A review of the Health Reciprocal Exchange Health Insurance Company review leads not to a specific company but instead, a type of company or organization you or your business may want to consider when you are in need of health insurance coverage. Reciprocals are insurance companies or organizations with similar risks that provide benefits through the exchange of contracts and share the risks amongst the group. Companies and individuals entering into the agreement are considered both the insured and insurers.
Health Reciprocal Exchange Insurance Information
With a reciprocal insurance agreement, the entity of insurance providers or organizations is not incorporated as they are with a mutual insurance company. Instead, they are independent of each other but work together to decrease the amount one single organization must pay out in losses. With a reciprocal, individuals who purchase insurance plans are called subscribers instead of policyholders. Premiums are used to help pay for losses and all members share profits as well as losses. An example of a well-known reciprocal insurance agreement is between USAA and Farmer’s Insurance Company.
Health Reciprocal Exchange History
Insurance reciprocals began over 100 years ago when groups of people working in the same business exchanged insurance contracts with one another instead of using a traditional insurance company. Their main goal was to protect themselves from losses due to fire, which were common at the time. When a loss occurred for one member money was collected from all of the subscribers in proportion to the amount of their individual contribution. Today reciprocals may be a group of insurance companies or entities that wish to share risks and reduce individual losses such as municipalities, universities, or corporations.
Health Reciprocal Exchange Legal Matters
With an insurance reciprocal, there are legal matters that must be adhered to and overseen. Typically, these are taken care of by an “Attorney In Fact,” who is selected by a Board of Directors for the entity. This person is responsible for:
- Paying losses
- Investing premiums into the exchange
- Recruiting new members
- Underwriting new business
- Underwriting renewal business
- Receiving premiums
- Exchanging reinsurance contracts
Health Reciprocal Exchange Advantages
With a reciprocal exchange, an organization can make large profits if it recruits enough members and avoids losses. For subscribers this can mean money back when those profits are shared jointly between them, which are the case with many reciprocals. Also with reciprocals, subscribers typically have more control over the organization itself than with a traditional insurance agreement. Finally, reciprocals reduce the amount of risk for one entity alone.
Health Reciprocal Exchange Disadvantages
In addition to several advantages, there are also disadvantages to insurance reciprocal exchanges for both the entities entering into them and subscribers. The reciprocal may not have enough members, especially when it is just getting started, to cover the cost of losses. Expenses for reciprocals can be higher than for a standard insurance company due to legal costs. In addition, insurance regulators usually more heavily scrutinize these types of insurance agreements.
Health Reciprocal Exchange – Things to Consider When Deciding on Health Insurance
Whether you wish to use a company that is part of a reciprocal agreement or a traditional health insurance company, there are several things you need to consider before making a decision. First you need to understand the difference between the different plans you may be offered. These may include:
- Preferred Provider Organization (PPO)
- Health Maintenance Organization (HMO)
- Indemnity Plan
- Point of Service Plan (POS)
After you have researched insurance companies and narrowed down your choices, you need to ask yourself some questions and do some additional investigating. The information you need to determine includes:
- Is your current doctor a member of the insurance plan and if not, are you willing to switch to one that is a member?
- Do you need to choose a primary care physician with the company’s plan?
- How many medical providers in your area are members of the plan?
- What will your premiums cost?
- What will your co-pays or deductibles cost?
- Do you have any pre-existing conditions that may limit the plans you have access to?
- What are the stipulations the company/plan puts on specialized medical care such as mental health care or pregnancy and fertility related costs?