Types of Health Insurance & How Health Insurance Works
• Indemnity Plans (Traditional Fee-for-Service Insurance)
• Preferred Provider Organizations (PPOs)
• Health Maintenance Organizations (HMOs or Managed Care)
• Self-Insured Health Plans (Single Employer Self-Insured Plans)
• Multiple Employer Welfare Arrangements (MEWAs)
State Sponsored or Administered Health Coverage
• Major Risk Medical Insurance Program (MRMIP)
• Healthy Families Program
• Access for Infants and Mothers Program (AIM)
How Is Health InsuranceMarketed in California?
Health insurance coverage is marketed to consumers through individual policies or group policies. Individual health insurance coverage should be pursued when your employer does not offer health insurance as a benefit of employment, when you cannot be named as the dependent on another person's insurance policy, or when you are not a member of a professional or trade association that offers group coverage. Many consumers are self-employed, contract employees, or work for small employers and do not have access to a group policy secured by an employer. Individual coverage can be obtained by contacting a licensed health insurance agent or broker. You will need to complete an application that includes your medical history, which will be reviewed by a medical underwriter at the health insurance company. If you meet the underwriting qualifications and are issued a policy, the company may not cover preexisting conditions up to one year after the effective date of the policy. However, if you have been previously insured under an individual or group policy without a break in coverage of more than 62 days, your new insurance company must apply the prior creditable coverage (refer to the "Health Insurance Terms" on page 15) towards any waiting period for preexisting conditions. Individual health insurance companies may reject your application based on your medical history.
Group health insurance offers certain advantages over individual health insurance policies. The waiting period for preexisting conditions is six months, not one year as with individual policies. Also, if you have been previously insured under a group policy without a break in coverage of more than 180 days, your new insurance company must apply the prior creditable coverage toward the six-month waiting period for preexisting conditions. Large employer group health insurance (more than 50 employees) and association group health insurance, like individual health insurance, is subject to medical underwriting. You can be denied coverage based on your medical history. Medical underwriting rules for small group health insurance (2-50 employees) differs from large group and individual health insurance policies. Regardless of any preexisting condition, you must be offered coverage under a small group policy on a guaranteed issue basis. However, the small group insurance company can utilize the six-month waiting period for preexisting conditions. Of course, if you have prior creditable coverage it must be applied to decrease or eliminate the waiting period.
Important Points to Remember About Individual and Group Health Insurance Coverage:
Health insurance coverage is marketed to consumers under either individual or group policies.
Individual and large group policies are subject to medical underwriting.
Qualifying creditable coverage must be applied towards the year waiting period for preexisting conditions in individual policies and towards the six-month waiting period for preexisting conditions in group policies.
Small group policies require that coverage be offered on a guaranteed issue basis regardless of any preexisting condition.
