Types of Group Health Insurance

Group health insurance coverage is purchased by an employer and is offered to eligible employees of the company, and usually extended to the employees' family members. Group health insurance brings an invaluable advantage to individuals, since it has the purchasing power of a group to achieve reduced acquisition costs for the insurance company. The insurance company can then reduce their rates for each individual member. There are a variety of group health insurance plans. The main distinction between them is the mechanism used for purchasing the insurance.

Health Maintenance Organization (HMO)

• One of the better known forms of group health insurance, HMOs are a group program where the organization provides a full-range of medical services to those who participate. The insured are either assigned a group of general practitioners, or select from a directory. Those practitioners can refer patients to specialists when needed. Those who are part of an HMO are referred to as enrollees.

Preferred Provider Organization (PPO)

• The Preferred Provider Organization (PPO) is another kind of health care network of doctors, hospitals, and other health care providers that contracts with health insurance companies. PPOs are popular because they give members the freedom of choosing doctors outside a strict network. Besides the advantage of having more choices of doctors, you don't have to get a referral to see a specialist with the PPO.

Indemnity or Fee-for-Service Coverage

• Indemnity health insurance coverage allows you to go to the doctor of your choosing. You pay for services at the time of your visit. The amount that your health insurance company will pay is predetermined based upon your deductible and co-insurance amounts. You are responsible for keeping track of all of your medical expenses.

Self-Funded ERISA

• Under the Employee Retirement Income Security Act (ERISA), employers have the ability to self-fund health care benefits. With self-funding, the employer opts to pay employee health care claims directly out of company assets, rather than paying a premium to an insurance company and transferring risk. The employer usually hires an insurance company or HMO to act as a third-party administrator for the health care plan to process claims.

Point-of-Service Plans

• A point-of-service plan (POS) combines the freedom of a PPO with the lower cost of an HMO. When you enroll, you are required to choose a primary care physician to monitor your health care, and he or she must be within the health care network. The primary POS physician may then make referrals outside the network, but your health insurance company will only offer partial compensation. For medical visits within the health care network, paperwork is completed for you. But, if you decide to go outside the network, it is your responsibility to complete forms, send bills in for payment, and keep health care receipts.