As an informed consumer, understanding the building blocks of health insurance can help you avoid confusing, even misleading, lingo, which will ultimately end up saving you money. Regardless of the particulars of any plan, some concepts are applicable to all of them.
Currently, insurance plans fall into two categories: group coverage and individual coverage. Group plans are provided by an employer, government agency or worker’s union while individual plans are negotiated between an individual policyholder and their insurer. Generally, group coverage is less expensive because the provider pays most of the premium for the user.
If a group insurance plan is available to you, it will probably provide more comprehensive coverage than an individual plan. This is because group plans pool policies within an organization and ultimately reduce costs for insurers. Under these plans, you’re more likely to be covered for maternity care, well-baby services, preventive care, vision and dental care.
Keep in mind that the way your group plan is set up can make a difference. Group plans are either self-funded or fully insured. What this boils down to is who makes decisions regarding your coverage.
Self-Funded vs. Fully Insured Group Plans