Types of Health Insurance Companies

Domestic, Foreign or Alien Insurance Companies:

In the United States of America, companies are usually organized and chartered under the laws of only one state, but it's common for them to conduct business in many states. A domestic company is one that has its home office in the state where it was organized.. In any other states where they conduct business, they are considered a foreign company. If the home office of a company is located outside the United States, it is considered an alien company. Regardless of status, domestic, foreign or alien, every company must be registered in every state where it writes policies.

Cooperatives:

These service organizations are producers cooperatives. Hospitals and physicians who sponsor Blue Cross/Blue Shield plans are providing the insurance, therefore they are considered to be the producers of the cooperative.

Originally Blue Cross and Blue shield were separate voluntary and tax-exempt associations. Blue Cross provided payments to hospitals and Blue Shield covered physicians, medical and surgical fees. People originally covered under these plans were termed subscribers since Blue Cross and Blue shield differ from traditional insurance companies.

In most jurisdictions, the two have merged, but each group still covers the expenses for which they were originally created. Over the years the tax advantages they initially enjoyed have been gradually reduced and many states have removed their tax exempt status altogether. The federal Tax Reform Act of 1986 classified them as taxable insurance companies.

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