive careoutside of the plan?

A20. Usually, care you receive outside of theplan is at your own expense. However,there are situations in which careoutside of the plan may be coveredwith a referral from your primary caredoctor. For example, care required froma specialist that is not available withinthe plan, is generally covered with areferral from your primary care doctor.Also, some HMOs now offer a Point ofService (POS) component. Using thePOS option, you may select doctors andother healthcare providers who areoutside of the plan. However, using thePOS option may change yourdeductible and co-payment obligation.

Preferred Provider Organizations

As compared to an HMO, a Preferred ProviderOrganization (PPO) is a group of doctors,hospitals, and other practitioners thatcontracts with a payor to provide services at adiscounted rate to preferred providers. Benefitshave already been agreed upon with thehealth plan; therefore, the patient is usuallynot responsible for the amount the providermay bill in excess of the health plan's usualand customary charge.

Q21. How does a PPO compare with atraditional indemnity plan, self-funded plan, Taft-Hartley plan or an HMO?

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A21. Similar to a traditional indemnity plan,a PPO will usually allow you to see anetwork provider without a referralfrom your primary care doctor. Also likean HMO, your out-of-pocket costs maybe lower, benefiting from thecontractual relationship between yourprovider and the plan. A PPO provides alarger selection of healthcare providers,better out-of-network benefits, and isless restrictive with accessing specialists.Self-funded plans and Taft-Hartley plansmay also be part of a PPO. TheSummary Plan Description wouldspecify the financial differencesbetween using the PPO networkproviders and the non-PPO providers.

Q22. Will my costs be different if I see aprovider who is not a member ofthe PPO?

A22. Yes. If your provider is a participatingprovider of the PPO, then you will beable to enjoy the special contract rates,which may result in reduced co-payments to you. If your provider isnot participating in the PPO plan, youmay still receive care, however, yourout-of-pocket costs may be higher.

For example, let's say your provider'snormal charge is $100. As aparticipating provider, the contractedfee may be $60. The plan pays 80% ofthe contracted rate (which is $48 in thisexample) and you are responsible for20% (in this example, $12). If yourprovider is non-participating, the planwill still only pay $48, but you will beresponsible not only for the 20%coinsurance ($12), but also for thedifference between your provider'scharge of $100 and the contracted rateof $60. As a result, for using a non-

participating provider, your out-of-pocket expense will be $52 rather than $12.

Participating Non-ParticipatingProvider Provider

Provider's Charge: $100 $100

Insurance'scontracted rate: $60 $60

80% paymentby insurance: $48 $48

Patient coinsuranceresponsibility: $12 $52

($60 - $48) ($100 - $48)

Public (Government) Health Plans

Supplemental Security Income

Supplemental Security Income, (SSI), is aprogram run by the Social SecurityAdministration that provides monthlypayments to the elderly, the blind, and peoplewith disabilities who have modest income. Toreceive SSI checks, you must live in the U.S.and be a U.S. citizen or national. (Certainnoncitizens may also be eligible.) Thesemonthly payments generally represent $552for one person, and $829 for a couple,however, they can vary based upon yourincome and what state you live in. Indetermining your income, the governmentreviews your cash, bank accounts, stocks andbonds, earnings, Social Security checks,pensions, and non-cash items you receive,such as food, clothing or shelter. There areseparate rules for working and non-workingapplicants.

Contact your nearest Social Security office orcall Social Security's toll-free number, 1-800-772-1213, or log on to www.ssa.gov to


learn more about this program. You may alsocontact the Caremark Customer AssistanceHotline at 1-800-331-7171.

Social Security Disability Income

Social Security Disability Income (SSDI), is aprogram run by the Social SecurityAdministration that provides monthlypayments to individuals who have a severeimpairment and are unable to perform anygainful work activity (not just the job you wereperforming at the time the disability began).

Q23. When do I become eligible forbenefits?

A23. If you have paid social security taxesover a sufficiently long period to be"fully insured," and contributed to theprogram recently enough to have"disability insured status," you areeligible for benefits after you have beendisabled for five months, and if thedisability is expected to last at least 12months.

Q24. How are the payments calculated?

A24. Your payments will be based on yoursalary and the number of years youhave been covered under SocialSecurity.

Q25. How does receipt of SSDI enableme to receive Medicare benefits?

A25. After 24 months of SSDI benefits, youqualify for Medicare.

Q26. Is there a time limit on SSDIbenefits?

A26. No. You will continue to receive adisability benefit as long as yourcondition keeps you from working.However, your case will be reviewed

from time to time to determinewhether there has been improvementin your condition, and whether you arestill eligible for benefits. If you are stilleligible when you reach 65, yourdisability benefit will automaticallyconvert to retirement benefits.

