health insurance is often called
accident and sickness insurance
or
accident and health insurance
an accident is
bodily injury caused by something unexpected, unintentional, unforseen
sickness is
loss due to illness or disease
types of losses and benefits
-loss of income from disability
-accidental death and dismemberment
-medical expense benefits
-dental expense benefits
-long term care insurance
-limited health exposures & insurance contracts
-prescription coverage
-vision care
disability income insurance
aka "loss of time" insurance
pays weekly or monthly benefit for disabilities resulting from accident or sickness.
primary purpose is to replace loss of personal income due to disability
AD&D Policies pay the policy's
principal sum for accidental death in accordance with policy provisions and definition of accidental death
principal sum
similar in meaning to policy face amount
amount paid if loss of two arms, two legs, or vision in two eyes due to accident
capital sum
amount if the policy is paying an accidental dismemberment benefit
medical expense insurance
commonly referred to as hospitalization insurance, provides benefits for expenses incurred as result of in-hospital treatment.surgery as well as outpatient expenses (doc. visits, lab tests, diagnostic services)
dental expense benefits
- generally sold as part of group health insurance
- offered for preventative maintenance, repair, and replacement of teeth
Long term care insurance
LTC - pays for care of persons with chronic disease/disability and may include wide range of health and social services
often covers nursing home care, home based care, respite care
limited health exposures and insurance contracts
a variety of special health insurance policies are available that provide limited coverage
by law, first page of policy must say "this is a limited policy
Policies under limited exposure
HIT-ABCD
Hospital income insurance
travel accident insurance
accident only insurance
blanket insurance
credit insurance
specified disease or dread disease insurance
Hospital income insurance
pays a specified sum on a daily weekly or monthly basis while insured is confined to a hospital
the amount is not related to expenses or wages lost
travel accident insurance
coverage for death or injury resulting from accidents occurring while insured is fare paying passenger on common carrier
accident only insurance
coverage on injury from accident but not sickness
benefit paid for all or any: death, disability, dismemberment, and hospital/medical expenses
blanket insurance
form of group insurance
individuals are automatically covered under blanket policy and do not receive certificates of insurance
credit insurance
policy issued only to those who are in debt to creditor, coverage limited to amount of debt
specified disease/dread insurance
provides a variety of benefit for certain diseases, usually cancer or heart disease
prescription coverage
normally provided as optional benefit under group medical expense policy
specific cost of prescription usually $2, 3, or 5, and insurance co. pays balance
vision care
only available on a group basis
cover eye exam, cost of lenses/frames, cost of contacts, other corrective items
health insurance is designed to
protect the insured from risk of medical and disability expenses
health insurance provides benefits
exactly when needed
medical expense insurance provides
the insured with necessary funds to cover hospital and physician expenses associated w/ serious illness, this preserving familys savings/assets
surgicenter
health care facility for out patient surgery
skilled nursing facility
engaged in providing skilled nursing care which is nursing care for patients who do not require acute hospital nursing care but need inpatient supervision
managed care
imposes controls on the use of health care services, the providers of health care services, and the amount charged for the services, usually through health maintenance orgs. or preferred provider arrangements
commercial insurers
stock and mutual life insurers and sometimes casualty companies
offer individual and group health plans
include PPO and HMOs
commercial insurers traditionally provide coverage by way of
reimbursement
but are evolving too
reimbursement
pay benefits directly to insured who is responsible for paying providers of medical services
dominant health insurers of the united states
blue cross
blue shield
differences between BCBS and commercial insurers
blues provide benefits on service bases (pays provider directly) rather than reimbursement
blues have contractual relationships with hospitals and doctors
producer's cooperative
Physicians and hospitals that sponsor BC/BS provide the insurance so they are considered to be the producers in the cooperative
Blue cross covers X
Blue shield covers X
blue cross-traditionally hospital service plan- covers hospital expenses
blue shield - traditionally physician service plan - covers medical and surgical expenses
subscribers
members of BC/BS
blues and managed care
many blues subscribers are now covered by blues affiliated HMO or PPO or point of service (POS) plan
POS Plan
type of health plan allowing the covered person to choose to receive a service from participating or nonparticipating provider with different benefit levels associated with in plan/out of plan
HMO
health maintenance organization
purpose of HMO
manage health care and its costs through program of prepaid care that emphasizes prevention and early treatment
