Q. What is group medical insurance?
Insurance where the each insured is a member of a group. A defining characteristic is that no one can be excluded from coverage. Examples of group insurance are employer medical insurance plans for employees.
Q. What is individual medical insurance?
This insurance has to be purchased as an individual rather than as a member of a group. This insurance is typically bought by those who are self-employed or unemployed.
Q. What types of health insurance programs are available?
You can purchase Major Medical (also known as fee for service) insurance, join a Health Maintenance Organization (HMO), Preferred Provider Organization (PPO), a Point of Service (POS) Program or a Consumer Driven Health Plan (CDHP)
Q. What is Major Medical?
Major Medical can be thought of as pure insurance. The insurance will pay out a portion for each medical service in exchange for a premium. The differentiator for major medical is that you are completely unrestricted regarding the medical provider you choose.
You can go to any doctor or hospital you like. You can also go whenever you like.
Q. What is an HMO?
An HMO (Health Maintenance Organization) is a membership health plan. Members receive comprehensive health care with an emphasis on preventative care.
One differentiator here is that you select a primary care physician (PCP). You see your PCP for all of your care. If it’s necessary you see a specialist, your PCP will provide a referral.
The other differentiator is that you have to stay in your HMO network to receive reimbursement for your care.
Q. What is a PPO?
A PPO (Preferred Provider Organization) is a combination of major medical and an HMO. It’s differentiated by a two tier payout system.
If you stay in the PPO network you’ll be covered at the full amount of your policy. If you go out of the network, you’ll still be covered in the second tier but to a lesser degree.
Q. What is a POS?
A Point of Service Program is a type of HMO. If you belong to a POS, you can easily get a referral to go out of the network to receive care and some of it will be covered. This plan combines the lower HMO cost with some of the flexibility of a PPO.
Q. What is a CDHP?
The idea behind Consumer Driven Health Plans is that the consumer has more of a direct say in their health care. Some think that it’s a way for employers to get out of the health care business.
CDHP’s combine Health Savings Accounts (HAS) for everyday medical needs with a high deductible medical plan to cover any major medical setbacks.
Q. What are deductibles on medical insurance?
A deductible is the amount the insured pays before the insurance company begins to pay. For example, if your deductible is $500 and your bill is $1500, you’ll have to pay $500 before the insurance company will pay the other $1000. The deductible is usually between $250 and $5000 and can vary by service.
Q. What are copayments?
Copayments or copays are an amount you have to pay at the point of service. For example, you might have a $25 copay for doctor’s visit. This means that when you get to the doctor’s office you’ll have to pay $25 out of your pocket before you can get treated.
Q. What is coinsurance?
Coinsurance is the payment you’ll share with the insurance company after the deductible is met. For example, your coinsurance might be stated that the insurance company will pay 80% of the next $10,000 of coverage after the deductible. So, you would be responsible for the other 20%.
Q. What is an HSA?
An HSA (Health Savings Account) is a savings account where you deposit money that will be used for medical treatment. It’s different than most savings accounts in that the money you deposit is tax free.
Q. What is Cobra?
The Consolidated Omnibus Budget Reconciliation Act (COBRA) provides certain former employees, spouses, former spouse’s retirees and dependent children to right to a temporary continuation of health coverage.
With COBRA, if you get terminated from your employer while in your employer’s group health plan, you can pay the premiums and remain in the plan for a certain period of time, usually 18 months.
However, you pay the entire premium which includes the portion the employer had been paying. This makes COBRA more expensive then what you were paying as an employee. Even so, it’s still less costly than individual medical insurance.
Q. What is short term health insurance?
This insurance is bought for short periods of time, usually between one month and one year. The idea of it is to provide gap insurance if you’re between jobs or just out of school.
The coverage is similar to major medical but is limited. For example, preexisting medical conditions and pregnancy are not included.
Q. What is a Mini-med?
A mini-med is a health insurance plan with limited benefits. With very few restrictions, it can be issued up to the age of 64. Your medical bills get reimbursed up to the policy limits per procedure expressed in dollar amounts. It can be used with any medical provider and is not limited to any specific PPO network.
Mini-meds are considered a supplemental policy. They’re not designed to replace any major medical policy you may have. They’re commonly used in conjunction with a high deductible major medical policy.
Q. What is an insurance risk pool?
Started in 1976 in Minnesota, and available in over 30 states, these insurance pools create a group of all the people denied health insurance coverage by private insurance companies. The states then provide a state sponsored health plan those people can buy into. They work like a PPO.
Steve Wyrostek -MedicalInsurance.org Expert A 20 year plus veteran of the insurance industry, Steve managed departments in the personal and commercial lines areas of major insurers. He’s familiar with how insurance—ranging from boat to workers compensation—works.
