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Traditional Health Plan Laws

What is traditional health insurance?

Traditional health insurance is often called “fee-for-service” because the insurer pays the bills after you receive the service. You usually can use any doctor or hospital. You will likely have to pay a deductible before the policy begins to pay and co-payments each time you receive a health care service. If the coverage pays less than the full bill, you may be responsible for paying the balance.

When you apply for a traditional health insurance policy you will be asked many personal questions. The company is trying to determine what kind of risk you might be. The company asks health questions as well as lifestyle questions to assess how likely it is that you will need health care that will be payable under the insurance policy.

Through the process of underwriting, the company will determine if it wants to accept you as an insured. If the company issues you an insurance policy it will use underwriting to determine what rating category in which to place you, thus determining the cost of the policy.

What are Michigan’s minimum coverage requirements?
There are certain coverages that every traditional health insurance policy must include. There are other coverages that are not required to be included in a policy but if the coverage is included in the policy, the health carrier has certain responsibilities concerning that coverage.

The minimum coverage benefits are listed below. The information below only applies to policies that are written on an “expense incurred” basis. This type of policy pays for the actual expenses that were incurred for health care services received. The other popular type of policy is referred to as an “indemnity” based policy. This type of policy pays a pre-set amount for health care services received, regardless of the actual amount charged for those services. The information below does not apply to indemnity policies.

What must an insurance company cover related to diabetes?
The insurance company must establish a program to prevent the onset of clinical diabetes. This program must emphasize best practice guidelines to prevent the onset of clinical diabetes and to treat diabetes, including, but not limited to, diet, lifestyle, physical exercise and fitness, and early diagnosis and treatment.
The insurance policy must include coverage for the following equipment supplies, and educational training for the treatment of diabetes, if determined to be medically necessary and prescribed by an allopathic or osteopathic physician:

  • Blood glucose monitors and blood glucose monitors for the legally blind.
  • Test strips for glucose monitors, visual reading and urine testing strips, lancets, and spring-powered lancet devices.
  • Syringes.
  • Insulin pumps and medical supplies required for the use of an insulin pump.
  • Diabetes self-management training
    If the policy includes prescription coverage directly or by rider, the insurance company must include the following coverage for the treatment of diabetes, if determined to be medically necessary:
  • Insulin, if prescribed by an allopathic or osteopathic physician.
  • Non-experimental medication for controlling blood sugar, if prescribed by an allopathic or osteopathic physician.
  • Medications used in the treatment of foot ailments, infections, and other medical conditions of the foot, ankle, or nails associated with diabetes, if prescribed by an allopathic, osteopathic, or podiatric physician.

Diabetes includes: Gestational diabetes, insulin-dependent diabetes, and non-insulin-dependent diabetes.

To review the statutes relating to diabetes coverage, click here http://www.legislature.mi.gov/mileg.asp?page=GetObject&objName=mcl-500-3406p)

Does an insurance company have to provide coverage for breast cancer diagnostic services?
The insurance company must offer or include coverage for breast cancer diagnostic services, breast cancer outpatient treatment services, and breast cancer rehabilitative services

Breast screening mammography must be allowed using the following schedule:

(a) A woman 35 years of age or older and under 40 years of age, coverage for 1 screening mammography examination during that 5-year period.

(b) A woman 40 years of age or older, coverage for 1 screening mammography examination every calendar year.

See Section 2406d of the Insurance Code: http://www.legislature.mi.gov/mileg.asp?page=getObject&objName=mcl-500-3406d

Is any mastectomy benefit coverage required?
The insurance company must offer benefits for prosthetic devices to maintain or replace the body parts of an individual who has undergone a mastectomy. This includes medical care and attendance for an individual who receives reconstructive surgery following a mastectomy or who is fitted with a prosthetic device. See Section 3406a of the Insurance Code: http://www.legislature.mi.gov/mileg.asp?page=getObject&objName=mcl-500-3406a.

Is hospice care coverage ?
If the insurance company provides coverage for inpatient hospital care, it must also offer coverage for hospice care. If hospice care coverage is provided, a description of the hospice coverage must be included.
See Section 3406c of the Insurance Code: http://www.legislature.mi.gov/mileg.asp?page=getObject&objName=mcl-500-3406c

Is chemotherapy required to be covered?
An insurance company must provide coverage for a drug used in antineoplastic therapy and the reasonable cost of its administration. Coverage shall be provided for any federal food and drug administration approved drug regardless of whether the specific neoplasm for which the drug is being used as treatment is the specific neoplasm for which the drug has received approval by the federal food and drug administration if all of the following conditions are met:
(a) The drug is ordered by a physician for the treatment of a specific type of neoplasm.
(b) The drug is approved by the federal food and drug administration for use in antineoplastic therapy.
(c) The drug is used as part of an antineoplastic drug regimen.
(d) Current medical literature substantiates its efficacy and recognized oncology organizations generally accept the treatment.
(e) The physician has obtained informed consent from the patient for the treatment regimen which includes federal food and drug administration approved drugs for off-label indications.

See Section 3606e of the Insurance Code: http://www.legislature.mi.gov/mileg.asp?page=getObject&objName=mcl-500-3406e

How must emergency health services be covered?
If the policy provides coverage for emergency health services it must provide coverage for medically necessary services for the sudden onset of a medical condition with signs and symptoms of sufficient severity, including severe pain, such that the absence of immediate medical attention could reasonably be expected to result in serious jeopardy to the individual’s health or to a pregnancy in the case of a pregnant woman, serious impairment to bodily functions, or serious dysfunction of any bodily organ or part.
An insurance company cannot deny payment for emergency health services up to the point of stabilization provided to an insured under this subsection because of either of the following:

(a) The final diagnosis.