Q27. How can I learn more about thisprogram?

A27. Contact your nearest Social Securityoffice or call Social Security's toll-freenumber, 1-800-772-1213, or log on towww.ssa.gov to learn more about thisprogram. You may also contact theCaremark Customer Assistance Hotlineat 1-800-331-7171.

Medicare

Medicare is a federally sponsored health planfor people 65 years of age and older, certainyounger people with disabilities (see SSDIdiscussion), and people with end-stage renaldisease. Qualified individuals now have theirchoice of the traditional Medicare program orMedicare + Choice.

Q28. What is traditional Medicare?

A28. The traditional Medicare plan is thetraditional pay-per-visit arrangementthat allows you to be treated by anydoctor, hospital, or other healthcareprovider that participates in theMedicare program. The traditionalMedicare Plan has Part A (HospitalServices) and Part B (Major MedicalServices).

Q29. What is Part A and what are mycosts?

A29. Part A helps pay for care provided inhospitals, skilled nursing facilities(SNFs), hospice, and home health. If

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you are eligible, you will be premium-free, because you or your spouse paidMedicare taxes while you wereworking. If you don't qualify forpremium-free Part A, you may be ableto buy it. After payment of adeductible, you will be responsible forthe coinsurance, which will varydepending upon the care provided. Forexample, for hospitals and skillednursing facilities the coinsurance iscalculated for each benefit period (theperiod of time from admittance to 60consecutive days past the last hospitalin-patient or SNF care day) based uponyour length of stay.

Q30. What is Part B and what are mycosts?

A30. Part B helps pay for doctors, out-patient hospital care, and other medicalservices, such as physical andoccupational therapists, x-rays,preventive services, and limited out-patient drugs (including blood clottingfactor) when administered inconjunction with covered Part Bservices. Effective July 18, 1994, self-administered blood clotting factors andnecessary items furnished to hemophiliapatients competent to use such factorsto control bleeding without medical orother supervision are covered andreimbursed under Part B. You areautomatically eligible for Part B if youare eligible for premium-free Part A.You are also eligible if you are a U.S.citizen or permanent resident aged 65or older. You will be responsible for amonthly premium, an annualdeductible, and coinsurance, which willvary depending upon the serviceprovided. For example, for doctors,medical and surgical services and

supplies, your coinsurance will be 20%of Medicare's approved amountwithout any out-of-pocket limitation.

Q31. What are Medicare + Choice Plans?

A31. Recognizing the limitations of thetraditional Medicare Plan, Medicare +Choice Plans provide you with a widerarray of health plan options. If youhave Medicare Parts A and B, do nothave end-stage renal disease, and livein the service area of a health plan,your options include:

n Traditional Medicare Plan with asupplemental plan

n Managed Care

n Private Fee-for-Service Plan

n Medicare Medical Savings AccountPlan (MSA)

Q32. What is the benefit of thetraditional Medicare Plan with asupplemental plan?

A32. Purchase of one of the 10 standardsupplemental insurance policies mayprovide additional benefits not coveredunder the traditional Medicare Plan(e.g., prescription drugs), and help payMedicare's coinsurance amounts anddeductibles. There are two types ofMedicare supplemental insurancepolicies: Medigap and Medicare Select.Medigap allows you to go to anydoctor or hospital that acceptsMedicare. Medicare Select requires youto use plan hospitals, and in somecases, plan doctors.

Q33. What is a Managed Care Plan, andhow does it compare with thetraditional Medicare Plan?


A33. A Managed Care Plan involves a groupof doctors, hospitals, and otherhealthcare professionals who inexchange for a fixed amount of moneyor other negotiated reimbursementfrom Medicare, agree to provide care toMedicare beneficiaries. Managed CarePlans include health maintenance plans(HMOs), HMOs with a Point of Service(POS) option and Preferred ProviderOrganizations (PPOs). A Managed CarePlan, may, or may not, be right for you,depending upon how you value choiceof provider, benefits, need forspecialists and cost. In comparing theManaged Care Plan to the traditionalMedicare Plan, while your choice ofprovider may be more restricted, yourcoverage is usually better and yourcosts are usually less.

For example, HMOs usually require youto use doctors and hospitals that aremembers of the plan, while PPOs andHMOs with POS options may allow youto use doctors and hospitals "outside"of the plan (although usually at greatercost). Managed Care Plans must offeryou at least the same covered servicesavailable under the traditional MedicarePlan; however, they typically offergreater benefits including coverage forout-patient drugs, vision or dental care,hearing aids, etc. While all plans(traditional and Managed Care) requireyou to pay the Part B premium,Managed Care Plans are generally lessexpensive, even when a co-paymentper visit or per service is required.

