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SolveYourProblem
eLearning Series:
Health Insurance: Your Questions Answered
What does everything mean & how
to choose the right policy
( 18 pages )
HEALTH
INSURANCE PROVIDERS
In this chapter
we will take a look at all the different “types” of insurers and
how they are structured. The following are the different types of
insurers:
- Traditional
Insurers
- Domestic, Foreign
and Alien Companies
- Blue Cross/Blue
Shield
- Health Maintenance
Organizations (HMO)
- Preferred Provider
Organizations (PPO)
Traditional
Insurers
This type of company
is one that has evolved over time into a ‘branded” image
in the eyes of the public. This is the opposite of what we
have come to know in today’s world as Health Maintenance
(HMO) and Preferred Provider Organizations (PPO).
A traditional
insurer selling health coverage may specialize in just health
coverage. The types of insurance they sell may be referred
to as accident and health (A&H) or accident and sickness
(A&S) companies. Most states require a separate license
to write life, health and property casualty.
Stock
and Mutual. Not only can an insurance company
be categorized by the type of insurance, they can also
be considered in terms of its ownership as either a stock
or mutual company.
At the time of
organization, a stock company sells stock to raise the money
necessary to operate a business. The stockholders are not
necessarily insured by the company nor do policyholders necessarily
own stock in the company. It is in business solely for the
purpose of selling insurance to policyholders.
On the other hand,
with a mutual company the policyholders are also owners of
the company and as such, can vote to elect the company management.
Any monies beyond the operating costs of the company may
be returned to the policyholders as dividends or reductions
in future premiums.
Consumer
Cooperatives. There are two different types of
cooperatives. They are consumer cooperatives and producer
cooperatives. Producer cooperatives include companies like
Blue Cross/Blue shield and some Health Maintenance Organizations
which we will discuss further on.
Additionally,
there are two types of consumer cooperatives. One is the
mutual insurance model discussed previously and the other
less common and unincorporated type is a reciprocal company.
A reciprocal company
is based on the model of give and take. Members agree to
share insurance responsibilities among all members. All members
insure one another and share in the losses and no member
can buy insurance without committing to providing insurance
in return. This type of consumer cooperative is managed by
an attorney-in-fact who handles all matters of business for
the cooperative.
Participating
and Non-participating Policies. These terms indicate
that the policyholder of a traditional type of insurance,
either does or does not participate in, or receive, a share
of any surplus that results from an insurers business operations.
These terms are also known as par and non-par.
The surplus from
which participating policyholders might receive a return
are excess reserves for claims, interest on investments and
savings on expenses. This represents amounts not ear marked
for any particular purpose and are therefore available to
participating policy owners.
 
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