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What is the basic difference between individual and group health insurance?

An individual policy is purchased by you directly with the insurance company. On a group policy platform, the group is the master insured and the insurance company contracts with the group. Insurance certificates, issued to a participating member, act as your policy.

What types of individual health insurance policies are available?

There are a variety of policies which insurance companies offer on an individual basis. Some of the more common types of policies include:

  1. Health Insurance - provides coverage for doctor visits, prescriptions, diagnostic testing, surgery and hospitalization .
  2. Hospital Confinement Indemnity (Medical Bridge) - a policy designed to pay a set amount (an indemnity) upon an "in-patient" admission into the hospital.
  3. Specified Disease (also called “Dread Disease”) - covers costs associated with a single disease, such as cancer, heart attack, etc.
  4. Accident Only - provides coverage for doctor visits, surgery and hospitalization resulting from an accident (no coverage for disease or illness).
  5. Dental - provides coverage for costs associated with dentists and orthodontists.
  6. Vision - provides coverage for sight correction
  7. Long -Term Care - coverage provided to individuals who otherwise would not be able to take care of themselves. A range of services from delivery of prepared meals, assistance with managing the residence, to stays in residential facilities. Long Term Care policies are often associated with long-term illness and the elderly.

What types of group health insurance coverage are available?

Group health insurance makes individual coverage available on a group basis. A primary advantage is the purchasing power of the group that achieves reduced acquisition costs for the insurance company. The insurance company is then able to reduce the rate it charges to provide insurance for each individual member of the group. There are a variety of types of group health insurance plans, the major distinctions between them being the mechanism used for purchasing the insurance. Common varieties of group health insurance plans include:

  1. Fully Insured Employer Group - the employer contracts directly with the insurance company to provide certificates to covered employees.
  2. Large Employer Group - same as a fully insured employer group with direct contract between the insurance company and the employer to provide individual certificates to covered employees.
  3. Health Maintenance Organization (HMO) - a group program under which the organization provides a full range of medical services to participants. Participants are either assigned or select from a group of general practitioners, who then refer their patients to specialists when the need arises. Good generalized system of providing medical care which is marked by curtailment in selection by the individual participant of the health care provider who render services. Individual participants insured by an HMO are called “enrollees”.
  4. Self-Funded - The group contracts with an insurance company or third-party administrator to handle the paperwork. The group pays for all costs associated with the operation of the insurance plan itself, along with the added cost for administration.
  5. Preferred Provider Organization - another kind of health care network (doctors, hospitals, and other health care providers) that contracts with health insurance companies.

How can I get health coverage?

Employer-sponsored group insurance:

Many people obtain their insurance through their employment. Upon reaching the eligibility requirement which is determined by their employer but meets the minimum state requirements, the employee becomes covered under the employer's group insurance policy and the employee is issued an insurance certificate or health insurance card. Medical insurance is a very common benefit of employment.

Individual insurance:

Health insurance which is purchased by the individual. Some major health insurance companies offer a broad range of coverage and options to individuals, who pay directly out-of-pocket for the cost of the insurance. Many insurance companies require completion of an exhaustive application and may require a medical examination before coverage will be offered to the individual. Some companies offer the ability for the employee to pay for their individual polices with pre-tax dollars. These plans are referred to premium only plans or “POP”.

Association-sponsored insurance:

You may belong to a group or organization that offers health insurance as a benefit of membership. Check membership benefit statements, brochures, or ask organizations leaders to determine availability of health insurance through your group or organization.



What will determine my insurance premium?

Insurance premiums are determined by actuaries employed by insurance companies. Actuaries determine the exposure to risk according to the provisions of the insurance policy and then set a premium rate. Additional underwriting factors, such as adverse selection for individual policies and special industry exposures for employer-sponsored group health insurance plans, are also factors of the premium charged.

What variables will affect my insurance premium?

Purchasers of insurance often can control several factors used to determine the insurance premium. Some of these factors, which act as limitations of the insurance coverage, include:

  1. Deductibles - The amount you yourself have to pay out-of-pocket before reimbursement of your expenses from the insurance coverage. It is usually a flat dollar amount - the higher the deductible, the lower the premium.
  2. Co-payments and co-insurance - for example, in an 80/20 plan, the insurance pays 80% of the covered expense and you pay out-of-pocket the remaining 20%. Therefore a 0% coinsurance typically will have a higher premium. To ceiling the individual exposure, most plans with a co-pay have a maximum, out-of-pocket, cost.


What services and items might be paid for under my health insurance?

Medical expenses as the result of illness, injury, and disease are typically covered by medical insurance. The particulars of how much coverage for each expense incurred is determined by the provisions of the particular health insurance policy.

What kind of exclusions and limitations might be in my health plan?

There are a variety of exclusions and limitations with respect to health insurance. Common exclusions include pre-existing conditions, substance abuse, attempted suicide, mental illness, reimbursement through a Workers’ Compensation insurance program, cosmetic or elective surgery and procedures, optical and dental coverage, and procedures determined to be preventive care.

