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- A plan sponsor is typically an employer
- For public health insurance, the plan sponsor is the federal or state government
- Plan sponsors create the health care plan for a third party
In the insurance industry, there are various parties who may set up insurance policies for you. If it is an individual health insurance policy, usually the person or persons on the policy will work with an insurance expert such as an insurance agent or company.
If it is a group health insurance policy, the employee and employer may work together to construct the health care plan. In either case, there is a certain amount of cooperation that goes into creating the health care plan for an individual or group of people. This helps ensure that the plan is optimal for everyone it covers.
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What is a healthcare plan?
Before we go into what it means to be a plan sponsor, it is important to define a health care plan in this context. A healthcare plan is an insurance policy that provides certain benefits in exchange for following the terms of the agreement. Typically, this means paying all deductibles, co-payments, and other fees before the insurance company pays for their part of the medical expenses.
Other rules, such as those regarding adding dependents and spouses to the policy, must also be followed. This is so that the insurance company must maintain its commitment to the contract.
What is a plan sponsor?
A plan sponsor, for the purposes of health insurance, is the designated party that is in charge of creating a health care plan in order to benefit the employees of an employer or company. Plan sponsors are typically the employers of a certain group of people and they create the health are plan for their employees.
Plan sponsors are also the ones in charge of making any necessary changes to the plan. This might be due to the company expanding or the needs of its employees changing over time.
Responsibilities of a Plan Sponsor
Making any necessary changes to the health care plan is simply one of many responsibilities that belong to the plan sponsor. Another one of the plan sponsor’s responsibilities is deciding on the parameters of membership. The source outlines this as one of those responsibilities.
A third responsibility belonging to the health care plan sponsor is choosing what kind of investments to make and how much money to invest in each investment option. Sometimes, plan sponsors contribute to the health care plan via cash or stocks.
Types of Plan Sponsors
The first main type of plan sponsor is one that is involved in private health care plans. As mentioned earlier, it is possible for the sponsor of such a plan to be the employer or company that employs a policyholder. However, plan sponsors even in the case of private health insurance are not necessarily employers or companies.
One portion of this is that plan sponsors sometimes do not handle financial decisions themselves. Sometimes, they outsource such responsibilities and thus involve third parties in plan sponsorship.
Plan Sponsors in Public Health Insurance
In the United States, the two primary public health insurance sources are Medicaid and Medicare. Medicaid operates at both the state and federal level while Medicare operates only at the federal level. Both are what make up the public health insurance sector in the United States.
Sometimes, the plan sponsors in such public health insurance programs are the people running Medicare and Medicaid. The federal government and the state governments are responsible for managing these programs.
Managed Care Plans
Managed care plans are one of the varieties of health care plans that plan sponsors can create for those covered by the plans. Managed care plans usually cover a great variety of health services like preventative care, adult and child immunization, diagnosing and treating illness, as well as prenatal and newborn care.
Managed care plans also offer mental health services and substance abuse treatment. They also provide support for diagnosing those who are suffering from mental health issues or recovering from substance abuse problems. This was added by the Affordable Care Act.
Managed Care Plan Savings and Networks
Additionally, managed care plans do their best to save money by offering preventative care so that those covered by them do not suffer from more serious health conditions.
Quite a few chronic health problems like diabetes, high blood pressure, and high cholesterol can be managed and prevented from getting worse if discovered early as states. Managed care plans also create health care ‘networks’ to lower costs.
These networks consist of doctors, clinics, hospitals, and various other health care providers. Some managed care plans require you to seek medical care within the network. In others, you may seek medical care outside the network but it can prove more expensive.
Types of Managed Care Plans
Four primary types of managed care plans exist. These plans are provided by a health insurance company and they utilize a provider network which describes. The four types of managed care plans are health maintenance organizations, preferred provider organizations, point of service plans, and exclusive provider organizations.
A health maintenance organization or HMO requires that you go to a health care provider within the network in order to be eligible for coverage.
The only exemption to this rule is emergency room visits for crisis situations. Otherwise, going outside of the network will mean you will have to pay for the medical expenses out of pocket. HMOs also require you to select a primary care physician.
A preferred provider organization or PPO works with a group of preferred provider and you can select one from this group. You do not have to select a primary care physician and you can see other providers within the network without a referral as the source suggests. Receiving care from a doctor in the network means you only have to pay for the insurance’s deductible and coinsurance.
A point of service plan or POS does require you to select a primary care physician. Additionally, you can receive care from a provider outside of the network which is information. You pay a lower amount if you use services or doctors in the network.
Exclusive provider organizations or EPOs are the fourth type of managed care plan. They allow you to visit any doctor that is in the network and you do not require a referral from a primary care physician. This is similar to a PPO.
However, the plan will not cover any care outside of the network aside from emergencies.
Reviewing the Term “Plan Sponsor”
Essentially, a plan sponsor is the party responsible for creating a health care plan for employees. This is most common with group health insurance plans that companies offer to employees as part of the benefits of working there. However, plan sponsors are not always employers.
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The federal or state government can be a plan sponsor if it is a public health insurance plan like Medicare or Medicaid. It depends on the type of insurance plan that is provided.
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