what is commercial health insurance?
Private companies or non-governmental organizations issue commercial health insurance. Government-sponsored health insurance policies are generally reserved for specific groups, such as seniors, people with low incomes, people with disabilities, current military members and their families, veterans, and members of federally recognized Native American tribes . Examples of government-sponsored insurance include the Indian Health Service (IHS), Medicare, Medicaid, the State Children’s Health Insurance Program (SCHIP), TriCare, and the Veterans Health Administration Program. These government programs, funded primarily through taxes, are designed to provide health coverage without making a profit.
By contrast, most commercial insurance providers are for-profit companies, although some operate as non-profit organizations. the monthly premiums of the insured finance commercial policies. Your premiums and coverage amounts are designed to generate a profit for the insurance company. If your health care policy is not part of one of the government programs listed above, it is a commercial health insurance policy. Employer-provided group health insurance policies are commercial, as are individual policies that people can buy if they don’t receive employer or government insurance benefits.
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In addition to federal regulations, each state has its own regulations that govern the requirements of insurance companies. This means that commercial health insurance providers vary by state. some providers only work in certain states, and the policies offered by national companies tend to vary by state to meet each state’s requirements.
how does commercial health insurance work?
When you buy a business health insurance policy, you choose a plan that covers the services you need and has a monthly premium you can afford. when choosing a plan, consider the deductible. this is the amount you must pay in that calendar year before the insurance pays its share. a lower deductible is usually offset by higher monthly premiums and vice versa. check your insurance card or contact your insurance provider for the total amount of your annual deductible.
The exact services and amounts covered by commercial health insurance vary by policy, but generally, they pay a significant portion of a covered person’s medical expenses. elective procedures that are not considered medically necessary are generally not covered. Qualifying expenses include routine medical care, doctor visits, hospital stays, emergency services, behavioral and mental health, substance abuse treatment, and preventive services.
Preventive services are done regularly to prevent or find potential health problems early so they can be avoided or treated before they become more serious. commercial health insurance plans cover many preventive services at no cost to the patient. These services may include routine immunizations, screening exams, annual well-woman exams, mammograms, and counseling.
When you visit a doctor, the office checks your insurance to see what services are covered and how much to charge you. The doctor’s office then submits a claim for the services rendered to the insurance company, which reimburses them for the covered portion. if a balance remains after the insurance company has paid its share, you will be billed. Insurance will cover more of the cost if you visit a doctor who is in your insurance provider’s network. see the section below for more information on provider networks.
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types of commercial health insurance
There are many different types of commercial health insurance. it is important to understand what options are available, how they work, and the differences between each type. it is also possible to combine certain types. For example, flexible spending accounts and health savings accounts are meant to supplement other plans, covering expenses not covered by the primary policy. These are some of the most common types of commercial health insurance.
- Health Maintenance Organization: hmos requires you to choose a primary care physician (pcp) in your network. You should see this PCP for any health problem other than emergencies. the pcp may refer you to a specialist in the hmo’s network if they cannot fully treat the problem. the exception is OB/GYNs, with whom patients can make an appointment directly. hmos typically have the lowest premiums and out-of-pocket costs, but offer fewer options. if you want to see a doctor outside the network, it will not be covered. the amount you pay for the monthly premium, deductible, and copay depends on your plan.
- Preferred Provider Organization: PPOS also have a network of doctors, but offer members more freedom and flexibility. if you see an in-network doctor, your copay is lower and more services are covered. You still have some coverage if you see an out-of-network doctor, but a lower portion of the cost is covered and you pay more out of pocket. If you want to see a specialist, you do not need a referral from your PCP. As with HMOS, PPOSs charge monthly premiums, deductibles, and copays. amounts vary depending on your policy.
- Exclusive Provider Organizations: An EPO requires you to see in-network doctors, but you don’t have to see a PCP to get a referral before seeing a specialist. You do not receive any out-of-network coverage, so your choices are limited to in-network providers. EPO plans are less expensive than most HMO or PPO plans. they may be more suitable for young, healthy people who don’t expect to need a lot of medical care in the coming year. you pay monthly premiums, deductibles, and copays.
- Point of Service Plan: A pos combines elements of hmo and ppo plans. under a pos plan, you have a pcp who provides most services and can refer you to an in-network specialist if needed. many pcp services may not be subject to a deductible. As a PPO, you have the option of seeing a doctor outside of the network. You will receive some coverage, but your out-of-pocket costs will be higher. you will be charged monthly premiums, an annual deductible, and copays.
- Flexible Spending Account: Employers that offer health insurance can also add a Flexible Spending Account as an optional add-on to their health benefits package. You choose an amount to be deducted from your salary throughout the year, tax-free, in equal increments from each paycheck. You can use this money to pay for any eligible out-of-pocket medical and dental expenses you incur during the year, including deductibles, copays, over-the-counter medications, eyeglasses and other medical devices, and various health-related expenses. supplies.
- high deductible health plan: hdhps charges a higher deductible than most other health plans. the threshold is defined as an annual deductible of at least $1,350 for an individual or $2,700 for a family. monthly premiums are generally lower than a standard hmo or ppo plan. hdhps are often combined with a health savings account to make the deductible more affordable. This option is best suited for healthy people who don’t anticipate needing a lot of medical care and can afford to pay a large sum if a medical emergency arises.
- Health Savings Account: If you choose an HDHP, a Health Savings Account is a helpful addition. The account allows you to set aside money to cover your deductible, copays, and other eligible health care expenses. As with a flexible spending account, you do not pay taxes on the funds you deposit in this account. Many health insurance providers that offer HDHPs also offer Health Savings Accounts, but you can also open this type of account at most banks.
- private fee-for-service: a pffs is a type of medicare benefit plan (also known as medicare part c) that is run by a private company. You can choose a PFFS only if you’re enrolled in Medicare, which is available to people age 65 and older. a pffs allows you to go to doctors within the network and does not require a referral to see a specialist. however, physicians can choose which services will be covered on a case-by-case basis. You can see an out-of-network doctor who accepts the plan’s terms, but your out-of-pocket costs will be higher. you pay monthly medicare premiums and copays.
what is commercial prescription drug insurance?
Commercial prescription drug insurance covers a portion of the cost of drugs prescribed by a doctor and dispensed by a pharmacy. Most commercial health insurance plans include commercial prescription drug insurance as a policy segment. however, some plans that cover prescriptions only can be purchased separately if you don’t already have prescription coverage. they are most often offered by larger commercial health insurance providers.
As with health plans, the policyholder pays a monthly premium for their commercial prescription drug insurance. Most plans also have an annual deductible and a copay is charged based on the type of drug prescribed. In most cases, different drug tiers have different copay rates. insurance providers prefer generic drugs, which cost less if available. brand-name drugs generally cost more, especially if a generic version is available. specialty drugs require special handling and have their own copay.