(b) Prior authorization was not given by the insurer before emergency health services were provided.

Do companies have to include ambulance coverage ?
If the policy covers benefits for emergency services it must provide for medical transportation services.
Further information on ambulance coverage is available in Bulletin No. 2001-03-INS at http://www.michigan.gov/cis/0,1607,7-154-10555_12900_13376-29022–,00.html.

Can I go to an obstetrician-gynecologist? Can I go to a mid-wife?
If the insurance policy requires you to designate a participating primary care provider and provides for annual well-woman examinations and routine obstetrical and gynecologic services, the woman must be allowed to have these treatments performed by an obstetrician-gynecologist or a nurse mid-wife, as long as these providers are acting within the scope of their license.

See Section 3406m of the Insurance Code: http://www.legislature.mi.gov/mileg.asp?page=getObject&objName=mcl-500-3406m

Can my child go to a pediatrician?
If an insurance company requires a designation of a primary care provider and provides for dependent care, the insurance company must allow the insured to receive dependent care from a pediatrician.
See Section 3406n of the Insurance Code: http://www.legislature.mi.gov/mileg.asp?page=getObject&objName=mcl-500-3406n

Prescription Drug Coverage:

Insurer providing prescription drug coverage
If the policy includes prescription coverage and the prescription coverage is limited to drugs included in a formulary the insurance company must provide to the insured the formulary restrictions. It must also provide for exceptions when a non-formulary medication is medically necessary and an appropriate alternative.

Off-label use of approved drug
If the policy provides prescription coverage the company must provide coverage for an off-label use of a federal food and drug administration approved drug and the reasonable cost of supplies medically necessary to administer the drug.
“Off-label” means the use of a drug for clinical indications other than those stated in the labeling approved by the federal food and drug administration.

Substance abuse coverage
The insurance policy must include coverage for intermediate and outpatient care for substance abuse treatment. The insurance policy must provide a minimum dollar amount for coverage of substance abuse. The minimum amount is adjust each year based on the Consumer Price Index. To review the current substance abuse minimum benefit amount, go to http://www.michigan.gov/cis/0,1607,7-154-10555_13222_13236-34204–,00.html.

Other Policy Information

Will I have expenses In addition to my premium?
Deductibles—This is the amount of covered health care expenses that must be paid for by the insured before the insurance company will begin paying

Co-Insurance- This is the amount stated in the policy that is the insured’s portion of the claim. For instance, the insurance company may pay 80% of the claim and the insured’s share is 20% of the claim. The co-insurance amount is paid in addition to the deductible.

All costs after coverage benefits are used up under the policy. Once benefits are exhausted under the insurance policy, the insured is responsible for health care costs incurred.

How do I let the insurance company know when I have a claim?
Written notice of claim must be given to the insurer within 20 days after the occurrence or commencement of any loss covered by the policy, or as soon thereafter as is reasonably possible. Notice given by or on behalf of the insured or the beneficiary to the insurer at the insurer’s home office, or to any authorized agent of the insurer, with information sufficient to identify the insured, will be considered notice to the insurer.

When the insurance company receives notice of claim, it will furnish forms for filing proof of loss. If the forms are not furnished within 15 days after giving notice, the insurance company must consider that the insured had complied with the requirements of this policy as to proof of loss upon submitting, within the time fixed in the policy for filing proofs of loss, written proof covering the occurrence, the character and the extent of the loss for which claim is made.

Written proof of loss must be furnished to the insurance company within 90 days. Failure to furnish the proof within the time required will not invalidate nor reduce any claim if it was not reasonably possible to give proof within such time, provided such proof is furnished as soon as reasonably possible and in no event, except in the absence of legal capacity, later than 1 year from the time proof is otherwise required.

Can an insurance company exclude pre-existing conditions?
An insurance may exclude or limit coverage if the exclusion or limitation relates to a condition for which medical advice, diagnosis, care, or treatment was recommended or received within 6 months before the policy was issued and the exclusion or limitation cannot last for more than 12 months.

What happens If I am late with my premium payment?
The insurance policy must include a grace period during which the policy must continue to be in force. The length of time for the grace period depends on the frequency of premium payments. If the premium is paid on an annual basis, the grace period cannot be less than 31 days. If the premium is due on a weekly basis, the grace period cannot be less than 7 days and not les than 10 days for premiums due on a monthly basis.

Can I cancel my policy?
The policy may be cancelled in writing by the insured within 10 of receiving the policy. If the insured cancels the policy within the first 10 days, the insurance company must refund all premium that has been paid for the policy. If the insured cancels the policy after 10 days the insurance company must refund the pro rata premium that has been paid.

Can I get my policy back if it gets canceled?
If the premium had not been paid within the required time but the insurance company accepts the late payment of the premium and it does not require the insured to complete a reinstatement application, the insurance company must reinstate the policy. If the insurance company does require a reinstatement application to be completed, the policy will be reinstated after the insurance company has approved the application. If the insurance company requires an application to reinstate the insurance policy it must notify you within 45 days if the application has been approved. If the insurance company does not give notification within 45 days, the policy gets reinstated automatically. The past due premium must be paid to cover the time during which the policy had expired.

Is my family included in my policy?
Most policies include family coverage. Read the policy and the schedule page to determine who is insured under the policy.

What are my benefit limits?
Read the policy and the schedule page to determine what you are expected to pay and what the insurance company has agreed to pay.

Are experimental treatments covered?
Read the policy to determine how the company treats experimental treatments.