Health Insurance

Types of Major Medical Health Insurance

Group Plans

Fulfilling your insurance needs may prove simple if your employer offers a group plan or a choice of plans. Group health plans cover several people or groups under one policy. You receive a certificate that acts as your policy when you obtain insurance through a group plan. Most group policies include provision to cover family members, but the employer might not contribute towards the premium cost for the member's dependents.

In Florida, businesses with one to 50 employees have access to guaranteed-issue group plans, often referred to as small group health coverage. Guaranteed-issue coverage for a one-life group (a self-employed individual with no eligible employees) is only available during the month of August each year, with the policy taking effect on October 1.

Group plans, including rules for guaranteed-issue and how much the premium may vary by the particulars of the group, are regulated by each state's insurance department.

In Florida, insurance companies and HMOs that offer small group coverage must offer employers the option of purchasing a Basic or Standard plan. Most insurers and HMOs offer other health plans in addition to the state-mandated Basic and Standard plans; however consumers shopping in August for guaranteed issue one-life group coverage typically find that only the Basic and Standard plan designs are available to them.

Individual Plans

Individual plans cover one person or all members of a family under one policy. Usually, people purchase individual coverage when they lack access to employer-based group policies or want to supplement these policies. Others maintain individual health policies on a short-term basis during a period of unemployment or an extended trip.

Another reason for purchasing individual coverage could be to cover dependents when the employer funds the group premium only for employees. When dependents can health-qualify and meet any applicable underwriting requirements, individual coverage often is less pricey compared to similar benefits offered under the employer plan. This is because unlike individual policies, group plans accept all members regardless of health.

Short-Term Medical

While individual health plans often are purchased by people intending to keep their policy only for a short while, alternative coverage known as Short-Term Medical could be a better option. There are a number of factors aside from the monthly premium level that should be considered when choosing your coverage type.

Short-Term Medical coverage usually is appropriate when it bridges a gap between known events, such as when someone has a temporary break in employment and will be gaining access to group health insurance coverage at a specified date in the future. In this case, as long as the short-term policy offers a long enough duration, there wouldn’t be any concern about going without medical coverage or not being able to qualify for a new insurance policy in the future.

The advantages of Short-Term Medical include an easier insurance application, more liberal underwriting standards, and lower premium levels compared to COBRA or group conversion coverage that may be available. It is important to note, however, that Short-Term Medical policies usually do not cover the insured’s pre-existing medical conditions.

Short-Term Medical policies, even if not designed to pay for the insured’s pre-existing conditions, still provide the insured with continuous coverage as defined under applicable laws passed in 1996 known as the Health Insurance Portability and Accountability Act (HIPAA). This Act required that anyone who has continuous coverage in effect for the twelve months prior to getting a new insurance policy will not have to face pre-existing condition exclusions that otherwise would apply.

While Short-Term Medical might be a suitable way to keep continuous coverage in force so that there won’t be a waiting period for pre-existing conditions on one’s next insurance plan, these policies are not for everyone. First, Short-Term Medical usually is subjected to medical underwriting, so there is no guarantee the applicant will qualify for coverage. Second, applicants who can qualify are not given conversion rights; therefore, when the policy ends, any illnesses or injuries sustained during the policy period could prove to be a hindrance when applying for new individual coverage.

Out-of-State Association-Based Coverage

In Florida, an insurance company that markets health coverage to members of an association must be licensed by the state of Florida to sell such coverage to members who are state residents. Yet if the association is located in a state other than Florida, the coverage offered to members will likely be governed by the laws of that state. This means that many of the Florida consumer protection laws will not apply to this coverage, most notably the applicable premium rate approval requirements. While "out-of-state association" type of coverage may be affordable at first, the absence of laws protecting the consumer from renewal rate abuses may become more apparent in future years. This would become an issue should you develop a chronic health condition and are unable to medically qualify again for a more affordable policy.

Although the policy forms and premium rates charged are not approved by the State of Florida, when coverage terminates you must be eligible for a guaranteed-issue conversion policy. Your coverage document will contain information about conversions.

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• What is Traditional vs. Managed Care?
• Types of Major Medical Health Insurance
• What is a Health Savings Account (HSA)?
• Guaranteed-Issue Health Plans Including "COBRA" and "Mini-COBRA"
• How Will I Be Impacted By 2010 Health Care Reform Legislation?