Healthcare in the United States can be expensive. Without insurance, an accident leading to a broken leg1 can cost up to $7,500 to fix, and an average three-day hospital stay can be as much as $30,000.
This is why having a health insurance policy in place is critical. Many Americans understand this–according to the U.S. Census Bureau2, 91.7% of all Americans in 2021 had some form of health insurance coverage.
But simply having health insurance doesn’t solve everything. There are always services and procedures your plan may not cover, which can leave you with costly medical bills—especially if you have a chronic condition.
In this blog, we’ll go over what health insurance does and doesn’t cover, why a health plan might not pay, and how your employer can supplement your health plan to cover excluded services.
What does health insurance cover?
The services a health insurance plan covers may differ depending on the policy, but there are some standard parameters that most plans must abide by. Typically, a health plan will cover preventative services, doctor and hospital visits, prescriptions, and other essential health benefits.
Before the federal government implemented the Affordable Care Act (ACA), health insurance providers on the individual market could exclude certain services from being covered by their medical plans. Benefits could vary from plan to plan, leaving consumers unclear on what to expect when switching from one policy to another. Employer-sponsored group health insurance plan coverage also differed by policy and employer.
Today, individual and small group insurance plan benefits are more standardized. All plans on the public health exchanges—like the federal Health Insurance Marketplace—must cover the ten essential health benefits. Essential benefits include preventive services, mental health care, prescription drug coverage, and pediatric services.
Even with this policy in place, the specific services a health plan covers can vary by state. This means your health plan may cover different benefits than another similar type of plan in a different location. Additionally, employer-sponsored, large-group health plans aren’t required to cover the ten essential health benefits.
When you reach your annual out-of-pocket limit for essential health benefits your plan covers, your insurer will cover 100% of their cost. Additionally, insurers aren’t allowed to restrict the amount they’ll pay for essential health benefits on a lifetime—and in many cases, annual—basis.
If you participate in the government program Medicare, your coverage has two main parts. Medicare Part A generally pays your hospital inpatient costs, while Medicare Part B helps pay for doctor visits, preventive services, laboratory services, medical supplies, and more. There are also other supplemental Medicare plans, like Parts C and D, that you can choose to enroll in.
What doesn’t health insurance cover?
While your health policy will cover many healthcare needs, there’s no rule that a health plan must cover every service.
While most health plans must cover the ten essential health benefits, an insurance company has the power to determine which other health services they’ll cover. They make these decisions based on theirunderstanding of the types of medical care most patients need and what they can offer while remaining profitable.
Understanding your health coverage will help you understand how much you’ll pay out-of-pocket, including your deductible, coinsurance, and copay. It can also help you determine if you need to purchase a supplemental health plan.
Let’s look at four popular healthcare services often not covered by standard health insurance plans.
1. Adult dental and vision services
Under the ACA, dental coverage is an essential health benefit for children. But adults aren’t so lucky. Some people previously had health, dental, and vision coverage bundled into one plan. But now, most medical insurance plans don’t cover dental or vision care for adults unless otherwise stated.
If you want dental or vision coverage, you’ll most likely have to buy supplemental coverage that includes one or both of these services. These are often purchased on a private health exchange or from a broker. But before you buy a plan, know that they typically don’t have any caps on out-of-pocket costs.
Many employers also offer dental and vision insurance to their employees.
2. Fertility treatment
Despite a growing need for fertility benefits, costly fertility care remains inaccessible to many. As of 2023, only 21 states3 have fertility insurance coverage laws. Most health insurance plans will cover infertility diagnostic testing, but insurance companies usually only cover a narrow range of fertility treatment services.
The quickest way to determine if your insurance plan covers fertility treatment services is by reviewing your health plan’s summary of benefits or calling your insurer. If your insurance policy excludes infertility treatment and all related services, it’s safe to assume any services you need for your treatment aren’t covered.
3. Weight loss surgery
Weight loss surgery, or bariatric surgery, is a type of surgery that can cause weight loss by restricting the food your stomach can hold, which results in weight loss. While this may be medically necessary for some, most standard health insurance plans don’t include bariatric surgery coverage.
Access to this type of healthcare has improved for many within the last few years, but weight loss coverage isn’t a standardized form of care yet. This is because health insurers don’t consider bariatric surgery a necessary or life-saving treatment for most patients. So, whether your health plan covers weight loss surgery will vary depending on your chosen plan and insurance company.
4. Cosmetic procedures
Similar to weight loss surgery, many cosmetic procedures aren’t covered by health insurance. This is because these procedures are typically elective and not done to treat a health condition.
