| These are some of the follow up questions | | | | internal employee benefits expertise to do |
| that people have regarding health insurance | | | | so. For this reason, many group insurance |
| for the average consumer, it is easy to | | | | purchasers do not deal directly with |
| become baffled by the process; but, learning | | | | insurance company underwriters or group |
| about the process, educating yourself, gives | | | | insurance representatives, preferring instead |
| you much more purchasing power. | | | | to deal with an intermediary. |
| | | | |
| 1. What is an HMO? | | | | Smaller employers need a qualified |
| | | | professional to act as intermediary because |
| A health maintenance organization HMO is an | | | | they lack the resources and expertise to |
| organization that provides comprehensive | | | | handle their group insurance needs. An |
| health care to a voluntarily enrolled | | | | intermediary can help them define their needs |
| population at a predetermined price. Members | | | | and objectives, design a plan to meet those |
| pay fixed, periodic fees directly to the HMO | | | | criteria, select the proper purchasing and |
| and in return receive health care services as | | | | funding vehicle, obtain competitive quotes |
| often as needed. | | | | from insurers and service the plan. |
| | | | |
| 2. What is a PPO? | | | | 4. What is a risk? |
| | | | |
| A preferred provider organization PPO is an | | | | The risk an insurance company assumes when it |
| association that contracts with a group of | | | | agrees to cover a particular group is the |
| doctors, dentists, hospitals or other health | | | | possibility that claims will exceed the |
| care service providers to provide care at | | | | expected level. It is the chance of financial |
| prearranged rates or discounts. | | | | loss inherent in the group. Insurance |
| | | | companies use it to determine whether they |
| 3. Can an employer work directly with an | | | | will underwrite an insurance policy on a |
| insurance company? | | | | particular group. |
| | | | |
| It is possible for an employer to deal | | | | The spread of risk is necessary not only |
| directly with an insurer through a group | | | | because of the expected variations in a |
| sales representative to purchase group | | | | populations health but also because some |
| insurance. Premium rates and underwriting | | | | policy holders particularly very small groups |
| practices vary considerably from one insurer | | | | purchase group insurance to cover certain |
| to another, however. In addition, the | | | | individuals with known health problems. This |
| coverage provided is rarely identical. This | | | | is a more costly way to obtain coverage for |
| means that comparison shopping is often | | | | those high risk individuals, but often the |
| beyond the capability of all but the most | | | | only way possible, given the evidence of |
| sophisticated purchases, for example, the | | | | insurability requirement for individual |
| very large company that has sufficient | | | | policies. |