Many individual health insurance policies exclude coverage for medical conditions that exist prior to the inception of the coverage. This is commonly referred to as a ”pre-existing condition" exclusion. Common pre-existing condition periods are six months and 1 year prior to the inception of the insurance coverage.

What is the coinsurance clause in medical expense plans and how does it work?

Coinsurance, sometimes called "percentage participation," requires the insured to share in the cost of medical care. Under an 80/20 coinsurance provision, the medical expense plan pays 80 percent of eligible medical charges above any deductible. The insured is required to pay the remaining 20 percent. Other coinsurance arrangements, e.g., 70/30 or 90/10, are sometimes used. In the event of large or catastrophic medical expenses, an insured might suffer severe financial hardship due to the operation of the coinsurance clause. To compensate for this possibility, many major medical expense plans contain a coinsurance max out of pocket cap, or stop-loss limit. This provision places a limit on the insured's out-of-pocket costs in a given year arising from the operation of the coinsurance clause. The size of the coinsurance cap generally ranges from $2,000 to $3,000, depending on the plan, although limits as low as $1,000 are sometimes used. Once the coinsurance cap has been reached, all eligible expenses above this amount are paid in full, up to the plan's overall limit of coverage.

What is the difference between copayment and coinsurance?

On occasion, these terms have been used interchangeably. However, it is preferable to define the two terms differently, despite their similarity of purpose. Under a copayment or co-pay provision, the insured usually is required to pay a set or fixed dollar amount (e.g., $10, $20, or $30) each time a particular medical service is used. Coinsurance, sometimes called "percentage participation," requires the insured to share in the cost of medical care. Under an 80/20 coinsurance provision, the medical expense plan pays 80 percent of eligible medical charges above any deductible.



I just changed my coverage but I don’t like my new plan. I want to change again, As soon as possible. Can I do that?

You can make changes to your elected coverage during your annual open enrollment period only. Outside of open enrollment, changes can only be made based on a qualifying event such as loss of other coverage, marriage etc.

Does my employer have to provide health care coverage?

No, health care coverage is a benefit that your employer may provide but is not (at this time) required.

What kind of health insurance might be offered through my employer?

Health insurance is one of the most common forms of benefits offered to employees. A good health insurance plan offered by an employer protects its employees from catastrophic loss in the event of disease or illness. There are many varieties of employer provided health insurance plans, with differing levels of coverage and options.

My employer has a self-insured health insurance plan. What does this mean and is this a good deal for me?

Some large employers operate their own health insurance plan as opposed to purchasing coverage from an insurance company. Typically the large employer pays a third party (such as an insurance company or other administrator of health care claims) to administer the plan which they have designed for their employees - the large employer pays the costs (claims plus administration) directly out of the company's coffer. While the large employer saves the profit margin that an insurance company builds into its premium, it raises the exposure of the large company to greater risk in the event that more claims than anticipated must be paid. Due to the nature of these plans (and tight regulation of such plans), most self-insured employer-sponsored plans are very efficient and provide good health insurance benefits to employees.

I have health coverage through my employer but I’m leaving my job soon. Though I like my current coverage, I cannot carry it from job to job. What are my options?

For terminated employees or those losing coverage because of reduced work hours, a provision called COBRA (the Consolidated Omnibus Budget Reconciliation Act) obligates your employer to let you buy group coverage for up to 18 months after leaving. COBRA applies to all employers with 20 or more workers.

Your employer will furnish you with a summary plan description that contains information about COBRA. In addition, when a plan receives notice of a qualifying event, the plan must notify the covered person of their right to choose continuation of coverage.

What’s the situation with a spouse or child?

COBRA also applies to a spouse or dependent child of the covered employee who lose coverage because of the death or divorce of the covered employee, or loss of dependent status under the provisions of the health plan. If you decide to take coverage, the cost is the full premium, plus an administrative fee.

Since I work for a company that has less than 20 employees, COBRA is not available. But we do have group coverage. What are my options?

You may explore purchasing an individual policy. Pre-existing condition, however, may apply.

I’m also leaving my job where I have health coverage, But I have a pre-existing condition. What are my options?

Probably the largest single worry that many have is coverage for pre-existing conditions, especially when you switch jobs. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) helps assure continued health insurance coverage for employees and their dependents.

That law imposes limitations on exclusion of coverage for pre-existing conditions, provides credit for prior health insurance coverage and a method to provide certificates regarding such prior health coverage to a new group health plan, prohibits discrimination in enrollment and the premiums paid by employees and their dependents based on health factors, and other protections for obtaining health insurance - both as to employees and to employers sponsoring a health insurance plan.
The major benefit of this legislation for most employees is that when they have been covered by a group health insurance plan for more than 12 months (or an individual policy, by Medicaid, Medicare, or a public health plan), there will be no pre-existing conditions exclusion of new group health insurance when the employee enrolls as a participant in a new group health insurance plan. If, for example, you obtained medical advice, care or treatment for a condition 3 months ago, and had an individual or group insurance plan for the past year, your new group health insurance plan must not exclude coverage for that condition (pre-existing conditions exclusion not enforceable due to HIPAA).