Types of Plans
- 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.
Self-Funded vs Fully-Insured
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.
Premiums are paid to an insurance carrier that pays participant health care claims and administrative costs.
Health Insurance Portability and Accountability Act of 1996 (HIPAA)
- Established standards to protect privacy and security of an individual's health information
- 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