What is the difference between individual and group health insurance?
An individual policy is purchased by you directly with the insurance company. With a group health insurance policy, 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. Often group health insurance costs less than would have been charged had the insurance company sold individual policies to each member separately. In addition, group health insurance often contains additional coverage that is not available or is very expensive on an individual basis. The purchasing power of the group makes this economically feasible.
What types of individual health insurance policies are available?
There are a variety of health, dental and life insurance policies which insurance companies offer on an individual basis. Some of the more common types of policies include:
- Major Medical – provides coverage for doctor visits, surgery and hospitalization or ongoing illnesses.
- Hospital and Surgery – provides coverage for hospital stays, surgical services such as room and board, ER services, laboratory tests, X-rays, Outpatient surgeries plus doctors’ charges.
- Hospital Confinement Indemnity – a policy designed to pay a set amount (an indemnity) for each day you are an “in-patient” at a hospital.
- Health Maintenance Organizations (HMOs) – centralized service provider, commonly with a general practitioner (limited selection of participating doctors) coupled with coverage by specialists upon referral. Doctor visits, surgery, hospitalization and often reduced-rate prescription medicine are provided. May also cover preventive care, often not included in major medical policies.
- Specified Disease (also called “Dread Disease”) – covers costs associated with a single disease, such as cancer, AIDS, heart attack, etc.
- Short-Term – typically a major medical policy but with coverage lasting only for a specified length of time. Might be purchased to cover the time you are between jobs.
- Accident Only – provides coverage for doctor visits, surgery and hospitalization resulting from an accident (no coverage for disease or illness).
- Dental – provides coverage for costs associated with dentists and orthodontists.
- Vision – provides coverage for sight correction
- Home Health Care – care provided to enable you to remain in your home while receiving services which can range from assisted living (help around the house) to around-the clock nursing with other health care providers on call.
- 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. Often associated with long-term illness and the elderly.
- Limited – Benefit – not very common, a bare-bones type of coverage.
What types of group health insurance coverage is available?
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. The Group is in a better position to bargain with the insurance company for additional benefits for its members. There are a variety of types of group health insurance plans, the major distinctions being the mechanism used for purchasing the insurance. Common varieties of group health insurance plans include:
for purchasing the insurance. Common varieties of group health insurance plans include:
- Fully Insured Employer Group – The employer contracts directly with the insurance company to provide certificates to covered employees. Typical arrangement is either for major medical or health maintenance organization (HMO) coverages.
- Small Employer Group – Insurance companies group certain industries together and then gather small employers together to form a larger group. These groupings enable the insurance company to better predict the cost of providing the insurance. The small employers can then get coverages otherwise not available unless charged a much higher rate. All the small employers get the same policy without deviation.
- 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.
- 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”.
- Self-Funded ERISA – available to large groups. 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.
- Association Group – similar to a fully insured employer group, the distinction being that instead of an employer, it is a different type of group, such as a credit card company offering insurance as a benefit to its cardholders or a church group offering insurance to its parishioners.
- Group Managed Care – a long-term health insurance plan offered through the group or association.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 insurance coverage?
Employer-sponsored group insurance
Millions of people obtain insurance through their employment. Upon reaching the eligibility requirement (such as an employee working up to 30 or more hours in Washington and up to 40 hours a week in Oregon on a 3 month continuous basis), 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 fringe benefit of employment. Some employers will provide coverage solely for the employee, some employers pass along the cost of dependent coverage to the employee, while other employers pay the entire cost of medical insurance for the employee and his/her family.
Health insurance which is purchased by the individual. Some major health insurance companies offer a broad range of coverages and options to individuals, who pay directly out-of-pocket for the cost of the insurance. You can complete an enrollment application and a medical health questionnaire.
Some states offer health insurance benefits to their residents, often with certain income requirements for eligibility. These plans are designed for the “working poor” – individuals who are employed but no health care coverage is available where they work. This enables the state to protect its residents from catastrophic loss due to illness, disease or accident without placing an additional burden upon its program for the truly indigent.
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’s the difference between primary and secondary insurance coverage?
Since many people have available medical insurance from more than one plan (such as two employed spouses covered under group health insurance plans), insurance companies do not want insureds to profit through their health insurance. To prevent double recovery, most health insurance plans have provisions which determine how primary versus secondary coverage will be determined.
Primary coverage is provided through the plan of which they are a member (such as the spouses both covered through their respective employment – the primary coverage is provided under the plan provided by the employer of each spouse) or the plan under which the member has been a participant for the longest time period.
Secondary coverage, usually as a result of being covered as a dependent under someone else’s health insurance plan, provides reimbursement for medical expenses after exhaustion of coverage available through the primary plan.