Q34. How does the Private Fee-for-Service Plan operate?

A34. Under this program you choose aprivate insurance plan that accepts

Medicare beneficiaries. You may go toany doctor or hospital you choose. Theinsurance plan, rather than theMedicare program, determines thereimbursement amount and pays theprovider. You are still responsible forthe Medicare Part B premium, as wellas any monthly premium the plancharges, and an amount per visit orservice. In addition, if the doctor billsmore than the plan pays, you areresponsible for this difference.

Q35. How do I enroll/disenroll in one ofthe Medicare Plans?

A35. If you are not yet 65 and alreadygetting Social Security or RailroadRetirement benefits, you are enrolledautomatically in both Parts A and B,and your Medicare card is mailed toyou about 3 months before your 65thbirthday. If you are disabled, you will beautomatically enrolled in both Parts Aand B beginning in your 25th month ofdisability, and your Medicare card willbe mailed to you about 3 monthsbefore you are entitled to Medicare.Your initial enrollment period starts 3months before you turn 65 and lastsfor 7 months. If you chose not to takePart B when you were first eligible, youcan sign up during two enrollmentperiods: general enrollment period(January 1 through March 31 of eachyear for coverage that begins on July 1of that year); special enrollment period(available to individuals who are/werepreviously covered under a grouphealth plan).

You may enroll in a Medicare ManagedCare Plan or Private Fee-for-Service Planat any time, simply by contacting theplan and requesting an enrollment

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form. The plan cannot refuse to enrollyou during your open enrollmentperiod (the first six months after youturn 65 and are enrolled in MedicarePart B). You may disenroll at any time,for any reason, by contacting the planor the Social Security Administration.Your disenrollment becomes effectiveas early as the first of the month afteryour request is received.

You can only enroll in a MedicareMedical Savings Account (MSA) planduring the 3-month period before youare entitled to Part A and Part B, orduring November of each year. Youmust set up a Medicare MSA at a bankor savings institution. You can leave theMedicare MSA Plan by filing a requestfor disenrollment in November. Yourdisenrollment becomes effectiveDecember 31.

As of January 1, 2002, disenrollmentopportunities have become limited.

Q36. What if I can't afford the costsassociated with Medicare?

A36. If you have Medicare Part A and yourbank accounts, stocks, bonds, or otherresources do not exceed $4,000 (for anindividual), or $6,000 (for a couple),you may qualify for assistance as aQualified Medicare Beneficiary (QMB),Specified Low-Income MedicareBeneficiary (SLMB) or QualifyingIndividual (QI). The QMB program paysMedicare's premiums, deductibles, andcoinsurance for entitled older anddisabled people who are qualified forMedicare Part A. If your income is toohigh to qualify for QMB, you may beable to get help under the SLMB or QIprograms. Both SLMB and QI pay yourMedicare Part B premium, but do nothelp with Part A.

Q37. How can I learn more aboutMedicare?

A37. Contact your local Social Security officeor Medicare carrier to learn more aboutthis program. Additional information isavailable online at www.medicare.gov.You may also contact the CaremarkCustomer Assistance Hotline at 1-800-331-7171.

TRICARE

TRICARE is a regionally managed healthcareprogram for active duty and retired membersof the uniformed services, their families, andsurvivors.

Q38. Are different plans available underTRICARE?

A38. Yes. There is TRICARE Prime (HMO),TRICARE Extra (PPO), TRICARE Standardand TRICARE for Life.

Q39. What is TRICARE Prime?

A39. TRICARE Prime is the managed careoption. If implemented in your area,you may enroll in this plan at any time;however, there is a one-yearcommitment. If you are on active duty,you will be enrolled in this planautomatically, and assigned a PrimaryCare Manager. Your eligible familymembers may choose to also enroll inthis plan, or any of the other plansoffered, except TRICARE for LIFE. UnderTRICARE Prime, there is no annualdeductible, no enrollment fee, and noco-payments for authorized medicalvisits and prescriptions except forretirees under the age of 65. Retireesunder the age of 65 have an annualenrollment fee of $230 per individualor $460 per family. Enrollees in the


TRICARE Prime plan have access tomedical treatment facilities andTRICARE network providers.

Q40. What is TRICARE Standard?

A40. TRICARE Standard is a fee-for-serviceoption. Enrollment is not required toparticipate, and beneficiaries mayswitch between TRICARE Standard andExtra programs at any time, dependingupon the choice of doctor. Beneficiarieschoosing this plan have the greatestchoice of civilian doctors but at ahigher cost. Under TRICARE Standard,there is no enrollment fee, however,you are responsible for a deductibleplus co-payments depending on yoursponsor's status and the type of servicereceived. For example, active dutyfamily members will be responsible fora deductible plus 20% of the allowedcharges and a co-payment, whileretirees under the age of 65 will beresponsible for a deductible plus 25%of the allowed charges.

