Types of Insurance: Private Insurance

types of insurance

• Car insurance or life insurance is not used for low probability

  • high cost events until house burns down or they get into an accident 

• In health insurance people use it to cover unpredictable and predictable costs 

  • Surgeries, routine doctors visits, meds 

• Financial services in a prepaid system 

  • Part of why health insurance is so complicated and expensive 

private insurance

•  how most working americans get coverage 

• Noticeable factor is the structure for coverage 

• Single plan - only you 

•  Family plan will allow you to cover your spouse or children 

  • Private insurance is the only way to get family coverage

  • government programs don’t offer it 

employers

• Not all employers offer it

• 60% of all employers offer health benefits to their workers 

• Nearly half of all businesses in the country are not a source of health coverage which contributes to the number of uninsured Americans 

• May factors that play into whether employers offer insurance 

5 main types

• Group insurance

• Self-insurance

• Individual private insurance

• Managed care plans

• High-deductible health plans (HDHPs)

group insurance 

• Offered through an employer, a union, or professional organization

• Anticipates large numbers of people in a group will buy insurance through a sponsor

  • The premium/avg cost is lower

  • Cost and risk are shared among the insured

• Because it tied to employment the employers pay most of the premium which makes it more affordable for employees 

self-insurance 

• Large employers’ workforces are large and diversified enough

• They can predict their own medical experience

• High losses covered through reinsurance

• Instead of paying a large insurance company to take on all the risks, the employer itself takes on all the risk and pays for the employees insurance 

• Saves money by avoiding administrative and profit generating fees by insurance companies

individual private insurance

• Coverage for people who are self employed, students, or those not covered by insurance plans 

• Risk is individually determined 

• High risk people are often unable to get coverage 

• Purchase the plan straight from an insurance company or through the state or federal healthcare marketplace 

• Individual insurance was much riskier, however the ACA fundamentally changed that 

  • Making this market much more accessible

managed care plans 

• Single most dominant type of health insurance in the US

• System that controls or combines financing and delivery of healthcare services 

  • Orgs that pays the bill also plays a role in controlling how/where you get your care

• monitor utilization and use a variety of methods to reimburse providers

• Main purpose is to manage cost ensure quality by coordinating care and carefully reviewing the necessity of services 

• All managed care plans use gatekeepers

health maintenance organization (HMOs)

•  Lower monthly premium but strictly limits the providers you can see to those within the network 

• Require you to see a primary care provider who is a gatekeeper for all specialist services. 

preferred provider organizations (PPOs)

• higher monthly premiums but the most flexibility. 

• Members can see specialists without referrals and receive care outside the network (usually at a higher out-of-pocket cost).

High-deductible health plans 

• Very high annual deductible 

  • You must pay a large amount out of pocket 

• Low monthly premium 

  • Save monthly especially to cover other healthcare costs

• Link saving account to high-deductible plan, giving consumers greater control on how to use the funds

ACA mandates and private insurance

• Reformed how private health care insurance works 

• Individual mandate - All US residents must have health insurance that offers minimum insurance coverage 

• The law requires government run marketplace which is like amazon for health plans 

• Focuses on patient protection 

  • Fundamentally changes the relationship between us and the insurance company

• The law provides subsidies for low income individuals to help them afford healthcare coverage 

  • Form of financial help 

employer mandate

• Requires employers especially those with 50 or more full time employees to offer insurance to those working 30 hours or more per week

ACA categories

• Bronze, silver, gold, platinum (4)

  • Platinum covers most coverage with higher deductibles/copayment, bronze = lowest converge 

insurance companies

• Today, insurance companies cannot deny your coverage or charge you more based on your health condition 

• Children need to be under their parents plan until their 26 birthday 

  • Whether they are single or married

preventative services

• Recommended preventative services and immunizations must be without cost sharing

  • Covered 100% by your insurance 

  • You pay no copay, deductibles, no insurance for these services

    • Idea is to eliminate cost barrier and provide affordable healthcare   

benefits

• No lifetime limit on benefits 

  • Used to leave patients with long-term diseases bankrupt 

  • Now, their insurance coverage does not run out no matter how severe their illness