Commercial Health Insurance: Definition, Types, And Examples

What is commercial health insurance?

Commercial health insurance is health insurance provided and managed by non-governmental organizations. This can cover the insured's medical expenses and disability income.

In 2021, 1,160 health insurers filed with the National Association of Insurance Commissioners (NAIC), a nonprofit organization that sets standards for the U.S. insurance industry and provides support to insurance regulators.

The Basics

• Non-governmental organizations provide and administer so-called commercial health insurance.
• The two most popular types of commercial health insurance plans are the Preferred Provider Organization (PPO) and the Health Maintenance Organization (HMO).
• Most commercial insurance is provided as group insurance offered by the employer.
• Although planning proposals are not a government responsibility, they are largely regulated and controlled by each state.

Understanding commercial health insurance.

Commercial health insurance policies are usually sold by public and private commercial providers. Generally, licensed agents and brokers sell plans to the public or group members; However, in most cases, customers can also buy directly from the service provider. These policies vary widely in the amount and type of specific coverage they provide.

The term "commercial" distinguishes these types of policies from insurance provided by the government or government programs such as Medicaid, Medicare, or the State Children's Health Insurance Program (SCHIP). In general, any type of health insurance that is not provided or supported by a government program can be considered a type of commercial insurance.

Most commercial health plans are structured as a Preferred Provider Organization (PPO) or a Health Maintenance Organization (HMO). The main difference between the two types of plans is that an HMO requires patients to use network providers and facilities if they want insurance to cover the costs, while a PPO allows patients to go out of network (although their out-of-pocket costs costs may be higher).

In addition, HMOs require patients to select a primary care physician who will serve as a central provider and coordinate care provided by other specialists and health care providers. A referral to primary care is often required to see a specialist.

According to the National Association of Insurance Commissioners (NAIC), the US health insurance industry will generate

$24 billion

in net revenue

in 2022

.

This is 29% more than in 2021.

Types of commercial health insurance plans.

Commercial health insurance can be classified based on renewal periods and the type of health benefits provided. Commercial policies can be sold individually or as part of a group plan and offered by public or private companies. Some health plans operate as nonprofit organizations, often as subsidiaries or regional units of a larger for-profit enterprise.

In the commercial market, health insurance is usually purchased through employers. Because employers usually cover at least part of the premiums, health insurance is often a cost-effective solution for employees. Employers can often get attractive rates and terms because they have contracts with insurers and can offer them a large number of insurance customers.

Health insurance, whether provided and/or administered by the government, is funded primarily through taxes. It often targets special groups, such as the elderly (Medicare), low-income patients (Medicaid), and former military members (Veterans Health Administration programs). Other examples of government-sponsored insurance include the Indian Health Service (IHS), the State Children's Health Insurance Program (SCHIP), and TRICARE.

Self-employed workers and small business owners can purchase health insurance, but it is often more financially beneficial for them to try to join a group plan through a professional organization or local group.

The features of a commercial insurance plan can vary widely and are determined by the company offering the plan. State regulators and legislators also determine certain aspects of what the programs must offer and how they must operate. These laws also determine how and when insurers must bill and reimburse health care providers and patients, and how much money an insurer must keep in reserve to have enough capital to pay for care.

What is the difference between commercial and private health insurance?

Technically there is no difference. Commercial health insurance is provided by private issuers, unlike public health insurance, which is provided by federal agencies. Commercial insurance can be sponsored by an employer or purchased individually. Most private insurance companies are for-profit companies, but they can also be non-profit organizations.

Is Obamacare Commercial Insurance?

Obamacare (also known as the Affordable Care Act) is a federal law that is often used to refer to individual health insurance purchased through public health exchanges or exchanges. These plans are offered by private companies, so they are technically commercial insurance, although they must meet certain federal regulations.

What are some examples of commercial health insurance?

Common types of commercial health insurance include HMO, PPO, POS (point of service) plans, HRA (health reimbursement accounts), and LTC (long-term care) plans. Medicare Advantage, Medigap, and other Medicare supplement plans are also considered commercial health insurance. The term can also be extended by general health insurance to include dental and vision plans.

Primary

commercial health insurance

is health insurance provided by private issuers, as opposed to government-sponsored health insurance provided by federal agencies. The two most popular types of commercial health insurance plans are the Preferred Provider Organization (PPO) and the Health Maintenance Organization (HMO).

Although planning proposals are not a government responsibility, they are largely regulated and controlled by each state. Most commercial insurance is provided as group insurance offered by the employer.

Health insurance fee