The Basics of Nonprofit Health Insurance

Essentially a special type of private individual health insurance, nonprofit health insurance is an arrangement between an insurance company and a nonprofit entity where the insurer agrees to pay for medical losses related to liabilities and damages that befall the entity. Although there is no medical coverage provided by the charity itself, all medical costs are paid by the insurance company and the charity.

There are several ways in which nonprofit insurance works. First, there is a payment of a fixed amount for health care. If the insurance company pays the costs of a policyholder's hospital bills, he or she will be responsible for any uninsured expenses.

Secondly, some insurance companies prefer to deal with these types of organizations. This is because nonprofit insurance has very low claims rates. The nonprofit entity does not have employees' compensation, retirement benefits, or any other types of employer-sponsored benefits. Insurance companies are usually looking for a low deductible and very little coverage for the health care costs. If they accept the insurance policy, the insurer takes the responsibility for paying for the cost of all healthcare services rendered to the client.

Thirdly, if a policyholder's liability or damages exceed their insurance benefits, the insurer will reimburse the policyholder for the difference. The insurance carrier may also choose to make payments for the medical care of the insured's family members. But generally, the insurance carrier will not pay for the care of children under the age of 18.

It should be noted that health insurance provided by nonprofit entities does not include prescription drug coverage, disability benefits, dental plans, and the like. However, this type of insurance can often be obtained at a much lower rate through private individual plans and managed care plans.

There are certain situations where private health insurance policies are not acceptable. Such as, the charity must be run by an individual who is not a member of a religious or social organization or must be run by a board-certified physician with a specialty in the medical field of service to the client.

There are also certain medical providers who may refuse to accept a particular insurance plan offered by a nonprofit entity. The provider is required to have a contract with the insurance carrier and must abide by that contract.

Other limitations that are often present in nonprofit insurance plans include the use of a defined benefit plan, which means that the policyholder will receive all or most of the benefits from the policy without paying any type of deductibles. or premiums.

Finally, the policies typically offer a higher premium than other health insurance policies that are purchased by individuals. Even so, they are still a viable option for some individuals.