Insurance Options for Conservation Districts
Over the years different Conservation District staff members have researched ways that
our organization could develop a group policy. Unfortunately at this time a group policy
will not work for the following reasons:
1. Our group is very small by insurance standards. Many insurance providers prefer to
have minimum of 500 employees and would prefer over 1000. Currently there are
approximately. Group coverage is available to individual Conservation Districts with
2 or more participants.
2. Most companies require 75% participation in the program and because we run as
independent organizations it would be difficult to get this level participation.
3. Because our group would be small our rates would most likely be higher because you
are buying the risk of the group.
The MACDE board determined that since the group option is not possible at this time we
would compile a list ways to save money, pros and cons of companies and show how to
research the best option for your District.
Health Insurance Options?
Health insurance companies use historical data and analysis to predict the medical
expenses for any given group of individuals (usually a company's employees). The
premiums they charge are based on the amount of claims they've paid in the past and
what they expect future claims to cost. When insurers pay out more in claims than they
receive in premiums and when future services are predicted to cost more, premiums go
As consumers, we are demanding more medical services than ever before. The cost of
these services is going up. These increased costs are passed on to employers in the form
of increased premiums. Insurance companies work with employers to adjust services
offered, as well as co-payments and deductibles, to minimize the impact of rising costs.
Take time to understand your health plan -- it can help save healthcare dollars for you and
for all Americans. For example, many health plans offer a reduced co-pay if you choose
FDA-approved generic prescription drugs, so you pay less. Because the average total cost
of a generic drug is three times less than the brand name, it helps keep costs down in your
Understanding the basics of how health insurance works and how to make the most of
your own health plan can help keep healthcare affordable for everyone.
Health insurance is available to consumers in a variety of plans and coverage s. Listed
here are some of the most common.
1. Medical and Hospital Coverage
Major Medical. Pays the cost of hospital bills and medical bills. You pay any
appropriate co-payments and deductibles. The policy covers only the eligible expenses
Managed Care. Provides preventive care and services basic to good health. Out-of-
Pocket costs are generally less than traditional health insurance. Care is given by the
plans network of doctors and hospitals. The managed care plan could be through a
traditional health insurance company or a health carrier that provides managed care plans
only. Managed care always has a provider network with specific rules to follow if you
need care. These plans cover basic care, which is often not included in major medical
Alternative Finance and Delivery System (AFDS). Provides limited health services,
such as dental, optical or podiatric care. AFDS are responsible for the access, availability
and quality of health services provided. AFDS have a contracted network of providers.
Most coverage through an AFDS is available to groups.
Hospital-Surgical. Pays only expenses directly related to hospitalization, which usually
includes room and board plus doctors' charges.
Short-Term. This coverage lasts for only a specified length of time, but for no longer
than 180 days in any case. For example, you might buy a six-month policy with major
medical coverage for the months that you are between jobs and between group coverage.
These policies do not cover pre-existing conditions.
Catastrophic. Has high limits but pays only after you have paid a high deductible,
sometimes $2,500 or more.
High Deductible Plans. These plans are Major Medical coverage, but are sold in
conjunction with Health Savings Accounts. They pay the cost of hospital and medical
bills, but have very high deductibles that you pay from your federally tax exempt health
2. Limited Purpose Coverage
Accident Only. Pays only when you are treated for accidental injury or if an accident
Disability Income. Pays a fixed amount for a specified period of time when you are
unable to work because of an accident or illness.
Hospital Indemnity. Pays a flat amount (such as $100 per day) when you are
Long-Term Care. Pays to take care of you for an extended time in a nursing home or
your own home. See the Shopper s Guide to Long Term Care Insurance
Medicare Supplement. Pays some medical expenses not paid by Medicare. (See the
Choosing a Medigap Policy at www.medicare.gov/publications/pubs/pdf/02110.pdf
Special Need. Pays for health care not covered by typical major medical policies (for
example, dental or vision care).
Specific Disease. Pays only for treatment for a disease or condition specifically named
in the policy such as cancer.
Home Health Care. Pays for health care delivered to you in your home.
What is traditional health insurance or commercial insurance?
