Understanding Health Insurance: Types of Insurance Plans and Residential Care

Health insurance can be a confusing, vague, and overall difficult topic to understand. When you combine the need to understand health insurance while attempting to find appropriate residential mental health treatment for a loved one, a new level of confusion can arise. If you or a loved one needs to enter residential treatment, you’re probably wondering how insurance can or will help. With many different types of insurance plans, every situation is not the same. So, we’re here to make things a little easier and break down what residential treatment is, and how it is treated by different types of insurance plans.

What is Residential Treatment?

Simply put, residential treatment is an intensive, 24 hour level of care that offers supervised treatment of individuals suffering from chronic mental health or substance abuse issues.  Residential treatment is classified as an intermediate health care service and serves a population whose symptoms are not intense enough to warrant treatment in a hospital setting but are more intense than can be treated in outpatient therapy.  Because residential treatment addresses long term and chronic issues, treatment centers are styled more like homes than hospitals, with residential treatment stays having an average length of 7-10 months. Without insurance, however, the bills for a residential stay can add up. Before attending or sending a loved one to residential treatment, it’s important to understand what your insurance will cover.

Different Types of Insurance Plans and How They Work With Residential Treatment

Understanding health insurance seems like a daunting task. So, here’s an easy guide to the different types of insurance plans and residential care.

Plan Type HMO: Health Maintenance Organization

Under an HMO, you must select a primary care physician (PCP), through whom all of your healthcare needs are coordinated. In order to see a specialist, you must first see your PCP, who will then provide you with a referral. HMOs only provide in-network coverage, which is a contractual agreement for discounted rates between healthcare providers and your insurance company. This is sometimes a drawback, since you are limited in the providers you can see, but is also sometimes a benefit, because all of the providers you have access to charge a lower, contract rate. An HMO must allow out-of-network coverage in emergency situations, but out of network care is generally restricted to hospital settings. Typically, as HMOs primarily deal with in-network providers, members will not be responsible for billing claims or resolving claim issues.

HMOs affect residential treatment in a couple of different ways. First, your PCP will need to recommend residential treatment, and will then refer you to an appropriate care center. Options for residential treatment centers may be limited depending on the availability within your network. Once you have a referral, it is important to ensure that you’re within your coverage network in order to avoid high residual medical bills.

Plan Type EPO: Exclusive Provider Organization

EPOs are similar to HMOs, but generally offer a larger network, such as all providers in a certain state or municipality. Different from an HMO, however, you do not need to select a PCP and do not need a referral to see a specialist, provided that specialist is in the network. There is no out-of-network coverage under an EPO, except for emergency coverage as required by law. You are restricted to providers within your EPO network. Before choosing a residential treatment center with an EPO, carefully consider the treatment options in-network. You most likely will not be able to select a residential treatment center out-of-network but should be able to select one in-network without a referral.

Plan Type PPO: Preferred Provider Organization

POS plans are similar to PPO’s, with a few important differences. In a POS plan, you are required to designate a Primary Care Provider, but you can also seek care both in and outside of your network, provided that you receive a referral for care from your Primary Care Provider. Once you have received a referral, the same cost-sharing exists as in a PPO, where your insurance will pay more for an in-network provider than they will for an out of network provider. Before seeking residential treatment under a POS plan, meet with your Primary Care Provider and ensure that they write you a referral. You should also consider the cost and benefits of in-network residential treatment as opposed to out of network residential treatment.

Funding Source HRA: Health Reimbursement Arrangement

HRAs are accounts set up by employers, which act separately from your HMO, PPO, EPO, or POS health plan. Your employer contributes funds to these accounts to cover or contribute to employee medical expenses not covered by their health plan. When looking to check into a residential treatment center, you would most likely have to file some type of separate claim with your employer, seeking reimbursement for treatment costs. Even if approved, the available funds made available would probably be limited. Speak to the appropriate manager before going through the process of filing a claim, and determine if this is the best route to take.

Funding Source HSA: Health Savings Account

HSAs work in conjunction with your health plan, and allow for you to contribute money from your paycheck into a separate personal account to use toward medical expenditures later. While you can choose when and how much to withdraw from your HSA, if you choose to use the money for non-medical expenses before the age of 65, you will have to pay a penalty when filing your annual income taxes. If your health insurance won’t cover residential treatment costs, depending on whether or not you want to allocate those resources for these costs, you can elect to withdraw funds from your HSA. This is a great option if your insurance covers some costs, but not all.

Funding Source FSA: Flexible Spending Account

Lastly, FSAs are similar to HSAs, except your employer owns the account. You are still responsible for contributing funds to the account, and like an HSA, are still able to decide when to withdraw money from the account. FSAs can be used in conjunction with various insurance plans, so you may be able to cover some costs for out-of-network residential treatment with these funds.

Understanding Health Insurance Goes A Long Way

While insurance reimbursement is certainly confusing, understanding your health insurance is important to ensure that you and your loved ones receive the care you need. Finding a well-suited insurance broker can save you a headache for dealing with future insurance reimbursement issues. We hope this blog post has helped you understand your options. If you still have questions about your specific insurance after reading this, or if you have a claim denied, Denials Management is here to help. Contact one of our knowledgeable experts today and we’ll be happy to help you understand your coverage options, and help you through the claims and appeal process for Residential Treatment.