Introduction To California Health Insurance

Illness or non-work related injury can be financially devastating, especially when considering the rising cost of health care over the past 20 years. Health insurance can help protect you from large out-of-pocket health care expenses that can accumulate during an acute or chronic illness.

If you have a job, your employer may provide group comprehensive major medical coverage. You can also purchase individual comprehensive major medical coverage privately or through an insurance agent or broker who is licensed by the State of California to sell health insurance products.

Types of Health Insurance and How Health Insurance Works
Health insurance pays for expenses incurred for diagnosis and treatment of covered medical conditions. There are many different types of health insurance plans available in California. It is important if you have a choice of health insurance to choose the plan that best fits your specific needs, budget, and lifestyle.

Also, make sure that you are aware of the state or federal agency that regulates the type of health insurance you have in case you experience questions or problems. Each of the different ways of receiving health care services has advantages and disadvantages. It is in your best interest to become familiar with the different types of health insurance, so you know what may be available to you.

Indemnity Policies (Traditional Fee-for-Service Insurance)

Preferred Provider Organizations (PPOs)

Health Maintenance Organizations (HMOs or Managed Care)

Self-Insured Health Plans (Single Employer Self-Insured Plans)

Multiple Employer Welfare Arrangements (MEWAs)

Indemnity Policies (Traditional Fee-for-Service Insurance)
Most indemnity policies allow you to choose any doctor and hospital that you wish when seeking health care services. The hallmark of traditional fee-for-service insurance is choice. You are given the choice of what provider to visit when seeking covered medical services with few if any geographic limitations. When purchasing an indemnity policy, you may often have a deductible. The deductible is the amount you are required to pay before policy benefits are provided.

You may have a choice in the amount of your deductible. If your health care charges are covered, or eligible for payment under the policy, any applicable deductible will apply. Once the deductible has been paid, the remaining charges are reimbursed to you at a specified percentage according to the policy contract. The difference between eligible charges and the percentage paid is called a "copayment," and is normally your responsibility.

The policy or an employee benefit booklet (if your indemnity policy is group coverage) will spell out the terms and conditions of what is covered and what is not covered. Read your policy or benefit booklet before you need health care services and ask your health insurance agent, insurance company, or employer to explain anything that is unclear.

The California Department of Insurance (CDI) regulates indemnity policies. If you have an individual or group health insurance policy that is a traditional fee-for-service policy issued by a CDI licensed health insurance company, then you can contact the CDI for assistance. Since jurisdiction is divided between several state and federal agencies, it can be confusing to determine who regulates your health care coverage. The CDI is always available to assist consumers with health care questions or to direct consumers to the correct agency for assistance. Please see the last page of this brochure for the many ways you can contact the CDI.

Important Points to Remember About Indemnity Policies:

You have the freedom to choose your doctor, specialist, or hospital with few if any limitations.

Your options are seldom if ever limited by geographic restrictions.

You may be responsible for paying a deductible before covered medical benefits are reimbursable.

You may be required to pay a co-payment for covered medical services.

You can seek assistance from the CDI for questions regarding any indemnity policy.