Health Plan Questions and Answers
If I have a question about the plan, who do I call?
You are welcome to contact the Member Services staff at (800) 821-2251 toll free or directly at (907) 465-4460.
As a state employee, why am I required to have a health plan?
State statute requires permanent full-time or permanent full-time seasonal employees and their spouses and eligible dependent children to have health coverage. In addition, for those groups who are in a union, contracts with the unions require health insurance. A large portion of the cost of your health premium, called a Benefit Credit, is paid on your behalf monthly by the State of Alaska as your employer. The Benefit Credit as well as the health plan coverage itself is a significant part of your monthly benefit package as a State of Alaska employee.
Permanent part-time or permanent part-time seasonal employees are not required to select a health plan – if they do select one, the state contributes one-half the benefit credit it provides to full-time employees.
Even if you don’t use your health plan today or haven’t used it very much in the past, one of the reasons to have the coverage is in case you experience an unexpected health need that could otherwise be financially devastating.
What is self-insurance and how does it work?
Self-insurance means the premiums are deposited into a group health fund which is maintained and invested by the state. The state uses those funds to pay the cost of claims and administration of the plan. If the fund runs out of money, the state is liable for the cost.
How does it differ from “normal” insurance?
In an indemnity plan, a “normal” health plan, premiums for coverage are set by the insurer to cover all the same things but the insurer takes the risk. If the insurer doesn’t ask for enough premiums and runs out of money, the insurer is liable for the excess costs.
What is the claims administrator's role?
HealthSmart (formerly Wells Fargo TPA) is a claims processor, called a third party administrator, or TPA. They are paid an administrative fee per covered employee/per month to process claims, provide access to their network of doctors and pharmacies, and provide reports required to administer the plan. The amount paid to HealthSmart (formerly Wells Fargo TPA) is a very small portion of the total premium paid each month.
How did HealthSmart (formerly Wells Fargo TPA) become the claims processor?
The state requests proposals from companies who can provide the services required. This is done at least every five years but may be done more frequently. The proposals are reviewed by a committee of labor and management members, and a contract is awarded to the successful bidder.
Who decides what is covered?
The health plan benefits have been carried over during the years the plan has been in effect—these provide the basis for the plan. At this time, there is a labor management committee (comprised of management representatives and representatives of the employee groups that are in the plan) that makes recommendations on covered benefits. The Commissioner of Administration reviews those recommendations and decides whether they should be included.
This is the process for the high level benefits, for example, physical examinations. But the administrative details are set by the division and the third party administrator based on what is currently and commonly recognized by the medical community.
How are health premiums determined?
The premiums for health insurance are determined by calculating the following:
- Claim cost is how much the plan paid in claims in the past on behalf of all covered persons.
- Claim trend is the amount you expect that cost to increase or decrease.
- Reserve is the amount held “just in case” to pay large claims, for claims received but not yet paid, or claims that have not yet been received although the service has already been provided.
- Administrative cost includes paying a company to process the claims, printing forms and booklets, and staff salaries.
Of the four items, claim cost is the largest amount of the premium—administrative cost is the smallest. The division works with a health and welfare benefit consultant, who is trained to make these types of calculations, to set the premium each year. Since the state is self-insured, the claims administrator is not involved in setting premiums.
What is the benefit credit and how is it determined?
The benefit credit is the amount the state contributes toward the cost of your health insurance. For members of various unions, it is collectively bargained/negotiated between the state and the union as a portion of your compensation. For employees not covered by collective bargaining, it is set by the state and is generally set equal to the combined cost of the economy medical and preventive dental coverage. Current benefit credit amounts »
Why do I pay so much of the cost?
You pay the difference between the cost of the various medical, vision, dental and other options you select and the benefit credit. This way, you are choosing how much you pay. Even if you select the most expensive options, the amount of the premium you pay is still less than the benefit credit (unless you are a part-time employee) – meaning the state still pays the majority of your costs. You can also select options that equal the benefit credit, which means you pay no additional premiums.
How long does it take to process claims?
