​Health Plans

Types of Plans

Indemnity plan

  • ​Reimburses health care providers for the specific care/services received by plan participants.

​Health maintenance organization (HMO)

  • ​Delivers comprehensive health services for a fixed or prepaid fee
  • Restricts which health care providers can be used; often requires participant to select a primary care physician to act as a gatekeeper
  • Emphasizes preventive care

​Preferred provider organization (PPO)

  • ​Discounts services for plan participants who choose to receive care from preferred health care providers in a network

​Point of service (POS) plan

  • ​Blends features of HMO and PPO plans

​​Financing and Funding

Income must equal or exceed the cost of benefits and administration.

  • Income
  • Expenses
  • Reserves

Self-Funded vs Fully-Insured

​Self-funded plans

Contributions and investment earnings are used to directly finance health benefits for participants. Plan sponsor often buys stop-loss insurance to provide financial protection if claims exceed a specified dollar amount.

Fully-insured plans

Premiums are paid to an insurance carrier that pays participant health care claims and administrative costs.

Key Legislation

​Health Insurance Portability and Accountability Act of 1996 (HIPAA)

  • ​Established standards to protect privacy and security of an individual's health information

​Patient Protection and Affordable Care Act of 2010 (ACA)

  • ​Required larger employers to offer affordable, minimum value health plans to workers or pay penalties
  • Mandated various health plan design provisions
  • Mandated individuals to get health insurance; created public health insurance exchanges/marketplaces for those who do not have access to health care coverage elsewhere; offered subsidies/tax credits to those who cannot afford to buy coverage on the exchanges