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Medical
Health insurance coverage means benefits consisting of medical care (provided directly, through insurance or reimbursement, or otherwise) under any hospital or medical service policy or certificate, hospital or medical service plan contract, or HMO contract offered by a health insurer. Health insurance coverage includes group health insurance coverage, individual health insurance coverage, and short-term, limited-duration insurance. The following are some of the common types of employer-provided health coverage:

Health Maintenance Organizations (HMOs)

A Health Maintenance Organization, or “HMO” is a legal entity consisting of participating medical providers that provide or arrange for care to be furnished for a fixed, periodic fee per person. Individuals enrolled in an HMO select a primary care physician. For medical services to be covered by an HMO, the service must generally be provided by an in-network provider or by one referred to by the primary care physician. Covered services generally include:
  • Routine office visits;
  • Diagnostic tests;
  • Hospital care;
  • Surgery;
  • Emergency care; and
  • Preventive service

Preferred Provider Organizations (PPOs)

PPOs are networks of doctors, hospitals and others that provide services that contract with a health insurer to provide services to its members. The use of these providers can result in lower out-of-pocket costs for members, such as deductibles, co-payments, and co-insurance.

Fee-for-Service or Traditional Indemnity Plans

Fee-for-service plans, also called traditional indemnity plans, do not generally limit coverage based on which doctors, hospitals, or others provide services (no networks). Instead, the patient may have a deductible to meet before a health insurer will cover services. A fee-for-service may also include co-payments by the patient.

Point of Service (POS)

Point of Service (POS) plans are a hybrid of HMOs or PPO plans with traditional indemnity plans. In these types of arrangements, a patient may receive services from preferred or non-preferred providers; however, a patient may receive higher benefits by visiting a preferred provider after consulting their primary care physician.

High Deductible Health Plans (HDHPs) and Health Savings Accounts (HSAs)

A popular option for many employers is to sponsor a high deductible health plan in conjunction with a tax-saving Health Savings Account (HSA). An HDHP has:
  • A higher annual deductible than typical health plans; and
  • A maximum limit on the sum of the annual deductible and out-of-pocket medical expenses that must be paid for covered expenses. Out-of-pocket expenses include co-payments and other amounts but do not include premiums.
A health savings account (HSA) is a tax-exempt trust or custodial account that an employee sets up with a qualified HSA trustee to pay or reimburse certain medical expenses incurred. A qualified HSA trustee can be a bank or an insurance company. To be an eligible individual and qualify for an HSA, the employee must be covered under a high deductible health plan (HDHP). Reference Sources
  • Survey definitions from:
  • The National Compensation Survey definitions (BLS),
  • The Medical Expenditure Panel Survey definitions (AHRQ), and
  • The National Employer Health Insurance Survey definitions (NCHS)
  • Definitions from other Federal agencies and surveys, such as:
  • The Current Population Survey (BLS/Census)
  • ERISA-related definitions (from PWBA)
  • Glossaries and informational papers from websites such as:
  • OPM’s Federal Employees Health Benefits, makes, the current limitWithoutPlans (glossary and specific plan booklets)
  • Blue Cross / Blue Shield
  • The National Center for Policy Analysis, and The Health Insurance Association of America.
  • Publications such as:
  • Employee Benefit Plans: A Glossary of Terms, Ninth Edition 1997, Judith A. Sankey - editor, International Foundation of Employee Benefit Plans.
  • "Fundamentals of Employee Benefit Programs, Fourth addition"
  • "Managed Care Plans and Managed Care Features: Data from the EBS to the NCS", Cathy A. Baker and Iris S. Díaz, Compensation and Working Conditions, Spring 2001
  • EBRI Notes Vol. 16, no. 7, July 1995
  • HIAA Source Book

Self Insured VS Fully Insured

Fully insured health plans are typically group health insurance plans in which an employer or company pays the health insurance premiums for coverage. Insurance companies that provide the group health insurance plan for an employer set the premium rates each year. Fully insured plans have many characteristics that make them different from other types of health insurance plans. These include pooling, risks, premiums, and employer size.

Self-insured plans, unlike fully insured plans, are generally designed in which the sponsor retains the risk associated with paying covered health expenses, rather than paying a premium and transferring the risk to an insurance company. Some sponsors retain the risk for a subset of the benefits, but transfer the risk for the remaining benefits to health insurers – that is, they finance the plan’s benefits using a mixture of self-insurance and insurance. Self-insurance is more common among larger sponsors, mainly because the health expenses of larger groups are more predictable, and therefore larger sponsors face less risk.