The claims administrator's contract with the state requires them to process 90% of claims (not including point of sale prescription claims) within 14 calendar days of receiving a complete “clean” claim. Failure to do so will require them to pay penalties.
What is the usual, customary and reasonable (recognized) charge and how is it determined?
The recognized charge is based on the procedure code which is used on the claim form or invoice from your provider and by the area in which the services are performed. The area is determined by zip code and there are four major areas in the state.
All claims submitted for identical procedure codes (the identifying number that tells a computer what service you received from your provider) in each geographic area are accumulated for a twelve-month period. The recognized charge is the one that allows 90% of all those claims to be paid in full. This means if 1000 claims are received for the same procedure code, 900 would be paid in full and 100 would have some amount which is uncovered since it exceeds the recognized charge. This is updated every six months. In some cases, such as surgery, the plan uses the data from the entire state because there is not enough data available from any one area’s statistics.
Many things affect the recognized charge, and some common errors are:
- If the claim is coded incorrectly, it may pull the wrong data.
- If more than one procedure is performed at a single time, the provider should charge less for the additional procedures than if they were performed separately – similar to getting a group discount when you purchase in volume.
Why not publish all the recognized charges?
The recognized charge is not published for a variety of reasons. There are literally thousands of procedure codes and many more created by modification code combinations. In addition, if the plan advertised how much it will pay, providers that charge less would know they could increase their charge and still get paid in full. This is also considered proprietary data by the third party administrator and is not shared publicly.
What if my claim isn’t paid correctly or is denied?
First, review the explanation of benefits (EOB) and your benefit booklet to make sure you understand what is covered and why the claim wasn’t paid. If you still have unanswered questions, you should contact HealthSmart directly to discuss the claim. If you feel it should be covered or paid differently, you should submit a written appeal to HealthSmart within 180 days of the date on the explanation of benefits.
If you exhaust Health Smart’s appeal process and you still feel it should be covered, you may appeal the decision in writing to the Plan Administrator at the division. The division will review your appeal and make a determination. The full process is explained on our health plan appeals page.
Why do I pay less for a prescription if I use the mail order pharmacy?
The mail order pharmacy, currently Costco/Envision, can purchase drugs in very large quantities and can pass those savings along to our members. Since prescriptions are the fastest growing cost in the health plan, it is important to try to control this cost which in turn helps control the amount of premiums you pay for coverage.
Why is the mail order pharmacy out of state?
The plan needs a mail order pharmacy that is experienced and capable of handling the volume of prescriptions our plans require. In addition, it must be able to work within the existing pharmacy computer system to access member accounts, bill electronically, and see other prescriptions filled at other participating pharmacies (and vice versa) to check for drug interactions. Vendors – both in state and out of state – compete for the state’s prescription plan business on a competitive basis. At this time, there is no mail order pharmacy in state that can meet these requirements.
Health Flexible Spending Account (HFSA)
What is “streamlined” claims submission for the Health Flexible Spending Account (Health FSA) and why can’t people with more than one health plan elect it?
Under streamlined claims submission, claims are automatically forwarded for payment from your health plan, after processing, directly to your Health FSA. Without streamlined claims submission, you receive the explanation of benefits back from all plans and file the claim yourself to the Health FSA.
People with more than one health plan can’t elect streamlined claims submission because their claims must be processed by two separate health plans to calculate the coordination of benefits before the Health FSA pays. If any amount remains unpaid, submit that remainder to the Health FSA as described. Health FSA reimbursements are issued as soon as a claim is received and processed. Most reimbursements submitted through the mail have a check issued within 2 to 3 weeks.
Q: Why do we lose any money left over in the account at the end of the year?
A: It is an IRS rule associated with the tax benefits of the HFSA. Since your contributions to the HFSA escape income taxes, they must be used for the intended purpose in the current period, or forfeited. Make sure to submit reimbursement claims in a timely manner. Claims for services incurred during the benefit year will be accepted any time during that year. You have a 90-day grace period (until March 31) to file all unpaid claims for that benefit year.
If you have other questions you would like added to this page, please e-mail our Webmaster. You are welcome to contact the Member Services staff at (800) 821-2251 toll free or directly at (907) 465-4460.