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Individual | Group | Medicare
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Small Group vs. Individual Health Insurance
Individual and Small Group Health Insurance plans are governed by different laws. Here is an overview of the difference.
Small Group Insurance can not deny coverage to anyone based on their medical condition. If you have a medical condition that causes the carrier to see you as greater than the average financial risk they can NOT decide to rider / not cover that condition or you. However, to ensure the carrier’s solvency, they are allowed to raise the rate for the entire group up to a maximum of 65%. Small group is usually more expensive than individual insurance and your employer will be required to pay for a part of the premium for each employee. Small group provides an employer with a way to ensure that all employees and their dependents can have health insurance. It is often a positive factor in retention of employees. Small group insurance may have a waiting period of up to 90-days, a 12-month pre-existing period unless credible coverage is proven and will have maternity benefits or at least the option to cover maternity for very small groups.
Individual Health Insurance carriers look at the medical situation of each applicant and may decide one of four things for each condition identified: 1) accept the condition, 2) rate-up that individual, and / or 3) rider the condition (cover the rest of the body but not that condition permanently or for a specific period of time), or 4) decline the person. Individual health insurance may have a pre-existing period and is NOT likely to offer maternity benefits.
PPO – Preferred Provider Organization
A PPO is an insurance plan which contracts with one or more groups of health care providers including doctors, hospitals, clinics, labs, etc. to provide you with services at a discounted price. As a member, you will receive better benefits when you choose to seek services from a network provider. However, benefits will be available for non-network services as well. You will NOT be required to select a Primary Care Provider or to obtain a referral prior to seeing a specialist.
A PPO has a finite amount of money they are at risk for to provide your care called the Lifetime Maximum. Frequently, PPOs will limit certain services on an annual basis such as the number of physical therapy sessions.
The underwriting process will review your current health status and determine if you are appropriate for membership. If you have pre-existing conditions you may experience an increase in your rate, a waiver / rider which will eliminate coverage for a specific condition or a denial of membership. In addition, there may be a waiting period before pre-existing or other conditions such as some surgeries may be covered.
H.S.A.
A Health Savings Account is a pre-tax savings account that works in conjunction with a High Deductible Health Plan (HDHP) and is authorized under IRS regulations (see www.irs.gov). To qualify for an H.S.A. you must be currently insured under a high-deductible health insurance plan, have no other coverage (coverage for accidents, disability, dental, vision or long-term care do NOT disqualify you), NOT be enrolled in Medicare and NOT be claimed as a dependent on another person’s tax return.
The insurance part: Usually the high deductible plan is a single deductible for either an individual or a family. Once you have met the deductible in any one year, one of two things happens: 1) you may select to have a coinsurance period where you and the carrier share the bills (typically 20% for you) until a specific amount of money is spent by you, OR 2) you select NO coinsurance and at that point the carrier pays the remainder of the health care expenses that year that qualify as benefits under your plan.
The H.S.A. part: You and /or your employer are allowed to deposit pre-tax money into a savings account each year. The amount allowed depends upon the deductible you select and/or the maximum allowed by the IRS. The money can be drawn out and remains tax free as long as it is used for medical, dental, vision or other expenses allowed by the IRS (see www.irs.gov). The money will earn interest. You can select from many banks within our country that will provide you with the account. Each bank has their own unique terms such as annual minimum deposit, annual or monthly charges, optional checks or debit cards. The bank is responsible to report the money you deposit and withdraw annually to the IRS. They are NOT responsible to report the reason for the withdrawal. You must maintain records to qualify your withdrawals should you be asked to do so. The money in the H.S.A. is yours forever…as you grow older, move to a new employer or a new state.
HMO – Health Maintenance Organization
An HMO takes a financial risk to provide you with specific medical services. HMOs have no lifetime maximum. There are NO pre-existing condition waivers / riders.
HMOs generally have a unique provider network. You must reside within the designated HMO area. You must use the physicians and other providers within the network. There are NO benefits for services provided outside the network other than emergency care. You will be required to select a primary care physician. A referral to a specialist may be required. This close relationship with providers allows HMOs to unite with their providers in managing your care. HMOs are generally less expensive than PPOs and may have more extensive benefits.
Coinsurance
The amount you may be required to pay for services after you pay any plan deductible.
Copayment
The amount you pay for some medical services according to your health plan details. A copay does NOT usually go towards meeting your deductible or coinsurance amount.
Credible Coverage
When you have been covered by group insurance (or some other types but not individual insurance) for the past 12 months with no break in coverage for greater than 63 days, you are said to have credible coverage. You will be asked to prove credible coverage by providing a Credible Coverage Statement from each carrier that has covered you in the past 12 months. Once you prove credible coverage, the carrier will remove the pre-existing period from your coverage.
Deductible
The amount you must pay for some medical services according to your health plan details before the carrier begins to pay. Lab, x-ray, office procedures, outpatient surgery, hospitalization and emergency department benefits usually require you to meet your deductible first.
Formulary
A list of generic and brand names drugs that are covered under a specific health plan. Usually there are NO benefits for drugs not on the formulary.
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