Q41. What is TRICARE Extra?

A41. TRICARE Extra is similar to TRICAREStandard, but offers discounts topatients when they use TRICAREnetwork providers. For example, activeduty family members will be responsiblefor a deductible and 15% of theallowed charges, while retirees underthe age of 65 will be responsible for adeductible plus 20% of the allowedcharges. As with TRICARE Standard,enrollment is not required.

Q42. What is TRICARE for Life?

A42. TRICARE for LIFE is a Medigap typeprogram for uniformed service retireesand family members 65 or over and

enrolled in Medicare Part B. Enrollmentis automatic with Medicare enrollment.

Q43. How can I learn more aboutTRICARE?

A43. Contact your local TRICARE ServiceCenter, or log on to www.tricare.osd.milto learn more about this program. Youmay also contact the CaremarkCustomer Assistance Hotline at 1-800-331-7171.

Civilian Health and Medical Program ofthe Veterans Administration (CHAMPVA)

CHAMPVA provides medical coverage todependents of completely disabled veterans orto dependents of deceased veterans whopassed away as a direct result of a service-associated disability.

Q44. Will I lose my eligibility if I qualifyfor Medicare?

A44. No. If you are 65 years of age or older,and qualify for Medicare, you may beeligible for CHAMPVA for Life which isan extension of CHAMPVA benefitssigned into law on June 5, 2001.

Q45. What costs am I responsible for?

A45. If you receive care at VA healthcarefacilities offering the CHAMPVA In-house Treatment Initiative (CITI)program, there is no cost share.However, if you receive care outside ofthe CITI program there is a deductibleand a cost share. Note that due to thevolume of veterans that they areserving, not all VA healthcare facilitiesparticipate in the CITI program.

Q46. How can I learn more aboutCHAMPVA?

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A46. Contact the VA's Health AdministrationCenter, or log on towww.va.gov/hac/champva/champva.htmlto learn more about this program. Youmay also contact the CaremarkCustomer Assistance Hotline at 1-800-331-7171.

Medicaid

Medicaid is a state administered medicalassistance program designed to providemedical care to individuals with limitedincome. The program is funded by acombination of federal, state and local monies.

Q47. How is Medicaid eligibilitydetermined?

A47. Eligibility is based on a "means test," ora determination of an individual's orfamily's financial status or otherqualifying status. Some states limiteligibility to a "strict" means test. (Ifincome exceeds a maximum level, anapplicant is not eligible for benefits.)Applicants with income under this levelare considered "categorically needy"and are eligible for benefits. Otherstates have an additional category ofeligible beneficiaries called "medicallyneedy" for people whose incomeexceeds the maximum eligibility limit,but whose medical expenses reducetheir income to within the eligibilitylevels. "Spend-downs" may beassigned to those individuals. After adesignated amount of expenses hasincurred, individuals may becomeeligible for Medicaid. At the point atwhich the maximum income level isreached, Medicaid will begin to pay forhealth costs. For example, if themaximum income for eligibility is$1,000 per month, and the family's

income is $1,500, with medicalexpenses of $750, once the first $500is spent on healthcare, effectivelybringing income to $1,000, theremaining $250 would be covered byMedicaid.

Temporary Assistance for NeedyFamilies (TANF) is a Medicaid programspecifically designed to assist familieswith dependent children. Eligibility isusually based on the family's financialstatus. TANF replaced the Aid toFamilies with Dependent Children(AFDC) program in 1997.

Q48. What benefits are provided?

A48. Each state must provide basic benefitsestablished by the federal governmentin order to qualify as a Medicaidprogram, and receive federal funding.For example, each state must providein-patient and out-patient hospitalservices and doctor services. Beyondthese basic benefits, each state candesign its own program to include, orexclude, such items as prescriptiondrugs or eyeglasses.

Q49. Can I choose my provider of care?

A49. You can receive care from any providerwho is a participant in the Medicaidprogram. If you are in a MedicaidManaged Care Plan, your choices maybe further restricted to doctors andother healthcare providers who are partof the Managed Care Plan.

Q50. Who should I contact to learn moreabout the Medicaid Program?

A50. You may contact your state MedicalAssistance office. Or, you may contactthe Caremark Customer AssistanceHotline at 1-800-331-7171.


State Children's Health Insurance Program

The State Children's Health Insurance Program(CHIP), Title XXI of the Social Security Act, wasenacted in 1997 to enable states to providecoverage to uninsured, low-income children,not currently covered under Medicaid. Thisprogram is especially designed to insurechildren from working families with incomestoo high to qualify for Medicaid, but too littleto afford private coverage. As an incentive,federal matching funds are provided to statesthat initiate this program. The eligibilitystandards define a low-income child as onewhose family income is at or below 200% ofthe federal poverty level. States have theflexibility to create a new program or modifytheir existing Medicaid program.

