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Health Plan Questions and Answers


General Information

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?

Aetna 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 Aetna is a very small portion of the total premium paid each month.

How is a claims processor chosen?

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 proposal evaluation committee (PEC), and a contract is awarded to the successful bidder.

Who decides what is covered?

The health plan is updated in order to ensure the sustainability of benefits and promote value, so that members are enrolled in the plan that best meets their needs. 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 has the final determination as to coverage under AlaskaCare.

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Premiums

How are health premiums determined?

The premiums for health insurance are determined by calculating the following:

  1. Claim cost is how much the plan paid in claims in the past on behalf of all covered persons.
  2. Claim trend is the amount you expect that cost to increase or decrease.
  3. 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.
  4. 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 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.

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Claims

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 maximum allowed charge and how is it determined?

Claims payment is limited to the maximum allowed charge for eligible services. If a charge exceeds the maximum allowed charge, the amount above the maximum allowed charge is not covered by the Plan, and is your responsibility to pay.

The maximum allowed charge is the charge contained in an agreement the claims administrator has with the provider either directly or through a third party. If no agreement is in place, the maximum allowed charge is determined in accordance with the provisions of this section 3.2(d).

To determine the maximum allowed charge, the Plan utilizes the benchmark data on healthcare charges compiled by and licensed from FAIR Health, Inc. The benchmarks are based on 12 months of charges and are arranged in percentiles by procedure codes and geozips.

Procedure codes are codes (alpha/numeric) assigned to services and procedures performed for patients by medical and dental practitioners. Each code number is unique and refers to a specific medical service or procedure. For purposes of determining the maximum allowed charge, the procedure codes utilized are the Current Procedural Terminology, or CPT codes owned and licensed from the American Medical Association. For dental procedures, the Code on Dental Procedures and Nomenclature, or (CDT) codes, owned by and licensed from the American Dental Association, are used.

Geozips refer to geographical areas generally organized by the first three digits of the U.S. zip codes. For purposes of determining the maximum allowed charge, the State of Alaska is divided into three geozips:

Area#1 – Geozip 996 Area#2 – Geozip 995 Area#3 – Geozip 999 Zip Codes that begin with 996 or 998 Zip Codes that begin with 995 or 997 Zip Codes that begin with 999

Alaska data relate to services provided in Alaska. If a procedure is provided in a different state, FAIR Health data for the appropriate state will be used. Only Inpatient Facility data are not organized by geozip; nationally these data are organized by 18 regions defined as rural or urban. Inpatient Facility data for Alaska are organized into two regions, rural and urban.

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 Aetna directly to discuss the claim. If you feel it should be covered or paid differently, you should submit a written appeal to Aetna 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.

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Prescriptions

Why do I pay less for a prescription if I use the mail order pharmacy?

The mail order pharmacy 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.

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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.

Why do we lose any money left over in the account at the end of the year?

It is an IRS rule associated with the tax benefits of the HFSA. Since your contributions to the HFSA aren't applied to your 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 email our Webmaster. You are welcome to contact the Member Services staff at (800) 821-2251 toll free or directly at (907) 465-4460.

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