Health Coverage

Everyone who has attempted to shop for health coverage has experienced frustration in one way or another while looking. In a time of ever increasing health care costs, it can be financially devastating if a serious illness should occur and no health coverage exists.

For those who are fortunate enough to have coverage provided by their employer, or through a family member, understanding health coverage types may not be as crucial. Individuals who have no coverage and have not had coverage for quite some time can find it almost frustrating trying to get through the overwhelming amount of information involved. This is where understanding the basics can help.
The first question many people ask is:

Who are insurance providers and are there different types?

There are a number of sources are available for individuals seeking health insurance protection. For the most part, health insurance providers can be divided into three main categories: commercial, service providers and state/federal government. The main objective is to provide protection against any financial costs that come with illness, injury or disability.

Commercial Insurance Providers: Health insurance can be written by many providers including, life insurance companies, casualty insurance companies, and single line companies that specialize in one or more types of medical expense and disability income insurance. This includes both individual and group policies. The basic concept behind commercial insurance companies is that they operate on the reimbursement approach. Which in plain English means: You receive treatment, charges are submitted to your provider and then you are reimbursed for these expenses, with the only difference being that you have what is called 'the right of assignment' built in so that these reimbursed payments go directly to the healthcare provider and not to you.

Service Providers: With service providers there is a different approach. With this approach a monthly premium is charged and as a result of this monthly payment you receive the benefits as services provided by the hospitals and doctors provided in the plan. HMO's and PPO's are examples of this type of provider.

State and Federal providers: This is protection provided by a state or federal government program. Some examples of these are: Medicare, Medicaid, Social Security Disability and State workers' compensation programs.

Alternative Method Providers: In addition to the above three types of providers there is what's called 'alternative methods of providing health insurance'. An example of this is called Self Insurance. For businesses and individuals this an alternative to commercial or service health insurance plans. These can be diverse but the many of these plans are administered by insurance companies that are paid a fee for handling the paperwork and processing the claims. When an outside organization or insurance carrier is involved in providing these functions it is called ASO (administrative services only) or TPA (third party administrator.