Q51. What children are excluded fromthe Program?

A51. A child who is eligible for Medicaid, hashealth insurance, is covered under agroup health plan, who is an inmate ofa public institution or a patient in aninstitution for mental disease, or a childwho is a member of a family that iseligible for health benefits coverageunder a state health benefits plan onthe basis of a family member'semployment with a public agency inthe state. Undocumented immigrantchildren are not eligible for coverage.

Q52. What is the cost to the family?

A52. The purpose of the CHIP program is toprovide low cost or no cost insurancefor children. However, each state mayimplement the program in its own way.Check with your state MedicalAssistance office for the costs in yourstate.

Q53. Is a child eligible for CHIP if otherhealth insurance is available?

A53. Yes. In some states the availability ofother health insurance may not preventa child from participating in CHIP.However, there is a concern that thegoal of this program to expand thetotal number of children who havehealth insurance may not beaccomplished if children substitutepublic benefits for private sectorbenefits.

Q54. How can I learn more about CHIPs?

A54. To learn more about this program,contact your state Medical Assistanceoffice. You may also contact theCaremark Customer Assistance Hotlineat 1-800-331-7171

Children with Special Healthcare Needs

Although sometimes called by a slightlydifferent name, almost all states have this typeof program which, financed by state tax funds,and often supplemented by family co-payments, provides specialized medical careand rehabilitation to children with long-termcatastrophic illnesses whose families arepartially or wholly unable to provide for suchservices.

Q55. Who is eligible for this program?

A55. In those states that have this program,the program is usually available toanyone under the age of 21, who is aresident of the state, and has a long-term catastrophic illness which iseligible for care under the program,and whose family is unable to pay thefull cost of recommended treatment.Examples of catastrophic illnessesinclude individuals with hemophilia,sickle cell anemia, etc.

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Q56. If I have other insurance, can I stillparticipate in this Program?

A56. It depends upon your state's program.Understanding that medical care can bevery costly, and even a co-payment cancreate a financial hardship, some statesprovide secondary coverage for familieswhose primary health insurance coversless than 100% of charges.

Q57. What is the cost of this Program?

A57. The cost will vary by state. However,most programs base your share of coston the family size, income tax liability,and program expenditures.

Q58. How can I learn more about thisProgram?

A58. Contact your state Medical Assistanceoffice or the Caremark CustomerAssistance Hotline at 1-800-331-7171.

AIDS Drug Assistance Program

The AIDS Drug Assistance Program (ADAP)provides medications to low-income individualswith HIV disease who have limited or nohealthcare coverage from private insurance orMedicaid. All states, the District of Columbia,Puerto Rico, and the Virgin Islands have ADAPPrograms.

Q59. Who is eligible?

A59. Each state develops its own incomeeligibility criteria, typically using thefederal poverty level as a basis.Although medical eligibility also variesby state, most require individuals tosimply provide proof of HIV diagnosis.However, some states requireindividuals to demonstrate diseaseprogression, and others have specificcriteria for access to protease inhibitorsand/or antiretrovirals.

Q60. What drugs are available throughADAP?

A60. As with income and medical eligibilitycriteria, states are free to decide whichdrugs to include in their ADAP drug list,and how these drugs will be purchasedand distributed to individuals in need.

Q61. How can I learn more about ADAP?

A61. Contact your state Medical Assistanceoffice to learn more about thisprogram. You may also contact theCaremark Customer Assistance Hotlineat 1-800-331-7171.

Comprehensive Health Insurance Programs

These programs are mandated by state lawand are designed to provide a health plan toindividuals who are uninsurable on anindividual basis and do not have access to anygroup or public health plan. Commonlyreferred to as "state high-risk pools," stateComprehensive Health Insurance Programs arean excellent safety net for individuals whohave difficulty in purchasing adequate healthinsurance coverage due to a preexistingcondition.

Q62. Is this program available in allstates?

A62. No. Unfortunately, some states havechosen not to develop these programs.

Q63. How is eligibility determined?

A63. While eligibility may vary from state tostate, generally the participant must bea resident of the state and not eligiblefor COBRA benefits, and have beenunable to secure coverage. You do nothave to be indigent to qualify for thisprogram. However, the state may limitthe number of non-indigent enrollees inthe program at any one time.


Q64. What are my costs?

A64. Costs will vary by state, but typicallyyou will be responsible for a premium(generally 150% of the standardaverage individual rate for non-high risk individuals), deductible andcoinsurance.

