Commercial Plans

Companies like Humana, Prudential, Cigna and Aetna are considered commercial health insurance carriers. This means they are in the business of writing and selling health insurance plans that provide coverage for medical services, treatment and supplies.

Health plans that are written by commercial health carriers come in a wide range of different plan designs and plan types:

  • From HMO to Fee-for-Service plans.
  • From no deductible and no coinsurance to high deductible and high coinsurance.
  • From traditional to managed care plans.

Most core features can be customized to fit the employer’s needs and their budget. Because plan designs could differ greatly by carrier, it is possible that two different members that share the same commercial carrier may have two entirely separate benefit plan designs.

For Example: 

Susan Smith works for ABC Company and has a PPO health insurance plan with Aetna and James Jones works for XYZ Company and also has a PPO health insurance plan with Aetna.

Susan’s plan was written to provide for office visits with only a $5.00 copay if she picks a doctor that is in her network. James is required to pay a $100.00 deductible for all in network services. 

Just because two patients share the same carrier you cannot assume that benefits are the same. You will always need to contact the carrier to verify benefits. 

Each commercial carrier has a list of plans that they offer and the hope is that an employer or an insurance agent working on behalf of an employer, will be persuaded to choose one commercial carrier over another. The Insurance Agent’s role is to do the legwork that most employers do not have the time to do.

For Example

Joe’s Carpet Cleaning is a new company with 25 employees and they are looking for health insurance for the group. The employer could contact each commercial health carrier himself but most likely he will use an Insurance Agent. Think of an insurance agent like a real estate agent.

Let’s say you decide that you want to buy a house. So you contact a real estate agent, give them a list of your “must haves,” like location, size and price, and let them get busy. The Agent’s job is to find that best fit. Well this process is about the same for employers that are looking for health insurance. The Insurance Agent will look at all of the health carriers: Cigna, Humana, etc., to find the one that best fits the employer’s list of must haves.  

The Agent will present his list of good candidates to the employer for review and selection. If all goes as planned, the employer will enroll with one of the carriers on the list, the employees will get the health insurance they need and the insurance agent will get a commission.

Commercial health carriers are also in the business of administering the plans that they write. Once the sale is completed, the real work begins as the carrier is expected to handle all aspects of the insurance process including:

  • Enrollment
  • Issuing ID cards
  • Collecting premiums
  • Processing claims
  • Enrolling providers
  • Updating provider directories
  • Issuing Summary Plan Descriptions or plan booklets
  • Handling appeals and disputes

Most Commercial health insurance carriers also administer state Medicaid plans and some Medicare managed care plans.

As you can see, the business of health insurance is not unlike any other business. Commercial health insurance carriers need to remain competitive in order to retain the customers they have and they need a constant flow of new accounts to keep them in business.

Back to Chapter Two

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