INSURANCE TERMINOLOGY

 

Coverage The guarantee against specific losses provided under the terms of an Insurance
company.

 

Benefits are specific areas of Plan coverage’s, i.e.Outpatient visits, Hospitalization and so forth; those make up the range of medical services that a payer markets to his subscribers.

Rider This is an attachment to the policy that modifies its conditions by expanding or restricting benefits or excluding certain conditions from coverage.

Premium An amount the subscriber has to pay in order to own and activate a policy is
called Premium.

INSURANCE CLASSIFICATION

Individual Health Plans:-

• Individual health insurance covers the medical expenses of only one person or family.
• Unlike group insurance, you purchase individual insurance directly from an insurance company.
• When you apply for individual insurance, you are evaluated in terms of how much risk you present.
• This is generally done through a series of medical questions and/or a physical exam.
• Your risk potential determines whether you qualify, and how much your insurance will cost.
• Individual insurance is somewhat more risky for insurers than group insurance, since group insurance allows the insurer to spread risk over a larger number of people. For this reason, individual insurance is generally more difficult to obtain, and more costly than group insurance.

How do you get Individual Insurance ?

• To get individual insurance, you can either contact the insurer directly, or get in touch with your insurance agent.
• You will probably want to get quotes from several insurance companies before you choose one, just to make sure you are getting the best coverage for your money.
• Before issuing an individual insurance policy, the insurer willwant to know everything about your personal health history.
• Many insurers use information from the Medical Information Bureau to determine whether an applicant is insurable.

If the insurer doesn't want to cover a particular health condition, you may still be able to get a policy with an exclusion rider. But, if it is later discovered that you withheld information from your insurer, your coverage could be cancelled altogether.

Features of Individual Health Plans

• Single Owner
• Dependant Coverage
• Stringent Medical Check-up
• High Premiums
• Customized Policy

Disadvantages of Individual Coverage Premiums

• With group health insurance, a single policy covers the medical expenses of many different people, instead of covering just one person.
• Often, your employer or association pays at least part of the cost of group insurance. But when you purchase individual insurance, however, you are responsible for 100% of the cost (High Premiums)
• Individual insurance often doesn't provide as much coverage as group insurance policies in the same price range (Customized Policy)
• Moreover, individual insurance is often more expensive to make up for the insurer's increased risk exposure.
• Individual insurance coverage is, ironically, much easier to come by when you are healthy.
• If you are already sick or have a history of health problems, you may find it difficult to obtain coverage.
• Group insurance, by contrast, is usually available without taking a medical examination or answering health questions.
• Unlike individual insurance, where each person's risk potential is evaluated to determine insurability, all eligible people can be covered by a group policy, regardless of age or physical condition. The premium for group insurance is calculated based on the characteristics of the group as a whole, such as average age and degree of occupational hazard.

Disadvantages of Individual Coverage

• Unlike individual insurance, where each person's risk potential is evaluated to determine insurability, all eligible people can be covered by a group policy, regardless of age or physical condition. The premium for group insurance is calculated based on the characteristics of the group as a whole, such as average age and degree of occupational hazard.

Group Health Plans

Benefits of Group Coverage

• You don't need a physical exam.
• Under a group health insurance arrangement; the insurance company agrees to insure all members of the group, regardless of current physical condition or health history.
• The only condition is that the group members must apply for insurance within a specified eligibility period.
• Clearly, this is better for those with chronic health conditions, who might be unable to get individual insurance.

Eligibility

• Many employers offer group health insurance as part of their employee benefits package.
• Other groups that may offer insurance coverage include churches, clubs, trade associations, chambers of commerce, and special-interest groups.

Drawbacks to Group Coverage

• You can't customize your policy
• In a group insurance situation, the provisions of the policy are negotiated between the insurer and master policy owner(usually an employer or association).
• You don't have the freedom to have provisions included or excluded, and your deductible amount and co-payment percentage are determined in advance.
• In some situations, however, you may be able to choose between two or more insurance plans.
• In large companies, however, even customizing the plans as per the requirement of the employees is possible.

Features of Group Health Plan

• Group Owners
• Dependant Coverage – may be provided
• Global Coverage
• No Medical Check-ups
• Premiums are shared
• No customization offered

Group Health Plans

There are categories of Group plans:

EGHP - Employer Group Health Plan

The Employer Group Health Plan is a health plan offered to the employees through the employer.

LGHP - Large Group (Employer) Health Plan

• The Large Group Employer Group Health Plan is a health plan promoting this plan would be employing more than 100 employees or among the employers who have come together at least one of them would be employing >/= 100 employees

SGHP - Small Group (Employer) Health Plan

• The Large Group Employer Group Health Plan is a health plan promoting this plan would be employing more than 100 employees or among the employers who have come together
• at least one of them would be employing >/= 100 employees
• This is a plan rolled out by an employer employing less than 20 employees.
• It is a policy that combines the coverage offered in Basic and Major Medical Plans.
• The premiums of these plans are high. Comparatively lower co-insurance.
• The subscriber is required to pay a co-insurance of 20% on the medical expense incurred.
• The concept of Stop-Loss Clause is predominant in Commercial Plans.