Q65. Are there annual or lifetimemaximum benefits?

A65. Generally there are annual as well aslifetime benefits. Most states offer alifetime benefit between $500,000 and$1,000,000.

Q66. What services are provided underthis Program?

A66. Benefits will vary by state, however,usually they include in-patient and out-patient care, prescription drugcoverage, diagnostic and x-rays, andpreventative care.

Q67. Don’t the HIPAA insurance reformprovisions eliminate the need forthese programs?

A67. While HIPAA enables people alreadywith group insurance to have access toinsurance if they switch jobs to a newemployer that offers insurance, or inthe individual insurance market, it doesnot address people who do not nowhave insurance or have limited accessto insurance because of a medicalcondition. It also does not address thespecific rates that can be chargedpeople with health problems switchingto new insurance plans that might beprohibitive.

Q68. Who do I contact for additionalinformation?

A68. Contact your state InsuranceCommissioner to learn more aboutavailability of this program. You mayalso contact the Caremark CustomerAssistance Hotline at 1-800-331-7171.

Laws That Affect HealthcareBenefits

Employment Retirement Income Security Act

The Employment Retirement Income SecurityAct (ERISA) sets uniform minimum standardsto ensure that employee benefit plans areestablished and maintained in a fair andfinancially sound manner. These benefit plansinclude pension plans as well as welfare plansthat are established and maintained to providehealth benefits, disability benefits, deathbenefits, vacation benefits, day care centers,scholarship funds, etc. The provisions of ERISAcover most private sector employee benefitplans. In general, ERISA does not cover plansestablished or maintained by governmentalentities or churches. Employers who fail tocomply with ERISA-mandated requirements aresubject to civil action.

To learn more about ERISA, contact the U.S.Department of Labor, Pension and WelfareBenefits Administration, or log on towww.dol.gov/dol/topic/health-plans/erisa.htm.

Consolidated Omnibus BudgetReconciliation Act

Since most individuals with health plancoverage receive health benefits through theiremployer, loss of employment could havetragic consequences. Approximately 90% ofindividuals with private health plan coveragereceive their health benefits through theirrelationship with an employer. To protect theseindividuals from loss of coverage that may

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occur as a result of change or termination inemployment, in 1985, Congress passed theConsolidated Omnibus Budget ReconciliationAct (COBRA). COBRA allows formeremployees, retirees, spouses and dependentchildren the right to temporary continuation ofhealth coverage at group rates.

Q69. How do I know if my plan iscovered by COBRA?

A69. The law generally covers group healthplans maintained by employers with 20or more employees. While it applies toplans in the private sector and thosesponsored by state and localgovernments, it does not apply to planssponsored by the federal governmentand certain church-relatedorganizations.

Q70. When can I use COBRA?

A70. COBRA becomes effective when anindividual loses their "qualifying status"for health insurance coverage becauseof a "qualifying event."These eventsare identified below.

Employee, Spouse, Dependent Child

n Termination of the coveredemployee's employment for anyreason other than "grossmisconduct"

n Reduction in the hours worked by thecovered employee

n Employer's Chapter 11 bankruptcy(under some circumstances)

n Divorce or legal separation of thecovered employee

n Death of the covered employee

n Covered employee becomes entitledto benefits under Medicare

n Loss of "dependent child" statusunder plan rules

Q71. How do I determine if I'm eligibleto receive COBRA benefits?

A71. Generally, any individual covered by aqualified group health plan on the daybefore a "qualifying event" isconsidered eligible for COBRA benefits.This may include an employee, theemployee's spouse and dependentchildren. In addition, any child born to,or placed for adoption with, a coveredemployee during a period of COBRAcontinuation coverage would beeligible.

Q72. Under COBRA, how long will mybenefits continue?

A72. Although your employer's plan mayprovide longer periods of coverage,individuals generally are eligible for amaximum of 18 months for qualifyingevents due to employment terminationor reduction of hours of work.Individuals who qualify for SocialSecurity disability benefits can extendcoverage an additional 11 months, fora total of 29 months. For loss ofcoverage due to Medicare entitlement,divorce or legal separation, death, orloss of "dependent child” status,coverage is available up to 36 months.If a "second" qualifying event (such as,death or a divorce) should occur withinthe 18/29 month maximum coverageperiod, then you would be eligible for a36-month maximum coverage periodfrom the date of the first qualifyingevent. Of course, you must pay yourpremiums as directed by your plan inorder for coverage to continue.

Q73. How much will I have to pay tocontinue my benefits underCOBRA?