service incurred basis
the prepaymet
which is in contrast to the "old" reimbursement method
the emphasis on prevention means HMOs cover
preventative medicine
such as: routine physicals, well-child exams, diagnostic screening paid for inadvance
Health maintenance org. arrangement
HMO handles financial arrangement and makes health care services available because its comprised of:
- medical practitioners who have contracted to provide service
-consumer members agreeing to pay
HMO federal requirements
- certain employers required to offer HMO
-provide government grants
to receive gov. grants, HMO must
- maintain certain minimum financial requirements in terms of net worth of HMO or reserves
-provide defined pkg of health services
-require no more than nominal use charges or copayments
-est. premiums on community rating basis
designated service area
where HMO is allowed to operate
HMO Group model
medical group model"
hmo contracts w/ independent medical group
hmo pays medical group, medical group decides how they want to pay physicians - who remain independent of HMO not salaried employees
hmo often pays group capitation fee
practitioners at risk
capitation fee
fixed amount paid monthly for each HMO member
HMO Staff Model
contracting physicians are paid employee on staff of HMO
generally operate in clinics
HMO might own/operate their own hospital
unlike group model, staff model practitioners are at no risk - simply employed by HMO
HMO Network Model
similar to group, but with many medical groups rather than just 1
may also bring on independent doctors who work out of their own facilities
medical groups are paid capitation fee
individual docs paid capitation fee or discounted fee
HMO Individual Practice Association Model
gives HMO members max. freedom on physicians and locations
allows HMO to contract separately with any combo of individual doctors, medical groups, associations
no separate HMO facility - docs operate out of own priate offices
payment is usually fee-for-se
physicians, hospitals, and other healthcare providers who have contracts with an HMO are
HMOs panel
with an open panel
any and all providers who want to provide service for HMO may do so as long as they agree to HMO requirements
closed panel
limited number of health care providers chosen by HMO
groups that sponsor HMOs are
1. medical schools or associations
2. physicians
3. hospitals
4. service orgs. (such as Blues)
5. labor unions
6. consumer groups
7. insurance co.
8. government entities
Basic health care services HMOs must provide
inpatient hospital and physician services
outpatient medical services
preventative health services
in and out of area emergency services
inpatient hospital and physician services must be provided for a period of
at least 90 days per calendar year for treatment of illness/injury
outpatient medical services
must be provided when prescribed by physician and rendered in non-hospital-based health care facility
preventative health services
with the goal of protection against and early detection and minimization of ill effects and causes of disease or disability must be provided
well child care from _______, eye and ear exams for children ages _____, periodic health eval. and immunizations are all a part of ________
well child care from birth
eye and ear exams children 17 and younger
all a part of preventative health services
in and out of area emergency services
including medically necessary ambulance services, must be available on an inpatient or outpatient basis 24/7
many HMOs also provide one or more supplemental health care services
- prescription drugs
-vision care
-dental care
-home health care
-nursing services
-long term care
-substance abuse services
co-payments on HMO
members of hmo pay be charged copayments for basic services in addition to original monthly payment
HMOs are permitted to require co-pay on supplemental services and to charge an additional amount to monthly fee
exclusions and limitations
are used to limit a benefit provided or specifically exclude a type of coverage, benefit, medical procedure, etc.
Some benefits HMOs may (and often do) exclude
eye exams for older than 17
eyeglasses or contact lenses resulting from eye exam
dental services
prescription drugs
long term physical therapy (more than 90 days)
out of area services (other than emergency)
important features of HMOs
gatekeeper system
24 hour access
open enrollment
nondiscrimination
complaints
prohibited practices
quality assurance
open ended plans
open access HMOs
Gatekeeper system
member must select primary care physician (PCP) who provides or authorizes all care for particular member
PCP makes/authorizes referrals to specialists
24 hour access
members have 24 hour access to HMO
including PCP - need the PCP late night? they're there
open enrollment
1. employer sponsored group plans, a period each year when employees may choose to enroll (usually 30 days) or remain enrolled in HMO or change plans
2. the period when HMO must advertise availability to general public on individual basis
nondiscrimination
when hmo coverage is offered to a group - HMO cannot refuse to cover any individual member even based on preexisting conditions
complaints
all HMOs are required to have a complaint system called "grievance procedure" to resolve written complaints from members
prohibited practices
HMOs are not allowed to engage in certain types of business practices, policies, etc.
