102-5 Health Ins, Medicare, Medicaid Flashcards
Indemnity coverage (traditional plans)
Aka first dollar coverage
Generally don’t include a deductible or coinsurance but reimburse the insured (from the first dollar of loss)
Examples: hospital expense coverage, surgical expense coverage, physician’s expense coverage
Major medical plans
Often underwritten as group plans
Designed to provide broad coverage for all reasonable and unnecessary expenses associated with an illness or injury, wherever it may have occurred to the insured individual
Include deductible and coinsurance
Maximum out-of-pocket (MOOP)
The max amount the insured will pay, which includes the deductible and the coinsurance amounts
National Association of Insurance Commissioners (NAIC)
The group developed model legislation specifying 12 provisions that must be included in health insurance policies, as well as several optional provisions to help create uniformity in health insurance contracts
Primary care physician (PCP)
Aka “gatekeepers”
Initially consult w/ patients regarding health issues and coordinate any other specialized care the patient needs
Health Maintenance Organization (HMO)
A prepayment organization that provides a broad range of health services to its group of subscribers for a fixed monthly fee
The medical providers receive a monthly fixed payment for each enrolled patient called the capitation fee
Preferred provider organization (PPO)
Similar to an HMO except that members are allowed to receive care outside the network of PPO doctors and hospitals
Point of service plans (POS)
Includes a network of participating providers and other policies of a managed care plan, but also include indemnity-type benefits for patients receiving services from nonparticipating providers
Archer Medical Savings Accounts (Archer MSAs)
- Established by HIPAA in 1996
- Since replaced by HSAs
- New Archer MSAs can no longer be established
- existing archer MSAs can still be maintained
Earnings tax-deferred until distribution, distributions used for qualified medical expenses are not taxable
Distributions not used for qualified medical expenses are taxable and subject to an additional 20% penalty if made before age 65
Health Savings Account (HSA)
Features the concept of combined a high-deductible health insurance policy (HDHP) with a tax-free savings account to be used in payment of individual qualified medical expenses
Distributions tax-free if used to pay qualified medical expenses
Otherwise taxable and subject to a 20% penalty unless the owner is at least 65 years or disabled or has died
Health Reimbursement Arrangement (HRA)
A participating employee is reimbursed medical expenses by an employer
Managed by 3rd party
Any unused amounts may be carried forward for reimbursements in later years
Self-employed individuals may not have HRAs
Income tax implications of health insurance
Health insurance premiums paid by an employer through an employer-paid group plan are a deductible business expense to the employer, and the benefits are not included in the employees’ gross income
Consolidated Omnibus Budget Reconciliation Act (COBRA)
Requires certain employers to provide previously covered individuals (including spouses and dependents) w/ the same health insurance coverage they received while employed after the occurrence of a qualifying event
- Termination: 18 months
- Death: 36 months for spouse, dependents
- Divorce: 36 months for spouse, dependents
- Loss of dependent status: 36 months
- Employee eligible for Medicare: 36 months from date of eligibility
- Employee meets social security definition of disability: 29 months
Employers with > 20 employees must provide COBRA
Up to 102% - premiums for employee
Health Insurance Portability and Accountability Act of 1996 (HIPAA)
Addressed issue of preexisting conditions when switching jobs
Provided that there cannot be enforcement of a preexisting medical condition if:
- an employee was covered by the prior employer’s health insurance plan for at least 12 months
- fewer than 63 days have elapsed since the loss of coverage under the prior employer’s plan
Definition of preexisting condition: any medical condition. That was treated or diagnosed within 6 months before enrolling in the new group plan
Employer mandate in 2010 Health Care Reform Legislation
Requires certain employers to provide qualifying health care coverage to their full-time employees and eligible dependents or be subject to monetary penalties
- applies to firms w/ > 50 employees
- employers need to offer coverage to 95% of their full-time employees and their eligible dependents
Medicare
Federal gov insurance plan. Covers individuals:
- 65 or over
- who have been receiving social security disability benefits for at least 24 months
- who are on kidney dialysis treatment and in end-stage renal failure
Medicare Financing
Medicare payroll tax of 2.9%, divided equally between the employer and employee
Levied on all earnings w/ no income limit to providing financing
Additional Medicare tax of 0.9% if the taxpayer’s wages, other comp, or self-employed income exceeds the thresholds
3.8% Medicare contribution tracking aka net income tax levied on net investment income of taxpayers w/ modified adjusted gross income exceeding applicable thresholds
4 parts of medicare
Part A: Hospital Insurance
Part B: Medical Insurance
Part C: Medicare Advantage Plan
Part D: Outpatient Prescription Drug Coverage
Medicare Part A
- hospital care limited to 90 days
- lifetime reserve of 60 additional days for individuals who have exhausted the initial 90 days
- skilled nursing care
- condition must expected to improve
- home health services
- care in a hospice for the terminally ill
Medicare Part B
Requires monthly premium (not the case for Part A)
Medicare Part C
Health plan options that are part of the Medicare program which allows individuals to choose alternatives to Parts A, B, and D
Medigap policies
Supplemental health insurance policies standardized by the HIPAA legislation and identified in most states by the letters A through N for the types of benefits provided
Medicaid
A joint federal and state health insurance program designed to provide benefits for the indigent and impoverished
Look-back period of 60 months for assets transferred to others