A73. The law states that your premiumcannot exceed 102% of the cost to theplan. This may be more than you werepaying before your "qualifying event,"since generally the employer pays aportion of the cost for group healthinsurance, along with the employee.For disabled individuals receiving anadditional 11 months of coverage afterthe initial 18 months, the premium forthose additional 11 months may beincreased to 150% of the cost to theplan if the disabled individual was partof the coverage group (subscriber anddependent), but the limit could be102% if only nondisabled individualswere in the coverage group. You arealso responsible for any deductibles orco-payments.

Q74. Am I eligible for COBRA if I haveother health insurance coverage?

A74. Yes and No. If you have Medicare orother group health plan coverage priorto the date of COBRA election, youmay still be eligible for COBRA. Youmay have the right to continue withCOBRA coverage even though you maybe covered under another group healthplan, or Medicare, at the time of theCOBRA election. However, if youbecome covered under other grouphealth plan coverage or entitled toMedicare benefits after the date ofCOBRA election, and the new plandoes not have any exclusion orlimitation with respect to anypreexisting condition of the qualifiedbeneficiary, then your employer has theright to cancel COBRA continuationcoverage. If your employer does notcancel your COBRA coverage, you maycontinue your COBRA coverage subject

to the terms and conditions of all ofthe health plans under which youparticipate.

Q75. What are my options when COBRAcoverage ends, and I still have nohealth insurance coverage?

A75. Some plans allow individuals to converttheir group health coverage to anindividual policy. If this option isavailable, you will be notified, andallowed to enroll in a conversion planwithin 180 days before COBRAcoverage ends. The premium isgenerally not at the group rate, and thebenefits may not be as extensive. Theopportunity to convert to an individualpolicy also relates to non-COBRA plans.You may also have conversion rightsunder HIPAA as discussed below.

Q76. How do I enroll in COBRA?

A76. Generally your employer or planadministrator must determine when a"qualifying event" has occurred.However, you are required to notify theplan administrator if the qualifyingevent is a divorce, legal separation oryour dependent child ceases to be adependent child under the plan terms.Notice must be provided within 60 daysafter the date of the qualifying event orthe date you would lose coverage,whichever is later.

Q77. Am I eligible for COBRA if I amabsent from work due to the Familyand Medical Leave Act (FMLA)?

A77. The taking of FMLA leave is not itselfconsidered a qualifying event. However,if a qualifying event occurs immediatelyprior to, or during, FMLA leave, and

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you are unable to return to work at theend of the FMLA leave, then you wouldbe eligible for COBRA continuationcoverage.

Q78. If I allow my COBRA coverage tolapse, is my employer obligated toreinstate my coverage?

A78. No. Your employer is under noobligation to reinstate your coveragefor COBRA. If you are a COBRAparticipant, it is critically important thatyou keep your premium payments upto date and that you keep a record thatwill allow you to prove your payments.

Q79. Who should I contact to learn moreabout COBRA?

A79. You may contact the U.S. Departmentof Labor, your employer, or your planadministrator or log on towww.dol.gov/dol/topic/health-plans/cobra.htm

to learn more about this program. Youmay also contact the CaremarkCustomer Assistance Hotline at 1-800-331-7171.

Health Insurance Portability andAccountability Act

For years, individuals with chronic medicalconditions have suffered loss of healthinsurance as a result of a change ortermination of employment. Passage of thefederal Health Insurance Portability andAccountability Act (HIPAA) in 1996, helpedreduce this anxiety. HIPAA limits exclusions forpreexisting conditions, prohibits discriminationagainst employees and dependents based ontheir health status, guarantees renewabilityand availability of health coverage to certainemployers and individuals, and protects manyworkers who lose health coverage byproviding better access to individual health

insurance coverage. In simple terms, a changein employment may no longer result in loss ofhealth benefits for you and/or your family.

Q80. Do the HIPAA insurance reformprovisions apply to everyone?

A80. HIPAA insurance reform provisionsapply to employer-sponsored grouphealth plans (with two or more currentemployees), insurance companies andhealth maintenance organizations(HMOs). They also apply to self-insuredgroup health plans and union healthplans.

Q81. How do I know if my illness isconsidered a preexisting condition?

A81. Under the HIPAA insurance reformprovisions, if you have a medicalcondition, but have not received anymedical advice, diagnosis, care ortreatment within the 6 months prior toyour enrollment date in the plan forthat condition, then your old conditioncannot be considered a "preexistingcondition" for which an exclusion canapply. In addition, HIPAA mandates thatpreexisting condition exclusions cannotbe applied to pregnancy.

Q82. How long can I be excluded fromreceiving benefits from a newhealth plan because of mypreexisting condition?

