Group health insurance plans are offered by employers, labor unions, professional, fraternal, or other organizations. Premiums are usually lower than premiums on individual policies, and part of the premium is frequently paid by the employer or sponsoring organization.
In most group plans, members are automatically eligible for insurance just by becoming a part of the group. A physical examination is not necessary, and age is not a factor in determining the cost. However, if coverage is optional, eligible members must enroll within a specified time or they may have to prove good health at a later time.
Each group member has the same coverage as all other members of the group, although some plans offer several options. Under most group plans, other family members can be added at higher premium rates.
Under group policies, protection usually ends when the insured leaves that job or organization. Some group policies will allow a person who leaves to convert to an individual policy without having to show evidence of insurability, but premiums on the converted policy are often much higher than the group rates, and age and physical condition are important factors in determining cost.
In spite of higher rates, there are certain advantages to individual policies: policies can be selected to meet particular individual or family needs; coverage remains in force if the insured changes jobs or leaves the sponsoring organization; other family members can also be covered for additional premiums.
Basic Types of Policies
1. Hospital Expense Insurance covers the cost of basic hospital care. Included in coverage are room and board, routine nursing care, laboratory tests, x-rays, use of operating room, intensive care, anesthesia, drugs, medication, and ambulance service. Some policies pay a specific amount per day, which may or may not cover the actual charges. Other policies cover the full charges for a room – usually a semiprivate room. You might be required to pay a specific amount (a deductible) before the insurance will pay any of the costs. Some policies require you to pay a certain percentage of all costs (coinsurance), sometimes up to a specific amount. Outpatient hospital services are also covered by some policies.
2. Surgical Expense Insurance covers surgeons’ fees, either up to a set limit spelled out in the contract, or the full amount of the surgeon’s usual fee. Physicians may choose to accept the amount covered by insurance, provided the insurance is paid to the physician instead of to you. This is known as “accepting assignment.” In such cases, the physician cannot bill you for any difference between the physician’s fee and the amount paid by the insurance company. If the physician does not accept assignment, you must pay the deductible and coinsurance portion of the bill and any other amount not covered by insurance.
3. Medical Insurance provides for payment of physicians’ services other than surgery. Some plans also cover some diagnostic and laboratory tests. Maternity care, psychiatric treatment, and extended care are covered in some policies but not in all. Medical expenses may be covered in full, or the policy may specify a maximum amount that will be paid.
4. Basic Health Insurance usually combines the hospital, surgical and medical plans discussed above. Benefits and limitations vary widely.
5. Major Medical Insurance (sometimes called catastrophe coverage) is designed to cover expenses that result from serious injury or prolonged illness. Benefits are greater than those in the basic protection plan. Included, in addition to those in the basic plan, are special nursing care, physical therapy, prescription drugs, etc. In general, major medical covers all care and treatment prescribed by a physician.
