Different Types of Wisconsin Health Insurance Plans

Types of Health Plans

Health insurance coverage is generally available through employer-sponsored, fully-insured group health benefit plans; employer-sponsored, self-insured group plans; nonemployer-sponsored group health plans; and individual health benefit plans. Employer-sponsored, fully-insured group health benefit plans are health insurance plans in which an employer contracts with an insurance company to provide insurance benefits to its employees. The employer pays or contributes to the cost of the insurance, and the insurance company assumes all of the risk involved in paying claims. Fully-insured group health benefit plans are governed by state insurance laws and are guaranteed renewable. This means that the employer can continue to renew the plan each year as long as premiums continue to be paid in a timely manner, the employer does not perform an act that constitutes fraud, and the employer continues to meet contribution and group participation requirements. Coverage can also be terminated if the insurer discontinues offering in the state the particular type of group health benefit plan that was issued to the employer; the insurer discontinues offering all group health benefit plans in the state; the employer ceases to be a member of the association through which the coverage may have been obtained; or, in the case of a network plan, there is no longer an enrollee under the plan who lives or works in the service area in which the insurer is authorized to do business.

Employer-sponsored, self-insured group health plans, often referred to as self-funded plans, are health plans where the employer assumes all the risk of providing health benefits, and pays all health claims out of funds set aside for that purpose. Self- insured plans are sometimes confused with fully-insured plans because employers often contract with an insurance company or a third-party administrator to process claims. The federal Employee Retirement Income Security Act of 1974 (ERISA) assigns jurisdiction of most employers' self-insured plans to the U.S. Department of Labor. Although state insurance laws do not apply to most employers' self-insured plans, the plans are subject to the requirements of HIPAA.

Individual health benefit plans and nonemployer-sponsored, group health plans provide coverage to persons on an individually underwritten basis. Nonemployer-sponsored, group health plan coverage is often obtained by reason of an individual's membership in an association. An insurance company can decide whether to accept or reject an individual's application for coverage based on the individual's health history. Individual health plans and nonemployer-sponsored, group health plans are governed by state insurance laws. The plans are guaranteed renewable as long as premiums continue to be paid in a timely manner, and the individual does not perform an act that constitutes fraud. Coverage can also be terminated if the insurer discontinues offering in the state the particular type of health benefit plan that was issued to the individual; the insurer discontinues offering all individual health benefit plans in the state; an individual ceases to be a member of the association through which the coverage may have been obtained; or, in the case of a network plan, the individual no longer lives or works in the service area in which the insurer is authorized to do business.