Understanding Paid Health Insurance Benefits

Paid health insurance benefits in the United States are provided through private health care companies. These companies offer policies that are categorized by payment premiums, coverage limitations, and policy benefits. These policies may be provided and underwritten through provisions established by the insurance company.

Underwritten policies may restrict certain applicants or increase rates due to certain medical procedures. Overall, health insurance policies are intended to subsidize the cost of hospital visits, outpatient clinics, The majority of paid health insurance policies are distributed through employers that have contracts with health care providers.

This accounts for approximately 60 percent of the insured populace of the United States. Additionally the rates of paid health insurance policies continue to rise because of new treatments, more people seeking insurance, and other factors that health insurance companies view as potential risks.

Background

Health insurance policies were first drafted in the late 1920s. From these early beginnings, many private health insurance companies have been established and provide a variety of policies for United States citizens. Privatized health insurance began with the dawn of health insurance companies in the 1930s.

The popularity of health insurance led to the drafting of individual policies and group policies. In regard to senior citizens (citizens aged 65 or older), specialized policies exist to cover the cost of prescription medications and treatments at rates that are affordable for the retired.

Additionally, the United States government has created legislation to ensure that more American citizens can receive health coverage. Other legislation has been established to protect medical information and regulate how that information is tracked and transmitted.

Individual Health Insurance Group Health Plans

Group health plans, policies which cover a 3 or more people, are the most widely subscribed from of health insurance in the United States. Group policies are often provided through employers, fraternal organizations and other groups. These policies provide health coverage at a certain premium to be shared by those it covers. Through employers, employees pay a certain percentage while the employer incurs the majority of the cost. The primary benefit of group plans are a "guaranteed issue" policy.

This means that, for example, an employee will receive health coverage simply on the basis by being employed by a company that gives health benefits to its workers. Health insurance are often unable to underwrite these policies, nor can they refuse a group policy member due to a pre-existing medical condition.

Tax exemptions are also available to organizations with group health plans to help ease the financial weight of having a health care plan.

HMO Plans

Health maintenance organizations, or HMOs, offer health coverage plans through a network of hospitals and physicians. The HMO designates primary care facilities and doctors for its beneficiaries to receive medical care given their location and policy.

This is done through contracts with hospitals and/or private practices that agree to provide care for HMO beneficiaries. Most HMOs operate through a network of facilities. These facilities, if developed by the HMO, will only accept HMO beneficiaries. However, if private practices are contracted, the practice admits HMO policy holders in addition to its regular patients.

HMOs are regulated on state and federal levels through various mandates and legislation to standardize policies and operations.

Other Managed Care

Managed care, or care provided through a managed care organization (MCO), is offered through plans that specify techniques and practices to be used by health care providers. Managed care was ushered in by the Nixon administration to help reduce health care costs and increase the quality of care received. MCOs function by establishing networks of physicians and medical centers that will follow the techniques and initiatives of care for MCO beneficiaries. Examples of MCOs include HMOs, PPOs and IPAs.

HMOs are health maintenance organizations that contract medical facilities and practices to provide care for their beneficiaries. PPOs are preferred provider organizations that will cover the cost of medical treatment after the beneficiary has paid a deductible against the cost of care. This is the most widely used form of managed care in the United States. IPAs are independent practice associations which provide care for both managed care beneficiaries and private patients. IPAs establish contracts through MCOs and private practices.

Managed care is often debated due to the level of care provided and the rates that beneficiaries and medical practices incur by participating in these programs.

Supplemental Health Insurance

Other forms of supplemental health coverage are plans that cover specific illnesses or disabilities, prescription medications, and accidental death or dismemberment. These policies are specific to the beneficiary and their needs, but they must be available through their chosen insurance provider. The government funded Consolidated Omnibus Budget Reconciliation Act

The Consolidated Omnibus Budget Reconciliation Act of 1985, or COBRA as it is commonly known, ensures that United States citizens that leave employment may still receive health coverage through an employer. This legislation, along with other government regulations, mandates that employers amend their group health plans to extend coverage beyond the period of termination.

Despite amended health plans, COBRA beneficiaries must be eligible through an evaluation of the events that caused the termination of employment. Non-voluntary termination is the most common reason for an applicant seeking COBRA benefits.

COBRA benefits are not intended to be permanent. Most plans only last for approximately a year as beneficiaries are expected to find new employment and/or a new insurance policy. COBRA beneficiaries must pay insurance premiums just as with any other private insurance policy to receive coverage. In 2009, the Obama administration passed the American Recovery and Reinvestment Act (ARRA) to help subsidize the cost of coverage for COBRA beneficiaries. The effects of this act are currently scheduled to end in June of 2010.

Health Insurance Portability and Accountability Act

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) was created to protect privileged medical information and safeguard its transmission. HIPAA is responsible for closing gaps in insurance coverage and developing new methods of standardizing health care plans and how they are identified.

This is through Titles I and II of HIPAA legislation. Title I regulates primary health plans to reduce limitations that can be placed on insurance beneficiaries through policy underwriting. Title I also prevents policy holders from being affected by hidden exclusions in insurance policies.

Title II is responsible to establishing safeguards for medical information and regulating the electronic systems by which that information is saved and transmitted. Title II also created fines and penalties for those that commit fraud or abuse medical information. Investigators of health fraud must abide by regulations listed in Title II of HIPAA.

NEXT: What Are Other Managed Care Plans