Types of Health Coverage
Understanding the different types of health insurance coverage helps match clients with appropriate plans for their needs.
Individual Health Insurance
Individual health insurance is purchased by individuals or families directly from an insurer:
Characteristics
| Feature | Description |
|---|---|
| Underwriting | Guaranteed issue under ACA marketplace plans |
| Enrollment | Open enrollment period or qualifying events |
| Premium payment | Individual pays full premium |
| Tax credits | Available based on income through marketplace |
| Portability | Belongs to individual, not tied to employment |
Where to Purchase
| Source | Features |
|---|---|
| Health Insurance Marketplace | ACA-compliant, subsidies available |
| Direct from insurer | May or may not be ACA-compliant |
| Insurance broker | Assistance with plan selection |
| Private exchange | Similar to marketplace but private |
Individual Plan Considerations
- Medical underwriting doesn't apply to ACA plans
- Short-term plans may require underwriting
- Prescription coverage varies by plan
- Network restrictions may limit provider choice
Group Health Insurance
Group health insurance is provided through an employer or organization:
Employer-Sponsored Coverage
| Feature | Description |
|---|---|
| Eligibility | Full-time employees (30+ hours under ACA) |
| Premium sharing | Employer typically pays 50-80% |
| Tax treatment | Employer portion excluded from employee income |
| Underwriting | Generally guaranteed issue for employees |
| ERISA protection | Federal law protects plan participants |
Types of Employer Plans
| Plan Size | Characteristics |
|---|---|
| Small group (2-50 employees) | Community-rated premiums, ACA protections |
| Large group (51+ employees) | More flexibility in plan design |
| Self-funded | Employer assumes financial risk |
| Fully insured | Insurance company assumes risk |
Employer Plan Funding Types
| Type | Risk Bearer | Regulation |
|---|---|---|
| Fully insured | Insurance company | State insurance laws |
| Self-funded (self-insured) | Employer | ERISA (federal) |
| Level-funded | Shared (with stop-loss) | Varies |
COBRA Continuation Coverage
COBRA allows employees to continue group coverage after qualifying events:
| Requirement | Details |
|---|---|
| Employer size | 20+ employees |
| Coverage period | 18 months (36 for certain events) |
| Premium | Up to 102% of full premium |
| Qualifying events | Job loss, reduced hours, divorce, death |
Short-Term Health Insurance
Short-term health insurance provides temporary coverage:
Characteristics
| Feature | Short-Term Plan |
|---|---|
| Duration | Up to 364 days (36 months in some states) |
| Renewability | Not guaranteed |
| Pre-existing conditions | May be excluded |
| Essential health benefits | Not required |
| ACA compliance | No |
| Premium | Generally lower |
When Short-Term May Be Appropriate
- Between jobs and waiting for new coverage
- Missed open enrollment period
- Need temporary gap coverage
- Young, healthy individuals seeking lower premiums
Short-Term Limitations
- Pre-existing condition exclusions
- Limited benefits
- No maternity coverage typically
- No mental health parity requirements
- Doesn't satisfy ACA individual coverage requirements
Supplemental Health Insurance
Supplemental plans provide additional coverage beyond major medical:
Hospital Indemnity Insurance
| Feature | Details |
|---|---|
| Benefit type | Fixed daily/weekly amount for hospitalization |
| Use of funds | Any purpose (not restricted) |
| Coordination | Pays regardless of other insurance |
| Common benefits | $100-$500 per day hospitalized |
Critical Illness Insurance
| Feature | Details |
|---|---|
| Benefit type | Lump sum upon diagnosis |
| Covered conditions | Cancer, heart attack, stroke, organ transplant |
| Benefit amount | $10,000 - $100,000+ |
| Use of funds | Any purpose |
Accident Insurance
| Feature | Details |
|---|---|
| Coverage | Injuries from accidents only |
| Benefits | Specific amounts for specific injuries |
| Common coverage | Fractures, dislocations, ER visits, death |
| Exclusions | Illness, pre-existing conditions |
Cancer Insurance
| Feature | Details |
|---|---|
| Coverage | Cancer diagnosis and treatment only |
| Benefits | Lump sum and/or expense reimbursement |
| Limitations | Usually has waiting period for new policies |
Dental Insurance
Types of Dental Plans
| Type | Characteristics |
|---|---|
| DHMO | Network dentists, copays, no deductibles |
| DPPO | Network preferred, out-of-network available |
| Indemnity | Any dentist, reimbursement-based |
| Discount plan | Not insurance; reduced fees from network |
Typical Dental Coverage Structure
| Category | Coverage | Annual Max |
|---|---|---|
| Preventive | 100% | |
| Basic (fillings) | 80% | $1,000 - $2,000 |
| Major (crowns) | 50% | |
| Orthodontia | 50% | Separate lifetime max |
Vision Insurance
Vision Coverage Components
| Benefit | Typical Coverage |
|---|---|
| Eye exam | Once per year, copay |
| Lenses | Allowance or copay |
| Frames | Allowance (e.g., $150) |
| Contacts | Allowance in lieu of glasses |
| LASIK | Discount (not full coverage) |
Medicare and Medicare Supplement
Medicare Parts
| Part | Coverage |
|---|---|
| Part A | Hospital insurance |
| Part B | Medical insurance |
| Part C | Medicare Advantage (private plans) |
| Part D | Prescription drug coverage |
Medicare Supplement (Medigap)
- Fills gaps in Original Medicare (Parts A & B)
- Standardized plans (A, B, C, D, F, G, K, L, M, N)
- Sold by private insurers
- Must have Medicare Part A and B
- Plan F no longer available to new Medicare beneficiaries (after 2020)
Medicaid
| Feature | Details |
|---|---|
| Funding | Federal and state |
| Eligibility | Based on income (varies by state) |
| Coverage | Comprehensive (varies by state) |
| Cost to beneficiaries | Little to none |
| Expansion states | Cover adults up to 138% FPL |
Long-Term Care Insurance
Covers services not typically covered by health insurance:
| Coverage | Services |
|---|---|
| Nursing home | Skilled nursing facilities |
| Assisted living | Residential care facilities |
| Home care | In-home health aides, skilled nursing |
| Adult day care | Day programs |
LTC Benefit Triggers
Benefits typically begin when the insured:
- Cannot perform 2 of 6 Activities of Daily Living (ADLs), OR
- Has severe cognitive impairment
ADLs: Bathing, dressing, toileting, transferring, continence, eating
Test Your Knowledge
COBRA continuation coverage allows former employees to maintain group health coverage for how long after a qualifying event like job loss?
A
B
C
D
Test Your Knowledge
Which type of supplemental insurance provides a lump sum payment upon diagnosis of a covered serious illness?
A
B
C
D
Test Your Knowledge
What is a key difference between a self-funded (self-insured) employer health plan and a fully insured plan?
A
B
C
D