Traditional health insurance or coverage through a commercial insurer are often called
"fee-for-service" because the insurer pays the bills after you receive the service.
· You can use any doctor or hospital.
· The medical bills must be sent to the insurance company.
· You will likely have to pay a deductible before the policy begins to pay and co-
payments each time you have a claim.
· If the policy pays less than the full bill, you may be responsible for paying the
What is a health maintenance organization? (HMOs)?
HMOs provide preventive care and other services that are basic to good health. Your out-
of-pocket costs are generally less than traditional health insurance. Care is likely given by
a network of doctors and hospitals under contract with the plan.
Your managed care plan could be through a commercial health insurance company, or
you might be covered by a carrier that provides managed care plans only (an HMO).
Regardless, if you have a managed care plan, there is a provider network. Be sure to
follow your plan's network rules when you need care. More detailed information about
HMOs is available at http://www.michigan.gov/cis/0,1607,7-154-
What does HIPAA eligible mean and how does it apply? Throughout these web
pages, it will be helpful to know if you qualify as a HIPAA eligible individual. You are
a HIPAA eligible individual only if you
· Have 18 months of creditable coverage (see below),
· Were most recently covered by an employer group,
· Were not terminated from your group plan due to nonpayment of premium or
· Obtained new coverage by midnight of the 63rd day of your last coverage,
· Are not eligible for Medicare, Medicaid, or any other group coverage,
· Have exhausted all continuation of benefit options such as COBRA, and
· Do not have any other health insurance.
Individual vs. Group Coverage
There are two basic ways to buy health coverage: as an individual or through a group.
How you buy health coverage affects your rights and responsibilities. The biggest
distinction between the two is that most individual plans (the exception is the My Blue
products now offered by Blue Cross) are medically underwritten and group plans are
NOT. In medically underwriting plans a person can be charged a higher rate, have an
illness/condition excluded or be denied coverage based upon their health history.
(The Blue Cross individual rates can be found at fischer.coverageforone.com)
· You contract directly with a health carrier just like insuring your home or car.
· You are the policyholder.
HMOs call the contract-holder (the person in whose name the contract is written) a
subscriber, member or enrollee
· Your individual policy can cover your entire family and each family member would
be an insured.
· The health carrier needs approval from the Office of Financial and Insurance Services
to increase rates.
· Any premium increase affects everyone who has the same kind of policy.
· Unless you have made false statements on your application, filed fraudulent claims or
failed to pay your premiums on time, the company cannot cancel your policy because
of your health or claims.
· Coverage must include specific minimum benefits.
· A group insurance policy may cover two to thousands of people, but it is still only
· Your employer or trade association is the master policyholder; you and your fellow
employees are certificate holders.
· Each family member covered under your certificate is an insured.
· The master policyholder negotiates the terms of a group policy with the insurance
The master policyholder can
· Reduce or change the benefits and coverage,
· Increase your share of the premium,
· Switch to another insurance company, or
· Stop providing any coverage!
In a group contract
· Rates for employer groups are negotiable and are not regulated by the Office of
Financial and Insurance Services, except in the instance of Blue Cross Blue Shield of
· The contract must include specific minimum benefits required by state law - other
benefits are negotiated by the master policyholder.
· The master policyholder does not need consent of certificate holders to change
companies or policies, cancel the policy or agree to new premiums or benefits.
Large employer group
· May cover more conditions than individual contracts.
· May have more generous benefits.
· Cannot reject an application because of poor health as long as the application is made
during the eligibility period.
· Large employer groups are defined as having more than 50 employees.
Small employer groups are defined as having 2 to 50 employees.
Sole Proprietor Coverage
· Must be self-employed
· Cannot insure employees under this policy
· May have many of the same benefits as a small group policy
Ways to Save Money.
1. Contact an independent insurance agent.
2. Michigan Farm Bureau. Individual staff members can become members of Farm
Bureau and pick insurance options through the Farm Bureau program. Districts can set
up an employee reimbursement program.
Pros: Staff will have many options to choose from and when they leave the District the
policy is there name and they continue pay for it if they need to keep insurance.
