Policyholders can better evaluate treatment benefits by understanding insurance terminology and consumer rights
The 2011 (N-SSATS) report found that approximately two-thirds of rehabilitation centers accepted some form of private insurance, and the 2010 Treatment Episode Data Set (TEDS) survey reported that 41% of admissions utilized insurance benefits or government aid. These figures are expected to rise, however, since the Affordable Care Act (ACA) and Mental Health Parity and Addiction Equity Act (MHPAEA) helped eliminate insurance discrimination involving mental health and addiction services. Thanks in part to these legislative acts, many insurance companies improved their benefits for addiction treatment, but the language in the policies is often confusing, and individuals may struggle to understand how much coverage they actually have. Treatment centers and insurance representatives can help explain specific details, but it also helps to learn basic insurance terminology and legal rights when assessing a policy’s benefits.
Health Insurance Benefits Glossary
Understanding the terminology used in insurance policies is an important step in understanding the benefits themselves. There are several key words that are worth learning including the following:
- Co-Pay – A defined copayment amount that patients pay each time they use services
- Deductibles – A set cost amount that patients must pay before benefits are available
- Co-Insurance – A set amount or percentage the insured pays after meeting the deductible
- Limits – Total cost and treatment days allowed by policies not on the ACA exchanges
- Out-of-Pocket – The maximum amount of cost that the insured is responsible to pay
- Inpatient – Admission into a residential facility where patients stay during treatment
- Outpatient – Treatment services that occur per session while the patient lives offsite
- In-Network – Facilities usually offering more benefits through negotiated lower rates
- Out-of-Network – Facilities without negotiated rates that usually involve higher costs
- Medical Necessity – Criteria for determining if services are reasonable, necessary and appropriate for diagnosis and treatment
With these terms defined, policyholders can better evaluate their benefits by asking certain questions, including the following:
- Does the policy cover both outpatient and inpatient rehabilitation?
- What medical criteria must be met to qualify for inpatient benefits?
- Is there a difference in benefits between inpatient and outpatient care?
- Does the policy provide benefits for out-of-network rehab facilities?
- Which types of treatment require prior approval from the insurance company?
- What are the specific co-pays and limits for each specific form of treatment?
Individuals who plan to purchase new insurance in anticipation of addiction treatment will typically want to secure a policy from the ACA exchanges, which offer significantly improved benefits for rehabilitation services.
Affordable Care Act and Addiction Treatment
The MHPAEA of 2008 improved upon an earlier parity act from 1996, and it requires insurance plans with mental health and addiction coverage to provide the same level of benefits that they do for physical health issues. The ACA followed and improved addiction coverage in several ways including the following:
- Addiction treatment is a required benefit of all plans on the ACA insurance exchanges.
- Insurance companies cannot deny benefits for a preexisting condition like addiction.
- Policies cannot have lifetime and annual dollar limits on addiction treatment cost.
- ACA policies require that treatment is available during all stages of an addiction.
If you have a non-exchange plan that only covers catastrophic emergencies, it is unlikely that you have any treatment benefits. However, you can switch to an ACA plan during enrollment periods, and benefits cannot be denied even though you already had an addiction when you switched. With the ACA providing these types of enhanced benefits, Partnership at Drugfree noted that the law expanded coverage to millions of people, and Health Affairs in 2011 suggested that it affected addiction treatment more than any other area of health care.
Appeal Options for Denied Benefits
In addition to finding out coverage limits, policyholders may want to note appeal options if benefits are ever denied. If this happens, there are several possible options to consider, including the following:
- Contact customer service, and make sure the denial was not a mistake.
- Submit a written appeal and a doctor’s statement explaining the medical necessity.
- File multiple appeals if necessary and permitted by the insurance company.
- Request that the state insurance agency provide an independent review, if available.
- Utilize third-party arbitration services and insurance review groups, if available.
The Parity Implementation Coalition and Parity Toolkit provide guidance and resources for insurance appeals. Furthermore, to limit potential denials, the HBO: Addiction website advises addicts to request a complete clinical assessment of their physical and mental health and based on the findings ask the insurance company what treatments they will cover.
Free Addiction Hotline
Our admissions coordinators are available 24 hours a day on our toll-free helpline. We can look up your policy, help explain its benefits and recommend rehab facilities. We can also answer questions and provide information about treatment services and options. If you need help, please give us a call now.
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