Types of health insurance coverage

Generally, there are 2 broad categories of health insurance in the United States:

  • Private commercial coverage, under which insurance benefits are privately purchased
    • In most cases, coverage is purchased through an employer group
    • In some cases, coverage is purchased directly from a health plan, through a broker or a public health insurance marketplace, also known as a health insurance exchange
  • Government health insurance coverage, under which insurance benefits are provided through a government program such as Medicare or Medicaid
    • Medicare is a federal government program that provides coverage for individuals older than 65 years and for those with certain disabilities
    • Medicaid, along with the Children’s Health Insurance Program (CHIP), is a state-administered program that provides coverage for individuals with low income and for children with disabilities and special needs

Many families may have private commercial and/or Medicaid coverage. Here are some basic facts that may help explain these types of health insurance coverage options. If you have any questions, please contact your insurer directly to speak with a representative or case manager who can discuss the specifics of your health benefits.

PRIVATE COMMERICAL INSURANCE

  • Level of benefits, monthly premiums, and patient costs vary widely
  • Out-of-pocket costs include deductibles, copays, and coinsurance; an out-of-pocket cost limit may also apply
  • Individuals with commercial health maintenance organization (HMO) benefits are typically restricted to participating in-network providers and may need a referral to see a specialist
  • People with commercial preferred provider organization (PPO) benefits may pay higher out-of-pocket costs for seeing out-of-network providers

MEDICAID

  • Eligibility criteria and levels of benefits vary by state
    • Social Security Disability Insurance recipients may automatically qualify for Medicaid in many states
  • Out-of-pocket costs are generally low, particularly for those with income at or below 150% of the federal poverty level
  • Medicaid recipients are typically restricted to participating providers within the state
    • Individuals enrolled in a Medicaid Managed Care plan may be restricted to participating in-network providers

Navigating health insurance benefits

No matter what type of health coverage you may have, consider using the following framework to help navigate your insurance benefits:

Which services and products are covered under your health benefits and with what limits?

Which providers can you use?

How much will you pay out of pocket?

Benefit limits

Typically, insurers cover general categories of healthcare services, including healthcare professional (HCP) office visits, medical tests, laboratory test results, hospitalizations, and prescription drugs. However, it is important to understand what types of rules may be used to determine coverage as they apply to the management of spinal muscular atrophy.

Coverage limits and exclusions 

Under your insurance, coverage of certain services (especially ancillary care such as physical therapy, durable medical equipment [DME], or home health care) may be subject to a limit or benefit exclusion. For example, a private commercial health plan may not cover long-term home care services and may limit coverage of physical and occupational therapy (eg, 30 visits per year). 

Some families with private commercial insurance may enroll in supplemental Medicaid to help address certain coverage limits and exclusions. In that scenario, an individual with spinal muscular atrophy typically has primary health insurance coverage through a private commercial health plan and secondary, or supplemental, insurance coverage through Medicaid.

Medical necessity 

Your insurer is unlikely to cover care that is not deemed medically necessary. For instance, coverage of DME, such as a wheelchair or respiratory assistive device, may be rejected if your insurer believes that it is not medically necessary. Keep in mind that clinical documentation may be needed to justify medical necessity. In addition, a denial can be appealed for reconsideration of coverage by your insurer and/or an external independent organization. It is important to know that you have the right to request multiple levels of appeal, even after your insurer continues to deny coverage. However, this may require detailed documentation and several rounds of communication with the insurer, your HCP, and/or other parties involved. This can be a lengthy process but there are exceptions for urgent cases.

Prior authorizations, pre-certifications, and referrals 

Your insurer may grant coverage for some services and prescription drugs only after a prior authorization or precertification is approved. Typically, insurers place these restrictions in order to be able to review medical necessity before coverage can be granted. In addition, some insurers, including commercial HMO plans and Medicaid, may not cover specialty care unless individuals receive a referral from their primary care provider.