A82. Thanks to HIPAA insurance reformprovisions, a preexisting conditionexclusion may not last for more than 12months (18 months for late enrollees)after your enrollment date, and yournew plan must provide you "credit" forthe length of time that you had"continuous health coverage," (i.e.,without a break of 63 days or more). If


the plan does apply a preexistingcondition exclusion period, the planmust make a determination regardingyour creditable coverage and the lengthof any preexisting condition exclusionperiod that applies to you. For example,if you already had 12 months ofcontinuous health coverage with yourprevious health plan, you will not haveto start over with a new 12-monthexclusion. Therefore, you would beimmediately eligible to receive benefitsfor your preexisting condition. In allhealth plans, a late enrollee is anindividual who enrolls in a plan otherthan on either the earliest date onwhich coverage can become effectiveunder the terms of the plan or on aspecial enrollment date.

Q83. How do I prove to my new healthplan that I have "credit" and shouldnot be subject to a preexistingcondition exclusion period?

A83. A certificate of creditable coveragemust be provided automatically to youby the plan or issuer when you losecoverage under the plan or becomeentitled to COBRA continuationcoverage, and when your COBRAcoverage ceases. You may also requesta certificate within 24 months of whenyour coverage ceases. If you do notreceive a certificate, otherdocumentation can be used todemonstrate creditable coverage.Documentation, such as pay stubsreflecting deduction for healthinsurance, explanations of benefits(EOBs), or verification by a doctor canbe used.

Q84. Can I be excluded from coveragebased on my health status?

A84. No. Under the HIPAA insurance reformprovisions, group health plans andissuers may not restrict enrollmentbased on "health status-relatedfactors." These would include yourhealth status, medical condition, claimsexperience, receipt of healthcare,medical history, genetic information,evidence of insurability, or disability.

Q85. Can I be required to pay morebased on my health status?

A85. Yes and No. If you purchase individualhealth insurance, depending upon statelaw, insurers may be able to charge youmore depending upon your healthstatus. However, under HIPAA, grouphealth plans may not require you to paya premium or contribution greater thanother similarly situated plan membersbased on your health status-relatedfactor.

Q86. Can HIPAA help if I am unable toobtain group coverage?

A86. Yes. The insurance reform provisions ofHIPAA guarantee access to individualinsurance if you:

n have had coverage for at least 18months where the most recent periodof coverage was under a grouphealth plan

n were not terminated from groupcoverage because of fraud ornonpayment of premiums

n are ineligible for COBRA or haveexhausted COBRA benefits

n are ineligible for coverage underanother group health plan, Medicareor Medicaid or any other healthinsurance coverage

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Q87. I've identified new individual healthinsurance, but the premium is toohigh. Can HIPAA help?

A87. No. The insurance reform provisions ofHIPAA do not establish premium rates,but, as stated above, they do prohibitplans and issuers from charging youmore than other individuals in the sameplan, because of your health status.

Q88. What doesn't HIPAA do?

A88. Although the insurance reformprovisions of HIPAA provide you withgreater protection than ever before,they do have the following limitations:

n HIPAA does not require an employerto offer or pay for health insurancecoverage.

n HIPAA does not establish premium,co-payment, or deductible rates.

n HIPAA does not mean that you cancarry current health benefits or yourcurrent plan or policy with you whenmoving from one health plan orpolicy to another.

n HIPAA does not require plans to offer specific benefits.

n HIPAA does not stipulate that you willbe able to keep your doctor if youchange health coverage.

n HIPAA will not provide credit for yourprevious coverage against theapplication of a preexisting conditionexclusion period if a break of 63 ormore days has occurred.

Q89. How can I learn more about theinsurance reform provisions ofHIPAA?

A89. You may contact the U.S. Departmentof Labor, your employer, or your planadministrator or log on towww.dol.gov/dol/topic/health-plans/portability.htm

to learn more about this program. Youmay also contact the CaremarkCustomer Assistance Hotline at 1-800-331-7171.

Americans with Disabilities Act

In 1990, the Americans with Disabilities Act(ADA) was established to end broad-based and long-standing discrimination againstpeople with disabilities in many aspects of life, including employment, publicaccommodations, education, transportation,communication, recreation, institutionalization,voting, access to public services, and healthservices.

Q90. What is the definition of a disability?

A90. The Act states that "disability" means aphysical or mental impairment thatsubstantially limits one or more of themajor life activities of an individual. Forexample, the U.S. Supreme Court ruledthat an HIV-infected patient whoseinfection has not progressed to the so-called "symptomatic phase" is disabledwithin the meaning of the ADA.

Q91. How can I learn more about ADA?

A91. You may contact the U.S. Departmentof Labor, your employer or your planadministrator or log on towww.usdoj.gov/crt/ada/adahom1.htmto learn more about ADA. You mayalso contact the Caremark CustomerAssistance Hotline at 1-800-331-7171.


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