Many health insurance products for groups and companies will usually offer coverage based on Full Medical Underwriting (FMU) or Medical History Disregarded (MHD) contracts.
However, there are a range of alternative contract types which are starting to emerge in force across Asia, Europe and the Americas which can help your business to provide even more comprehensive protection to employees while reducing overall costs.
Full Medical Underwriting, or FMU, is the most common type of group health insurance contract.
An FMU policy will ensure that the group is fully medically underwritten. This means that the insurance company will look at the individual health risks associated with each group member and will calculate the overall premium and terms of coverage based on the aggregate risk of the entire group.
With a fully underwritten medical insurance policy the group is normally able to achieve a lower premium than with any other contact type. Partly due to the fact that an FMU policy will usually exclude pre-existing medical conditions present within the group (and consequently limit the risk of exposure to the insurer for some costly treatments), the lower premium which is generally associated with an FMU policy also comes from the more in-depth understanding the insurer develops about the group during the underwriting process.
It is important to note that FMU contracts can be either Community or Experience rated. As such, it is important to clarify the type of premium calculation being used in the specific option being considered by a group in relation to an FMU health insurance plan.
Briefly mentioned in relation to pre-existing condition coverage a Medical History Disregarded, or MHD policy will allow for the coverage of all pre-existing conditions present within the group; even if those conditions would normally be otherwise excluded from the plan.
Normally only available to groups with 5 or more members an MHD policy will usually be more expensive than an FMU contract due to the fact that all pre-existing conditions will be covered under the plan – meaning that there is a significantly higher likelihood of a claim occurring, consequently leading to the higher cost of the plan.
MHD group health insurance contracts will normally start as community rated policies, but will switch to experience rated plans with larger groups. This means that although pre-existing conditions can be covered, a larger group with an MHD policy will pay for the privilege of that coverage. This is usually only applied to groups of more than 100 individuals, but is comparable to the idea of “premium loading” which occurs in relation to individual and family health insurance products.
Less common throughout the international health insurance market are Health Insurance Trusts and Self-Insurance initiatives.
A Health Insurance Trust is an alternative to conventional corporate health insurance products (including FMU and MHD contracts). Under a corporate health insurance trust, the company pays into a trust fund for which the company’s employees are beneficiaries. When the employees of the company require medical treatment the costs of that treatment is paid for out of the money held in the trust.
There are a number of benefits for using a health insurance trust, the first of which is the fact that the company can potentially pay far less for “insurance” as it its effectively self-insuring its workers. By understanding the overall costs of healthcare for workers the company can have greater control on the overall costs of the “insurance” without having to worry about the impact of the insurance company’s profit margin.
Additionally, as the trust is created and maintained by a single company the benefits (that is to say the type of treatments covered for reimbursement) can potentially be far more extensive than would be available under standard group health insurance options.
However, despite the obvious benefits to a corporate health insurance trust this type of insurance scheme can be incredibly difficult to set-up and will require a large amount of initial investment as well as constant administration. The company operating the trust will be acting as the insurer and will have all the administrative difficulties associated with the normal operations of an insurance company including: claims payment, network creations, funding, and compliance. As such, a health insurance trust is normally only suitable for extremely large Multinational Corporations who will usually be able to access significant premium discounts on FMU or MHD contracts due to their size.
While trusts and self-insurance schemes for companies and groups do exist, these options are still very much in their infancy and carry uncertainty as to their efficacy within the market.
If you would like to learn more about the different contracts available under group health insurance plans from CCW, or if you would like to arrange a free no-risk no-obligation with a CCW Global advisor, please Contact Us Today.
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