Navigating benefit limits

The following are sample questions that can help you explore benefit limits for your health insurance coverage:

  • What benefit exclusions and limits apply to physical/occupational/respiratory therapy, home care, nutritional support, and DME?
  • What is covered by primary insurance versus secondary/supplemental insurance?
  • For a specific service, equipment, or medication:
    • What is considered to be medically necessary and what supporting documentation is required?
    • Is prior authorization, precertification, or referral required, and how can it be obtained?
  • If coverage is denied, what is the appeals process?

Provider-network restrictions

Your insurer is likely to have a network of participating providers who have agreed to provide healthcare services to its members under specific contracted terms. As a result, individuals may be restricted or incentivized to seek care from in-network, or preferred, providers.

For families with private commercial insurance, services provided by out-of-network, or nonpreferred, providers may be associated with higher out-of-pocket costs or might not be covered at all. For Medicaid beneficiaries, coverage is generally limited to participating providers in the specific state. Furthermore, individuals enrolled in Medicaid Managed Care might be able to seek care only from in-network providers within their state.

These provider-network restrictions can pose an important challenge if you are seeing a doctor who is not in your insurer's network or is located in another state. However, coverage exceptions can be granted as long as medical necessity can be established, especially if there is no in-network provider with the required expertise.

Navigating provider-network restrictions

The following are sample questions that can help you explore provider-network restrictions for your health insurance coverage:

  • Which coverage and out-of-pocket cost restrictions may apply for my HCPs?
  • Does a specific provider/center/hospital participate in the plan’s network and/or state Medicaid program?
  • If care needs to be provided out of network and/or out of state, what is the exception process?

Cost-sharing structure

Cost-sharing refers to the share of costs covered by an insurance plan that must be paid out of pocket. This is in addition to any monthly premium that is paid for having insurance coverage. A cost-sharing structure may include deductibles, copays, coinsurance, or out-of-pocket cost limits, but the specifics vary widely. It is important to note that certain preventive healthcare services that are received from in-network providers do not require cost-sharing. In addition, Medicaid beneficiaries generally have limited cost-sharing, particularly those with income at or below 150% of the federal poverty level.

Deductible 

If your insurance plan has an annual deductible, you must pay a specified amount in out-of-pocket costs before coverage can begin for the benefit year. For example, an individual with private commercial insurance may have an annual deductible of $1,000 in 2016. In this example, the first $1,000 of the cost of medical care for that individual in 2016 will need to be paid out of pocket before the insurance benefits will cover any cost.

Copay or coinsurance 

After the deductible is met, you may be responsible for part of the cost of care, in the form of a copay or coinsurance. While a copay is a fixed dollar amount for a specific healthcare service or product, coinsurance is determined as a percentage of the cost. For example, some individuals may pay a $25 copay for an office visit, whereas others may need to pay coinsurance, such as 20% of the cost paid by their insurer.

Out-of-pocket limit 

Most important, as a measure of catastrophic coverage, many people with private commercial insurance may have an out-of-pocket limit, which is a dollar amount that is set to limit financial exposure for individuals with medical costs. For instance, an individual with private insurance may have an annual out-of-pocket limit of $6,000 in 2016. In this case, once that individual’s share of covered costs reaches $6,000, the insurer will pay the full cost of covered services and products for the rest of 2016.

Navigating cost-sharing structure

The following are sample questions that can help you explore the cost-sharing structure of your health insurance coverage:

  • What types of preventive services are not subject to cost-sharing?
  • For the benefit year:
    • What is the annual deductible and what amount has been already met?
    • What is the annual out-of-pocket limit and what amount has been already met?
    • Which out-of-pocket expenses do not count toward the deductible or the out-of-pocket limit?
  • For a specific service, equipment, or medication:
    • Is there a separate deductible and/or out-of-pocket limit?
    • What copay amount or coinsurance percentage applies after the deductible is met?

Understanding health insurance options

Click here to download a guide specifically designed to help you understand the available health insurance options and programs to support SMA care.