Skip Navigation Links

Frequently Asked Questions: Health Insurance


What is Individual Health Insurance?
What is Group Health Insurance?
What is a PPO?
What is an HMO?
What is a POS?
What is an Indemnity Plan?
What is an HSA?
What is an HRA?
What is a Premium?
What is a Deductible?
What is Coinsurance?
What is a Copayment (aka Co-Pay)?
What is Out Of Pocket Maximum (OOP MAX)?
What is a Pre-Existing Condition?
What is MCC (Minimum Creditable Coverage)?
What is COBRA?


What is Individual Health Insurance?

Individual health insurance is a policy that provides coverage to a single person, or a family.

Individual health insurance can provide the same coverage offered under a group plan. Plus, an individual plan offers greater flexibility, and allows you to purchase a benefit design that best meets your own individual needs.


What is Group Health Insurance?

Group health insurance is a medical plan that is sponsored by an employer, and is purchased on behalf of employees.

Typically, employers will pay a portion of the premium and employees pay the remainder through payroll deduction. Group medical insurance doesn’t always translate into a discount or bulk rate, particularly if the ‘group’ is less than 5 people.


What is a PPO?

Defined as a Preferred Provider Organization, a PPO is a network of doctors and hospitals that have agreed to provide discounted services to an insurance company. Those insured are not allowed to receive care outside of the network doctors and hospitals with a lesser benefit.


What is an HMO?

Defined as a Health Maintenance Organization, an HMO combines an insurance company with medical care providers. Of all the health care plans available, an HMO is the most restrictive. With an HMO the insured must choose a Primary Care Physician (PCP), and must be seen by the PCP before going to a specialist. Also, unless pre-authorized by the HMO, there is no coverage for going to a provider outside of the HMO network.


What is a POS?

Defined as a Point of Service Plan, a POS is a hybrid insurance plan. A POS is less restrictive than an HMO, but more restrictive than a PPO—it may or may not require a PCP and may or may not allow out of network benefits.


What is an Indemnity Plan?

An indemnity plan is the least restrictive health plan. It allows you to see any provider/doctor/hospital, in or out of network. It is also the most expensive health plan, and thereby not a very popular choice for most.


What is an HSA?

HSA stands for Health Savings Account, which is a tax sheltered account used to pay medical expenses now and in the future. In order to open this account you must have an HSA compatible health insurance plan. These plans are regulated by the state and federal government and must have minimum and maximum deduction amounts.


What is an HRA?

HRA stands for Health Reimbursement Arrangement, which is an employer-sponsored arrangement. Unlike an HSA, this is not an account that funds are paid into, but rather an arrangement between the employer and employee. The HRA is set up to fund a portion or all of an employee’s deductible, out of pocket, co-pay, etc. By the employer taking a plan with a higher deductible or out of pocket these premiums are generally less, thereby freeing up money to help the employee fund this extra out of pocket.


What is a Premium?

The amount paid to an insurance company for health insurance coverage. This can be split between employers and employees.


What is a Deductible?

The amount that must be paid out of pocket before the insurance coverage will start paying benefits.


What is Coinsurance?

The percentage of covered expenses shared by the insurance company and the insured party after the deductible has been paid. If you have an 80/20 coinsurance that means the insurance company pays 80% and you pay 20%.


What is a Copayment (aka Co-Pay)?

Simply stated, it is a fee you pay to access medical care without having to first satisfy your deductible. Co-Pays are optional benefits to your health insurance policy for things like office visits and prescriptions.


What is Out Of Pocket Maximum (OOP MAX)?

This is the maximum amount per calendar year that you pay for covered charges. Once you have reached this OOP MAX, the insurance company will pay the remaining covered charges at 100%.


What is a Pre-Existing Condition?

The legal definition will vary by state, but generally speaking these are medical conditions that a person has been treated for, is receiving treatment for, or that a prudent person would seek treatment for, during a specified period of time immediately preceding the purchase of health insurance.


What is MCC (Minimum Creditable Coverage)?

It's the "floor" of benefits that adult tax filers need, to be considered insured and avoid tax penalties in Massachusetts. Starting on January 1, 2009, specific benefits will be required under MCC.

Massachusetts-licensed health insurance companies must put an MCC-compliance notice on their plans to indicate if it does or does not meet MCC.

For more information, visit mahealthconnector.org


What is COBRA?

COBRA (The Consolidated Omnibus Budget Reconciliation Act of 1986) requires continuation coverage to be offered to covered employees, their spouses, their former spouses, and their dependent children when group health coverage would otherwise be lost due to certain specific events. Those events include the death of a covered employee, termination, or reduction in the hours of a covered employee’s employment for reasons other than gross misconduct, divorce or legal separation from a covered employee, a covered employee’s becoming entitled to Medicare, and a child’s loss of dependent status (and therefore coverage) under the plan.

For more information visit http://www.dol.gov/ebsa/COBRA.html


   
      A National Organization for Small Business | Worcester, MA | Toll-Free 800-343-0939 | info@sbsb.com