Understanding how health insurance companies operate can help you realize how premiums are set. It can also help you appreciate the forces that influence the coverage and service you and your employees receive.
While the structure of companies vary, departments generally include:
Executive and administrative. This department, headed by the company president, oversees the operations of the company. Decisions made at this level, such as whether to reorganize or move company headquarters, can indirectly affect your premiums. It's doubtful that you'll interact directly with an executive, but corporate culture is generally set by those at the top, and can trickle down to your experience as the customer.
Marketing. This includes product design, advertising, and public relations. You and your employees are affected by the health insurance plans that marketing departments create, plus any decisions they might make that change health plans in the future.
Sales and local support. For most businesses, sales falls under marketing, but it's an area so important to insurance companies' bottom lines that it often stands alone.
Also called the agency department, this department is concerned with hiring, training, and compensating its sales force or agents. This department also provides backup customer service to agents who frequently work in the field.
Agents are licensed to sell insurance on behalf of insurance companies and work on commission. Agents are your first point of contact with insurers, and act as your customer service representative after you've purchased a policy. For example, when you hire a new employee, you'll probably send their health insurance paperwork to your agent's office for processing.
Some insurance companies don't have agents but sell directly to consumers. These companies can have lower rates, but you might not receive the same level of service as you would from an agent.
Actuarial. This department employs mathematicians and statisticians who set categories for evaluating applicants and fixing premiums.
Underwriting. Underwriters review the medical histories of plan participants and decide whether applicants receive coverage. Underwriters also set plan rates based on the demographic, geographic, and risk categories outlined by actuarial departments.
Policy issue. Workers in this area put together the paperwork that goes out to customers.
Investments or financial. All companies have funds on hand that they invest. The investment or financial department, usually headed by the treasurer of the company, selects and manages an insurance company's investments. These investments and their performance can affect your premiums.
Accounting. This department includes both bookkeeping and auditing. Auditors check to see that branch offices or agencies are keeping their accounts correctly.
Claims. The claims department decides whether to pay a medical bill submitted by you or your doctor. To make this decision, claims departments first look at whether the person who received care is eligible for coverage. For example, your company might have a waiting period before employees are insurable, or you might offer coverage only to full-time employees.
Next, claims departments decide if the medical care provided is covered under the plan. Claims departments also keep track of whether you or your employees have met your deductibles.
Claims departments will often work directly with doctors or hospitals to settle claims. However, if a bill goes unpaid, patients are ultimately responsible. That's when you or your employees will need to contact your claims department to get to the root of the delay.
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