Cons: Because the insurance is in the employee s name the payments have to come from
the staff. This means the District has increase the staff s wages to cover the cost or
3. Become a member of your local Chamber of Commerce. Most Chambers have plan s
for small businesses. Contact your local Chamber to see if that is option they offer.
Pro: The insurance is in the Districts name and the District can pay for the insurance
Con: The group is sometimes small, which means the rates may be higher.
4. Purchase a High Deductible Health Plan (HDHP) and establish a Health Savings
Account ( HSA ).
A Health Savings Account is an alternative to traditional health insurance; it is a savings
product that offers a different way for consumers to pay for their health care. HSAs
enable individuals to pay for current health expenses and save for future qualified
medical and retiree health expenses on a tax-free basis. These programs can be set up by
the employee or employer.
Employees must be covered by a High Deductible Health Plan (HDHP) to take advantage
of HSAs. An HDHP generally costs less than what traditional health care coverage costs,
so the money that you save on insurance can therefore be put into the Health Savings
The employee owns and controls the money their HSA. Decisions on how to spend the
money are made by the individual without relying on a third party or a health insurer. The
employee will also decide what types of investments to make with the money in the
account in order to make it grow. To establish an HSAs Districts can contact banks,
credit unions, insurance companies and other approved companies.
Blue Cross Blue Shield. The most recognized health insurance company in Michigan and
across the country. Blue Cross has a variety of programs for both groups and individuals.
BCBSM is a non-profit healthcare corporation regulated under Public Act 350 of 1980, as
amended. BCBSM is not licensed under the Michigan Insurance Code and therefore is
not an insurance company. Each state's Blue Cross Blue Shield Plan is separate and
regulated by the state in which it operates (Nonprofit Health Care Corporation Reform
Act). For more information on Blue Cross http://www.michigan.gov/dleg/0,1607,7-154-
If you are interested in Blue Cross Individual Plans contact an insurance agent and
request the brochure My Blue, My Life. My Health Plan . This brochure breaks down
all the options for individuals and gives prices for options.
Pros: Very well recognized, most agencies will carry Blue Cross.
Cons: Individual plans have to be in the employees name not the Districts. The District
then has to reimburse the employee. This then becomes taxable income for the
employee. No Chiropractic, Urgent Care
Priority Health. Priority Health is the second most recognized company in the state.
Pros and Cons Still researching.
Research Companies Records.
The Office of Financial and Insurance Regulation (OFIR) a division of the Michigan
Department of Labor and Economic Growth is responsible for the regulation of Blue
Cross Blue Shield, 27 HMOS, 139 banks, 169 domestic insurance companies, 223 credit
unions, 1,303 foreign insurance companies, 1,750 investment advisers, 2,100 securities
broker-dealers, 7,772 consumer finance lenders, 146,419 insurance agents, and 115,000
The Office of Financial and Insurance Regulation operates under two distinct offices -
The Office of Financial Evaluation and The Office of Policy, Conduct and Consumer
Assistance. OFIR can offer assistance to consumers if they have questions or complaints
about credit unions, insurance companies, banks, securities, and HMOs.
In the upcoming years, OFIR is seeking to create functional regulation for the financial
services industry. Government regulators often apply a model of regulation to modern
organizations that is a result of 130 years of experience. With changing complexities in
banking and insurance companies, the old-fashioned model cannot maintain a pace
consistent with the industries. Regulators must become adept at interpreting and
regulating complex service enterprises that did not even exist five years ago.
It is OFIR' duty to sustain an active relationship with Michigan's consumers. This
involves keeping consumers informed and helping them adapt to industry developments.
Most consumers are not aware of the complex changes occurring in the financial
Through adaptability and consumer communication, the staff members of the Office of
Financial and Insurance Regulation strive to be the preeminent financial service
regulators in the United States.
Insurance Complaint Statistics
OFIR receives thousands of complaints every year regarding insurance companies.
Complaints about health insurance (excluding HMOs), automobile, life, homeowners,
and other types of insurance have been counted and compiled into ratios. Complaint
ratios are created by dividing the dollar amount (in millions) of written premium into the
number of filed complaints. The resulting ratios provide complaint information that can
be meaningfully compared across insurance companies, regardless of size.