HMO cannot discriminate
cannot terminate coverage for reasons other than nonpayment, fraud, deception, violation of terms, failure to meet eligibility requirements, or t
Quality Assurance
required to follow guidelines prescribed by state insurance dept. to ensure quality of service to members
i.e. hours of operation, after hours emergency, etc.
open ended HMO plans
leaky HMO" or "point of service HMO"
participants may use non HMO providers at any time and receive indemnity benefits at a higher deductible and coinsurance amount
open access HMO plans
dissatisfaction with gatekeeper mechanism, delays in care, problems in obtaining referrals have lead to offer open access -- allows members to receive care from network specialists w/o going through gatekeeper
POS plan is more expensive than open-access h
Preferred Provider Organization
PPO
arrangement under which a selected group of independent hospitals and medical practitioners in a certain area (state) agree to provide a range of services at a prearranged cost
the contracting agency or organizer of the PPO may be any one of the following:
traditional insurance companies
Blue Cross/Blue Shield
local groups of hospitals
local groups of physicians
an existing HMO
large employers
trade unions
unlike most HMOs, providers under PPO are paid by
fee-for-service basis
rather than receiving flat monthly amount for each user
as a general rule, users under PPO have more of what over HMO users
choices among doctors and hospitals
however IPA HMO is similar in arrangement
PPOs generally pay in full for what out-of-network services?
emergency services
distinguishable features between PPO and HMO
PPO has no separate physical facility, and HMO usually do
gatekeeper PPO
is a plan that operates as a PPO but requires a PCP for referrals
point of service plans
another form of managed care
subscriber is given a choice of in network and out of network care
highest level of coverage within POS plan
in network coverage
--
plan pays for more medical services and insured wont have to submit claim forms
out of network care means
care is not coordinated by PCP
insured must submit a claim for forms in order to receive benefits
EPOs
exclusive provider organization - type of PPO in which individual members use particular preferred providers instead of choosing among variety of providers
EPO providers are
not paid salary but are paid on fee for service basis
EPOs are characterized by
primary physician who monitors care and makes referrals (gatekeeper concept), utilization management, experience rating, simplified claims processing
employer-administered plans
1. self funding
2. 501(c)(9) Trusts
3. small employers
4. cafeteria plans
5. Medical Savings Accounts (MSA)
6. Flexible Spending Accounts (FSA)
7. High deductible health plan (HDHP)
8. Health Savings Account (HSA)
9. Health reimbursement accounts (HRAs)
1
self funding
if claim costs are fairly predictable, employer pay consider a self funded plan
an employer, not an insurance co., provides the funds to make claim payments for company employees and their dependents
stop loss contract
in the event that claims are higher than predicted, a self-funded health insurance plan can be backed up by stop loss contract designed to limit the employers liability for claims
2 variations for stop loss contract
1. specific stop loss
2. aggregate stop loss
ASO contractual agreement
the insurer provides claim forms, administers claims, and makes payments to health care providers, but employer still provides funds to make claim payments
advantages of self insurance
1. company can save money if losses are less than predicted
2. expense of carrying insurance reduced
3. more vested interest in employees- encouraging them to be well because of assumed risk
4. company has use of money that would otherwise be tied up by i
disadvantages of self insurance
1. actual losses if more than predicted = unexpected loss of funds
2. expenses could be higher than expected if additional personnel are hired to administer claims/manage risk/ offer info
3. income taxes could be higher because no premiums to use as deduc
501(c)(9)
provides for the establishment of voluntary employees' beneficiary associations or 501(c)(9) Trusts -- funding vehicles for the employee benefits offered to members
_______ has caused popularity in 501(c)(9) to diminish
Tax Reform act of 1984
Small employers requirements to ensure insurance coverage at reasonable conditions:
fewer than 25 or 50 employees
1. standard benefit plans offered
2. max. waiting period for preexisting periods
3. insurer may not exclude particular individuals or medical conditions from coverage
5. carriers may cancel or nonrenew small employer plans on
cafeteria plans
defined as a plan in which employees select health benefits from variety of coverage options on basis of their individual and family needs
more complex/expensive than traditional plans, and make sense for larger employers
taxation of cafeteria plans regulated by
section 125 of internal revenue code
Medical Savings Accounts (MSAs) created to
aka Archer MSAs
created to help employees of small employers, as well as self employed, pay for medical care expenses
MSAs are
tax free accounts set up with financial institutions
to qualify for MSA
- employee or spouse who works for small employer that maintains individual or family high-deductible health plan for employee
-self employed person or spouse who maintains an individual or family high deductible health plan
small employer defined as
averaged 50 or less employees during last 2 years
high deductible health plan defined as
annual deductible between $2,000-3,000 for individual or $4,050 and 6,050 for family policy
with max out of pocket 7,400
as of January 2006
no new Archer MSAs can be established, and existing accounts rolled over into HSA
Flexible spending account
the FSA is a cafeteria plan that is funded with employee money by means of salary reduction
salary reduction plan
pretax plan - employee agrees to reduction in compensation and this is used to cover certain medical expenses
FSAs typically best for what size org
moderate to large size
High deductible health plans (HDHP)
offers very low premiums but requires insured to pay relatively high deductible
qualified high deductible plan has minimum deductible of
1,200 - 5,550 for individual
2,400-11,900 for family
HDHP generally paired with
HSA - money grows tax free as long as used for medical expenses
HSAs
since 2004, eligible to people under age of 65 enrolled in HDHPs
people age 55-64 can
make additional catch up contribution of 1,000 for individual policies
employer contributions from HSA
are excluded from employee's taxable income
HRAs
health reimbursement accounts
provided by employer with High deductible plan to create tax-favored savings account for each covered employee where employee can obtain reimbursement for medical expenses not covered
HRAs are the dominant form of
consumer directed health plans
Consumer driven health plans
CDHPs
allow employer to combine high deductible health plan with a spending or reimbursement account
employer contributes certain amount per year, usually 1,000-2,000, which rolls over
typical CDHP focuses on
personalized wellness and prevention
multiple employer trust
provide health insurance benefits to small businesses through a series of trusts usually established on the basis of specific industries (manufacturing, sales and service, real estate, etc.)
