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Terms You Need to Know As An Independent Health Insurance Broker |
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By Roberto Garabell
 As an independent health insurance broker, you have the ability to work with a number of insurance companies. You aren't a captive agent, stuck with one company; you're independent. Both you and your client benefit from this. You aren't forced to suggest a more expensive insurance product because that's what your company sells. You can be upfront and transparent, and have happy customers while you're at it.
With the help of the Internet, you have a definite chance of never making a cold call, which makes being an independent health insurance broker that much easier. However, no matter how technologically savvy you are, there are still some basic industry terms you'll need to know and understand before you ever open your doors. Here are just a few:
Coinsurance - Co-insurance is shared medical costs between your client and the insurance company after a deductible is met. A typical co-insurance policy provides a percentage amount that the client pays.
For example, the policy may have a set $2,000 deductible. Once this amount has been paid by the client, a co-insurance payment of
75/25% kicks in and the client pays 25% of the total medical cost. The client will pay that 25% up to another fixed amount (coinsurance out-of-pocket maximum). Once this fixed amount has been met, the company then pays 100% of the cost.
Coinsurance Out-of-Pocket Maximum - The maximum amount a client has to pay out-of-pocket before the health insurance company begins paying 100% of the medical costs.
Co-Payments - Co-payments are just what they sound like. The client and the health insurance company share in the payments for medical services. The client pays a flat fee for each service and the insurance company pays the difference.
Deductible - The deductible is the amount a health insurance company requires the client to pay each year before the benefits begin for covered medical expenses. For example, if the deductible is $5,000, the client must pay $5,000 worth of expenses, out-of-pocket, before the health insurance company begins paying. Usually, if there is a high deductible, there are also lower premiums.
EPO - An EPO is an Exclusive Provider Organization. EPOs have a network of providers for medical care, treatment and services. Clients with EPOs will need to use in-network providers only if they want their medical treatment to be covered by the health agency. However, while some plans require referrals for specialized medical care, EPOs don't.
HMO - A HMO is a Health Maintenance Organization. HMOs are also in-network providers. The co-payments are modest, and there are no deductibles or co-insurance, but HMOs require a referral for specialized medical care.
Indemnity Plan - Indemnity plans are also called traditional plans. The client can use any doctor or hospital without them being associated with a network, which means there's no out-of-network payment penalty. Premium costs are usually higher than for PPOs, however.
PPO - A PPO is a Preferred Provider Organization. PPOs offer in-network providers and out-of-network coverage, but out-of-network coverage normally has a higher deductible or lower co-insurance. Whether in-network or out-of-network, PPOs don't require referrals.
These are just a few of the terms you'll need to have a full understanding of before you're ready to go on your own. This is especially true, considering the fact that many health insurance companies also offer other types of insurance, such as life insurance, and that each company may have several plans.
Learning about the companies you'll offer as an independent broker, health insurance terms and individual company plans can help you go a long way. It's important that you don't get weighed down by the amount of information you'll need to learn. Being an independent health insurance broker is a rewarding career, and well worth the time it takes to learn it!
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