MEDICAL BILLING-AN INTRODUCTION

UNIT 4 AN OVERVIEW OF OTHER INSURANCE PLANS

Purpose

This unit introduces the student to the basic concepts of COBRA, No-fault, PIP, supplemental, Workers’
Compensation, and disability coverage. This is just a general introduction to other types of coverage
available. A much more in-depth look of the various types of insurance can be found in our
“Understanding Health Insurance” course.

Unit Objectives

After completing this unit, you should be able to:

 Understand how these other insurance plans affect medical billing

 Define No-fault insurance
 Explain what COBRA insurance is and who it covers
 Understand when workers comp insurance applies
 Define PIP (Personal Injury Protection)
 Understand how supplemental insurance works
 Define Medigap and explain how it coordinates with Medicare

Key Concepts

Workers’ Compensation insurance covers employees injured or who suffer illnesses as a direct result of
employment. No-fault insurance will cover individuals injured in automobile accidents. Personal Injury
Protection plans (PIP) will include coverage for personal injuries including emotional distress.
Supplemental insurance may be purchased by a subscriber to cover costs not covered by the insured
primary policy. COBRA (Consolidated Omnibus Budget Reconciliation Act) insurance is available to
individuals who lose their jobs, but want to continue their health benefits. The employee is responsible for
premium payments to their employers to continue their health benefit coverage under COBRA.

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An Overview of Other Insurances

There are several other medical insurance policies available, including COBRA, No-fault, PIP,
Supplemental, Disability and Workers’ Compensation. Many of these type claims are filed similar to other
medical insurance claims, but are more likely to be submitted on paper than electronically due to added
documentation that must be presented with the claims. Workers’ Compensation claims in some states
must be filed on special state specific forms. It is important to note that medical billers that deal with these
types of policies verify benefits and specific claims filing instructions from the carrier directly. A medical
biller must be familiar with their own state laws in addition to laws in the state their client or employer is
located as well.

COBRA

COBRA, or the Consolidated Omnibus Budget Reconciliation Act, is insurance that came into effect in
1986, is a form of coverage for unemployed workers and their families that want to continue health
insurance coverage with their group plan in cases of termination or unemployment. COBRA is a federal
law that guarantees health insurance coverage will remain in effect for up to 18 months in case of job
loss. Most companies with group coverage are mandated to make COBRA available to all employees
leaving their employment and will lose health coverage. Some smaller businesses with group coverage
can be exempt. For COBRA benefits, the subscriber is responsible for the COBRA premium to continue
coverage. Coverage with COBRA can also include dependents affected by unemployment, death or
divorce.

The most significant advantage the COBRA Act offers to individuals and dependent family members is
the right to receive ongoing protection -- under the same plan and receiving the same benefits -- after
they have been affected by a major life change. It simultaneously offers them a protective time period to
shop around for new coverage, while receiving ongoing benefits during that time period. COBRA
recipients usually have a higher premium as some employers shared the cost of the premium during
employment.

If a person is on COBRA and his previous employer goes out of business, then COBRA coverage ends.

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 Example of COBRA Benefits:

Mary Jones is recently laid off from her job with ABC Company. She is then presented with the option
to continue her existing health insurance coverage through ABC Company under COBRA. For Mary to
continue coverage for herself and her dependents she will need to make premium payments to ABC
Company who then passes those costs to the insurance company administering the existing group
health plan.

No Fault Insurance

No Fault insurance plans cover medical costs for individuals injured in automobile accidents. In states
with no fault laws, it is the insurance carrier of each insured and involved individual, who covers the
medical expenses of their policyholders regardless of whose fault the accident was. Currently there are
twelve states that have no-fault laws in place:

1. Washington, DC
2. Florida
3. Hawaii
4. Kansas
5. Kentucky
6. Michigan
7. Minnesota
8. New Jersey
9. New York
10. North Dakota
11. Pennsylvania
12. Utah

Of the above twelve states, three are considered to be “Choice” states; (these are in bold above) In a
"Choice" state, drivers can choose a no-fault system policy or a policy based on traditional tort liability
law The tort policy used in "Choice" states are the same as those used in states without no-fault laws
and, therefore, the claims procedures are the same. A driver retains her right to sue, generally without
any significant statutory limitations.

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PIP

PIP or personal injury protection is any other insurance in any context, which includes coverage for
personal injury including emotional distress. An example of PIP would be if a person were to slip and fall
in a public store. The store’s insurance would cover any medical expenses resulting from the fall. PIP can
also be an extension of an auto insurance plan, which may cover lost wages as well as medical expenses
as a direct result of an automobile accident.

Supplemental

There are several types of supplemental insurance available. Medigap is one example of a supplemental
insurance and is a second policy to Medicare, which is purchased separately by the Medicare beneficiary.
Medigap plans cover health care costs that Medicare does not pay such as coinsurance and deductibles.
Some Medigap policies also offer coverage for services that original Medicare does not cover like medical
care when you travel outside the U.S. One example of a Medigap policy is The American Association of
Retired People (AARP). The AARP policy is always secondary to Medicare and may pick up the
deductible and co-insurance that Medicare leaves as patient responsibility.

Another type of supplemental insurance plan might pay benefits major medical insurance does not cover
such as lost wages. An example of this type of supplemental plan might be Aflac.

Workers’ Compensation

Workers’ compensation insurance is coverage that provides insurance benefits to individuals for work
related injuries or illnesses.

Although Workers’ Compensation is both federally and state regulated, it is privately funded by premiums
received from employers’ and employees. The ultimate goal of the Workers’ Compensation program is to
return the worker to the marketplace as quickly as possible. If a worker is disabled, then the program is
designed to rehabilitate that disabled worker so that he will be able to assume some useful and remu-
nerative employment, even if he or she is not able to assume the same job responsibilities which he or
she had prior to injury or disability. Workers’ Compensation benefits are of four primary types: (1) medical
care, (2) disability benefits, (3) vocational rehabilitation, and (4) survival benefits or burial expenses. If you
have ever worked as an employee, you will notice that there are deductions listed on your paystub for
Workers’ Compensation.

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Disability

Disability insurance is often available to disabled workers while they are working, but not related to the job
itself. Disability insurance will cover medical costs as well as a portion of the worker’s pay.

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Summary:

 There are various types of additional insurance plans that patients may purchase or contribute to
 COBRA is a continuation of coverage an employee can purchase from their former employer to
continue their health plan coverage for a specified amount of time.
 No-fault coverage pertains to automobile accidents that cover injuries sustained in an auto
accident within states that maintain a no-fault system.
 Supplemental insurance is an additional plan a patient may purchase to supplement their primary
health insurance plan. Medigap is an example of a type of supplemental policy.
 Workers’ Compensation – is both a federal and state run program which covers employees for
injuries or illness as a direct result of their employment.
 Disability insurance is a separate plan that an employee or individual may purchase or be
provided to cover medical costs in addition to lost wages as the direct result of an injury or illness
related to their employment.