generally states require group size of ___ for METs
no such requirements, could be group of 1
METs are formed by
insurers or third party administrators called sponsors
sponsor is responsible for
developing the plan, setting underwriting rules, administering the plan
Multiple employer welfare arrangement
MEWAs
created by small employers who join to provide health insurance benefits for employees often on self-insured basis
blanket policy
usually used for hospital, medical, and surgical coverages
franchise insurance
allows very small groups to have some of the benefits of group insurance (especially the lower cost)
franchise insurance works like group insurance however
there is no master policy-- each individual receives individual policy
franchise insurance offers
hospital, surgical, medical, and disability income coverage
plans may be contributory or noncontributory
X amount of premiums paid for whole franchise group
one
Government health insurance
both federal and state governments offer statutory health insurance programs
on federal level - SS provides disability income and administers medicare
state level- all states have worker's comp laws/medicaid/ etc.
Social security pays 4 types of benefits
1. disability income benefits to workers
2. medicare benefits
3. retirement benefits to workers and dependents
4. survivors benefit to workers family
worker's comp designed to help
persons who suffer loss of income due to injury or sickness that occurs as result of their occupation
required by most states
eligibility for worker's comp
- work in an occupation covered by workers comp
-have had accident/sickness that is work related
benefits under workers comp
medical
income
death
rehab
workers comp medical benefits
provided without limit
income benefits
are paid to employees who suffer work related disabilities
subject to elimination period
death benefits provide 2 types of payments
1. up to a certain dollar amount provided as burial allowance
2. state provides weekly income payments for surviving spouse/children at 66.66% of deceased workers wages
rehabilitation benefits
valuable for reducing workers comp and returning employee to job ASAP
include:
therapy
vocational training
devices such as wheelchair
cost of travel/lodging/living expense while being rehabbed
Medicaid
health care benefits for financially needy
must be 65 or older
intended for those who cant pay medicare
federal-state program
medicaid is federal-state program in that federal gov. encourages states to increase medical assistance to indigent regardless of age by paying 1/2 of admin cost and 50-80% of fees
poorer states receive larger federal grants
health care reform act includes following changes
subsidies - 100-400% FPL
medicaid - expand medicaid to include 133% on FPL, require states to expand medicaid to childless adults, require fed. gov. to pay 100% of costs for newly eligible.
insurance reforms - insurance companies cant deny children based
fixed periodic fee
persons participating in an HMO pay a fixed periodic fee in advance for services performed by participating physicians and hospitals. This fee is payable, whether or not the participant uses any health care service.
accidental means provision
unforeseen, unexpected, unintended cause of an accident - requirement of an accident-based policy that the cause of the mishap must be accidental for any claim to be payable
To control costs, medical insurance plans available from commercial insurers and fraternal organizations are likely to provide care through:
open network PPO
----
Many commercial insurers and fraternals contract with independent physician groups and hospitals, creating extensive, often loosely organized preferred provider organizations for their insureds. Insureds are given lists of approved p
HMO act passed in
Congress passed the Health Maintenance Organization Act in 1973. The act encouraged the formation of HMOs by providing federal assistance for planning and development of federally qualified HMOs.
what happens when insureds go outside of preferred network in PPO plans
A larger deductible is often charged when members obtain medical services from providers outside the preferred provider organization.
fundamental difference btween roth IRA and traditional IRA
contributions to Roth IRAs are never deductible.
franchise or wholesale plan may not insure an individual for more than X amount...
A franchise (or wholesale) plan may not insure an individual for more than $25,000, unless it is written in connection with a professional association, an indebtedness, a sales contract, or a pension plan.
what happens if insured under EPO goes to out of network provider?
EPOs require insureds to use only approved providers, who offer care at a discount. The insured is likely to have to meet deductibles and pay coinsurance amounts.