Q: What are the various ways that individuals receive health insurance protection?

A: Besides participating in group insurance plans, individuals may also be covered under federal and state government-sponsored programs such as Medicare and Medicaid, service-type plans such as Blue Cross/Blue Shield or so-called alternative health care systems such as health maintenance organizations (HMOs) and preferred provider organizations (PPOs). Insurance may also be purchased privately on an individual basis, or through mass purchasing groups such as credit unions and professional or trade associations.

Q: What are the advantages of group insurance over individual insurance?

A: For an employer that intends to provide insurance protection to its employees, the group approach ensures that all employees, regardless of health, can be covered. Those with known health problems, who might otherwise be unable to obtain individual insurance, can be covered automatically upon employment without evidence of insurability. Although some limits may be imposed on new hires for certain conditions that predate their enrollment in the plan, most employees can receive coverage as soon as they are eligible.

Group insurance offers a lower cost per unit of protection than individual insurance, because the economies of scale resulting from selling, installing and servicing one plan covering many individuals. In addition, group plans are typically more flexible and tend to provide more liberal benefits than individual coverage

Q: What types of group protection do most employers provide?

A: Although there are many variations of each, the four major types of insurance coverage provided by employers to their employees are life, accidental death and dismemberment (A D & D), disability and health or medical. Some employers also provide additional coverages, including group legal, travel accident and vision and dental care.

Q: How can a labor union provide group insurance?

A: A labor union can provide group insurance for its members under a policy issued to the union. The union is the policyholder, just as the trust is the policyholder under a MET. A union may purchase a group policy for a large number of members who are employed by the same company, or for union members working for different companies. Group insurance purchased through a union is particularly advantageous in industries such as construction, where union members may work for many employers during a year.

Despite the opportunity for labor unions to purchase group insurance, few group contracts are issued to unions today. Organized labor more often obtains insurance benefits for its members through collective bargaining with employers. As a result, union members are usually covered under group insurance plans sponsored by one or more employers.

Q: What is a base plus plan?

A: A base plus plan is a two-part health insurance plan. Basic medical coverage -- for such expenses as hospitalization, surgery, physician's visits, diagnostic laboratory tests and x-rays -- is provided under the first part. There may be limits on these expenses, such as a limited number of hospital days and a surgical schedule, but no deductible or coinsurance applies to the covered expenses. The employee is reimbursed starting with the first dollar of expenses.

The second, or major medical, part of the plan covers other health expenses. The coverage is broad, with fewer limits; however, a deductible is required before the employee is reimbursed for expenses.

Q: What are the advantages to a base plus plan?

A: From the employee's point of view, base plus plans appear to provide more generous benefits because of the lack of deductibles and coinsurance in the basic medical part.

Q: What is a comprehensive plan and it's advantages?

A: A comprehensive plan provides coverage for most medical services using one reimbursement formula. In a pure comprehensive plan, a deductible must be met before reimbursement for any covered expenses begins, and coinsurance applies to all covered expenses until the maximum employee out-of-pocket expense limit is reached. Additional covered expenses are paid in full.

Because employees share from the beginning in the cost of their medical expenses when they are incurred, a comprehensive plan encourages them to use more cost-effective health care. The patient is more likely to be cost-conscious and to seek out more cost-effective health care services and providers.

Q: What kinds of hospital outpatient expenses are covered?

A: Three kinds of care are covered: emergency treatment, surgery and services rendered in the outpatient lab or x-ray department.

Q: What types of services are generally covered by a group health insurance plan?

A: Base plus and comprehensive plans vary by insurer, but generally cover the same kinds of services. These include:

• Professional services of doctors of medicine and osteopathy and other recognized medical practitioners
• Hospital charges for semiprivate room and board and other necessary services and supplies
• Surgical charges
• Services of registered nurses and, in some cases, licensed practical nurses
• Home health care
• Physiotherapy
• Anesthetics and their administration
• X-rays and other diagnostic laboratory procedures
• X-ray or radium treatment
• Oxygen and other gases and their administration
• Blood transfusions, including the cost of bloom when charged
• Drugs and medicines requiring a prescription
• Specified ambulance services
• Rental of durable mechanical equipment required for therapeutic use
• Artificial limbs and other prosthetic appliances, except replacement of such appliances
• Casts, splints, trusses, braces and crutches
• Rental of a wheelchair or hospital-type bed

Q: What is a deductible?

A: It is a specific dollar amount that an individual must pay (or "satisfy") before reimbursement for expenses begins. The higher the deductible, the lower the cost of the health insurance plan.

Q: For insured employees with dependent coverage, does the deductible for each person have to be satisfied before reimbursement begins?

A: Each person covered under a group health insurance plan must meet a deductible before expenses will be covered. However, plans usually include some type of family deductible in order to limit a family's exposure for health care expenses.

The family deductible is usually some multiple of the individual deductible, generally two or three. For the family deductible to be satisfied, the combined expenses of covered family members are accumulated. Some plans require, however, that at least one family member satisfy the full individual deductible before the family deductible can be met.

Q: What is coinsurance?

A: Coinsurance is a feature found in most group health insurance plans. It sets forth the percentage of covered expenses that the employees and the health insurance plan will pay. The most common coinsurance level is one in which the employee pays 20 percent of the expenses and the insurer pays 80 percent. This is called 80 percent coinsurance.

Q: What is a covered expense and are there limits?

A: A covered expense is an eligible expense under a group health insurance plan. A covered expense is an expense incurred by a covered individual that will be reimbursed in whole or in part under the group health insurance plan. For example, under most health insurance plans, doctors' visits are a covered expense. That is, a doctor's fee up to the amount provided by the plan will be reimbursed by the insurer

Just because an expense is covered does not mean that the coverage is unlimited. Both base plus and comprehensive plans have limits on the expenses for which they will reimburse. In addition, some form of deductible and coinsurance is often applicable.

Insurers limit covered expenses in a variety of ways. One way is to cap allowable payments for a certain procedure or service. A common example of this type of limit would be a surgical schedule. Insurers also restrict covered expenses by limiting the number of visits or days for home health care or skilled nursing care, or by establishing a reasonable and customary charge.