L13.Types of Health Insurance

Types of Health Insurance Overview

• Hundreds of private insurance companies provide medical coverage for individuals and groups.

• Many types of government-sponsored insurance programs exist, defined by specific coverage requirements.

• This lesson introduces government programs alongside basic types of private insurance.

Government-Sponsored Insurance Programs

Centers for Medicare and Medicaid Services (CMS)

• Branch of the U.S. Department of Health and Human Services.

• Administrator for Medicaid and Medicare programs.

• Acts as a purchaser of healthcare services, assures proper administration, assesses quality, and establishes reimbursement policies.

Medicare

• Federally administered and funded health insurance program for:

  • Individuals aged 65 or older.

  • People under age 65 with certain disabilities.

  • Individuals with end-stage renal disease.

• Medicare Part A:

  • Covers inpatient care, skilled nursing, home health care, hospice, and nursing home care.

  • Funded by Social Security payroll taxes; no premium required for coverage.

• Medicare Part B:

  • Covers medical expenses, laboratory services, outpatient treatment, and certain home health services.

  • Financed by monthly premiums from enrollees.

• Medicare Advantage Plan (Part C):

  • Offered by private companies with Medicare approval.

  • Fixed amount paid by Medicare to companies.

• Medicare Part D:

  • Provides prescription drug coverage with associated costs (premiums, deductibles, copayments).

Medicaid

• Federally mandated program providing services to those who cannot afford them.

• Established by Title XIX of the Social Security Act in 1965.

• Each state runs its own program with flexibility in establishing:

  • Eligibility standards

  • Types and amounts of services

  • Payment rates

Military Insurance

• CHAMPUS (Civilian Health and Medical Program of the Uniformed Services):

  • Established in 1966 for families of service members.

  • Transitioned to the TRICARE system.

• TRICARE:

  • Coverage for uniformed service members, families, and certain veterans.

  • Includes options for Medicare-eligible military retirees and a program for veterans' families (CHAMPVA).

Department of Veterans Affairs (VA)

• Provides healthcare benefits and prescriptions for eligible veterans.

• Prescription services are limited to those written by VA providers.

• Prescriptions may be mailed through consolidated mail-out pharmacies (CMOP).

Workers' Compensation

• Covers employees and dependents for work-related injuries, illnesses, or deaths.

• Governed by federal and state laws, which vary across jurisdictions.

Private Health Insurance

• Group Coverage: Offered by employers or associations.

• Individual Coverage: Purchased by individuals independently.

• Provides a variety of plans requiring premium payments for specified services, operating for profit.

• Involves prepayment where subscribers (insured) pay for anticipated health service needs.

Managed Care

• Developed due to rising healthcare costs, allowing for predictable healthcare expenses.

• Includes several program types:

  • Health Maintenance Organizations (HMOs):

    • Prepaid plans requiring members to use specific providers for care.

    • Members need referrals for specialists.

  • Preferred Provider Organizations (PPOs):

    • Members can choose their own providers with higher benefits for in-network care.

    • Members pay a percentage of healthcare costs until a threshold is reached, after which full coverage applies.

  • Point-of-Service (POS) Plans:

    • Combine elements of HMOs and PPOs, offering discounted care from participating providers.

Patient Assistance Programs

• Help individuals obtain prescription drugs at low or no cost.

• Offered by pharmaceutical companies and state governments, requiring application submission to assess financial need.

• Typically available for elderly, disabled individuals, or those with specific health conditions.

• Known as state pharmaceutical assistance programs (SPAP).