Q: What is the difference between a quote and an application?
Q: What is the difference between individual and group plans?
Q: What will determine my insurance premium?
Q: What determines the cost of a health policy?
Q: How can I get health coverage?
Q: What’s the difference between primary and secondary coverages?
Q: What services and items might be paid for under my health insurance?
Q: What is the difference between coinsurance and copayment?
Q: I’m between jobs. What are my insurance options?
What is the difference between a quote and an application?
A quote is a base premium amount that is generated from basic applicant information, such as age, gender, geographical location, etc. Final rates are determined after full medical underwriting, including an application. After the insurance carrier receives your application, they may require a phone interview or a partial or full medical exam to complete the medical underwriting.
What is the difference between individual and group plans?
An individual policy is purchased by you directly with the insurance company.
With a group health insurance policy, the group is the master insured and the insurance company contracts with the group. Insurance certificates, issued to a participating member, act as your policy. Often group health insurance costs less than would have been charged had the insurance company sold individual policies to each member separately. In addition, group health insurance often contains special coverages that are not available or are very expensive on an individual basis. The purchasing power of the group makes this economically feasible.
back to top
What will determine my insurance premium?
Insurance premiums are determined by actuaries employed by insurance companies. The cost of advertising, selling, paying for services rendered by health care practitioners, administration of the insurance program as well as the investment of premium payments and a profit margin are factored into the premium amount. Actuaries determine the exposure to risk according to the provisions of the insurance policy and then set a premium rate. Additional underwriting factors, such as adverse selection for individual policies and special industry exposures for employer-sponsored group health insurance plans, are also factors of the premium charged.
Often the premium charged on an individual plan is much higher than the premium charged for similar coverages offered through a group plan due to "adverse selection." Under group plans, an insurance company can determine that a percentage of participants will generally be in good health. Under individual plans, it is more likely that people in poor health and having a greater need for insurance will seek to buy coverage - "adverse selection" is the result of the basic premise that those people in good health do not have as much need for insurance as people who are in poor health.
back to top
What determines the cost of a health policy?
Most Group health insurance plans do not use underwriting for individual plan participants. Once the Group is offered health insurance coverage, individuals who are members of the group automatically qualify for the insurance (often with open enrollment periods to switch coverages at a particular time during the year).
In addition, Group plans are originally underwritten using the same criteria as Individual health insurance plans - the group as a whole is considered in an overall sense based upon the statistical composition of the individual group members. Typical underwriting criteria include:
1. Age - older people have a higher incidence of claims than younger people and require higher premiums for coverage
2. Number of people covered - whether coverage is offered solely to the individual or if coverage will also be extended to family members and dependents
3. Health history - primarily used in underwriting individual insurance plans, a history of disease or illness will impact whether a particular insurance company will offer insurance, and if so whether pre-existing conditions or other restrictions will be placed on such insurance
4. Occupation - some occupations involve more risk of injury or illness due to the nature of the work and thus require a higher premium
5. Lifestyle - whether a person smokes or engages in a hazardous hobby which exposes the individual to a greater degree of risk or disease, illness, or potential for accident.
back to top
How can I get health coverage?
Employer-Sponsored Group Insurance
Millions of people obtain their insurance through their employment. Upon reaching the eligibility requirement (such as a full-time employee working more than 40 hours per week for a six month continuous basis), the employee becomes covered under the employer's group insurance policy and the employee is issued an insurance certificate or health insurance card. Medical insurance is a very common fringe benefit of employment. Some employers will provide coverage solely for the employee, some employers pass along the cost of dependent coverage to the employee, while other employers pay the entire cost of medical insurance for the employee and his/her family.
Health insurance which is purchased by the individual. Some major health insurance companies offer a broad range of coverages and options to individuals, who pay directly out-of-pocket for the cost of the insurance. Many insurance companies require completion of an exhaustive application and may require a medical examination before coverage will be offered to the individual.
Some states offer health insurance benefits to their residents, often with certain income requirements for eligibility. These plans are designed for the "working poor" - individuals who are employed but no health care coverage is available where they work. This enables the state to protect its residents from catastrophic loss due to illness, disease or accident without placing an additional burden upon its program for the truly indigent.
You may belong to a group or organization that offers health insurance as a benefit of membership. Check membership benefit statements, brochures, or ask organizations leaders to determine availability of health insurance through your group or organization.
back to top
What’s the difference between primary and secondary coverages?
Since many people have available medical insurance from more than one plan (such as two employed spouses covered under group health insurance plans), insurance companies do not want insureds to profit through their health insurance. To prevent double recovery, most health insurance plans have provisions which determine how primary versus secondary coverage will be determined.
Primary coverage is provided through the plan of which they are a member (such as the spouses both covered through their respective employment - the primary coverage is provided under the plan provided by the employer of each spouse) or the plan under which the member has been a participant for the longest time period.
Secondary coverage, usually as a result of being covered as a dependent under someone else's health insurance plan, provides reimbursement for medical expenses after exhaustion of coverage available through the primary plan.
back to top
What services and items might be paid for under my health insurance?
Medical expenses as the result of accident, illness, injury, and disease are typically covered by medical insurance. The particulars of how much coverage for each expense incurred is determined by the provisions of the particular health insurance policy.
Typically doctor visits, surgeon and surgery expenses, costs of hospitalization, and follow-up therapy are covered by health insurance. Some plans provide for psychiatric care, drug and alcohol rehabilitation programs, and prescription medicines.
back to top
What is the difference between coinsurance and copayment?
On occasion, these terms have been used interchangeably. However, it is preferable to define the two terms differently, despite their similarity of purpose. Under a copayment or copay provision, the insured usually is required to pay a set or fixed dollar amount (e.g., $10, $20, or $30) each time a particular medical service is used. Copay provisions are frequently found in medical plans offered by health maintenance organizations (HMOs) where a nominal copayment is applied to each office visit and to each prescription that is filled.
I’m between jobs. What are my insurance options?
As a stop-gap measure, you could invest in a short-term policy. Written for a two to six month period, they generally cover hospitalization, intensive care, surgical and doctors’ care in and out of the hospital, X-rays and lab tests. Or, if you belong to any professional organization or group, or a trade union, you may try to get a policy at a low group rate.
back to top