However, if you can prove that the service is medically necessary, insurance may cover it. These services may include rhinoplasty in the case of breathing difficulties, skin removal for chronic rashes or other illnesses, and breast reconstruction for breast cancer patients.
Individuals should work with their physician and insurance provider to find out if the cosmetic procedure is covered by their health plan.
Why doesn’t a health insurance plan pay for certain expenses?
In some cases, you may find that you’re being billed out-of-pocket for a prescription or health service you thought was covered. When an insurer denies a claim, it’s easy to get frustrated.
But before you make an angry phone call, check to see if one of the three below common occurrences is why your health plan won’t pay.
1. Your health plan doesn’t cover the service you need
When a health plan denies a claim or refuses a pre-authorization request because a service isn’t covered, it means your policy doesn’t cover that particular service—no matter the circumstances.
If you think your health insurance company is wrong, check your policy details to confirm. If you have employer-sponsored health insurance, you can ask your company’s benefits specialist if it’s a covered service.
2. You got care from an out-of-network provider
Individuals with a health maintenance organization (HMO) or exclusive provider organization (EPO) plan have limited coverage. With these types of health insurance plans, your insurer won’t pay the total bill—or may not pay at all—if you use an out-of-network provider.
If you request pre-authorization for an out-of-network provider and the insurer denies it, you can re-submit the request using an in-network provider instead.
However, if you’ve already received care and your health plan won't pay, you may have to prove that no network doctor offered the service you needed to get your insurance company to pay. You also might have luck if the situation was emergency care and you had to go to the nearest available provider to receive the service.
3. Your health plan doesn’t think the service is medically necessary
If your insurer refuses a claim or pre-authorization request due to medical necessity4, they may not believe you need the specific healthcare you’re requesting and, thus, won’t pay.
If you receive a medical necessity denial, you should ask your physician for help. If your healthcare provider has recommended a specific prescription drug or medical service for a legitimate reason, they can explain that to your insurer.
In these cases, the insurer may approve the procedure or work with your physician to approve another more reasonable approach.
How to supplement a group health plan to cover excluded costs
Now that you understand more about health insurance coverage, you may wonder how you can access help to cover any excluded medical costs. While your employer may offer group health insurance, you may find that it doesn’t cover everything.
An excellent way your employer can supplement your group health insurance plan is with a health reimbursement arrangement (HRA)–like an integrated HRA—or a health stipend. These two benefits can help you pay for services and out-of-pocket expenses that your employer-sponsored group health insurance doesn't fully cover.
We’ll dive into each benefit below to give you a better idea of how they work.
If a business already offers employer-sponsored health insurance, an integrated HRA, also known as a group coverage HRA (GCHRA), is a solid option to offset gaps in coverage.
Integrated HRAs are tax-free health benefits for employers of all sizes that offer a group health policy. Using the GCHRA, employers set a budget-friendly reimbursement allowance for employees enrolled in their group plan to use on a wide range of out-of-pocket medical expenses. There’s no minimum or maximum allowance amount that employers are required to give.
When an employee makes a purchase, they submit proof via a receipt or invoice. Once their employer approves the expense, the employee is reimbursed for the cost up to the set allowance amount. They can’t exceed the allowance amount their employer sets.
Unlike health savings accounts (HSA), HRAs are employer-owned, meaning that unused HRA funds stay with the employer. In other words, the funds are “use it or lose it”—like a flexible spending account (FSA).
An integrated HRA is a great way for employers to offer financial assistance to their employees and help them cover services excluded by their group plan. It also gives an employee the ability to have more freedom and control to make the healthcare decisions that will work best for them.
With a health insurance stipend, employers offer employees a fixed amount of money to help them pay for out-of-pocket medical costs. The funds are usually given regularly, such as weekly or monthly, and are typically added to an employee’s paychecks as extra taxable income.
There are several advantages that health stipends present. They’re a very flexible and customizable health benefit for businesses. They have fewer regulations than HRAs, so they’re simpler to manage. Employers decide how much money they want to offer, and the employees pick the healthcare services they want to spend it on.
Employers can offer a stipend alongside a group health plan or an HRA to boost their health benefit.
Understanding health insurance can be complex. While most types of plans cover essential services, specific services you might need could be out of reach. And if you don’t have enough out-of-pocket cash to pay for the healthcare you need, your health insurance plan may not be a strong enough benefit.
If you’re an employer looking to supplement your group health insurance plan to cover more out-of-pocket medical costs for your employees, then a GCHRA or a health stipend can help. Contact PeopleKeep’s personalized benefits advisors, and we’ll give your group plan a boost.
This article was originally published on April 6, 2022. It was last updated on September 8, 2023.