5 - Employee Bene ts and Perquisites— Part II Flashcards
The first type of managed care plan is known as a health maintenance organization (HMO). Typically, HMOs specify the in-plan doctors and hospitals that participants may use. Normally, each patient is assigned a primary care physician (PCP) who controls access to specialists. For this reason, the PCP is sometimes called a ______. The employer pays the HMO an agreed-upon amount per employee (a monthly capitation fee).
A preferred provider organization (PPO) is a variation of an HMO that permits participants to go outside the prescribed list of health care providers for care in exchange for a higher fee and/or larger deductible (that is, the amount paid by the participant before any expense coverage by the plan).
A point-of-service (POS) plan permits a participant to delay the decision of staying within the network or going outside of it until ________.
gatekeeper
the service is needed
Factors impacting the premium include
(1) ______ (particularly for renewal premium rates),
(2) prices of ______,
(3) size of ______
(4) ________ of the plan.
The medical _______ rates of recent years have generally increased health care premiums irrespective of the above-noted factors. A rm should project future medical costs in planning budgets for upcoming time periods. No doubt one should expect cost increases or decreases based upon the factors mentioned in the text, but consideration should be given to the general medical care costs in the economy.
- plan changes
- services
- unit covered
- utilization
inflation
When the insurance carrier and the employer differ significantly on what the premium level should be for the following year, quite often they agree to write a _____________, or “retro,” into the contract. The carrier agrees to accept a lower premium. In exchange, the employer agrees to reimburse expenses at the end of the year up to a predetermined limit. Thus the employer improves cash flow during the year in exchange for an increased level of _____ risk at year-end.
retrospective premium adjustment
financial
Another way companies control health care expenses is by entering into a minimum premium arrangement with the insurance company. As the term implies, this reduces premiums to a minimum. But, the company agrees to deposit into a bank account an amount believed sufficient in size to cover normal _________ The carrier agrees to pay any and all claims beyond the amount deposited by the company.
The premium paid by the company is to ensure this excess protection. This approach results in savings to the company in two ways.
- The first way is a reduction of proportionate amount in premium ______ due the state.
- The second way is a signi cant reduction in ______ to cover open and unreported claims. These are claims that are incurred during the year the contract is in force but not paid until the following year because they were either not reported or reported but not paid as of the end of the year. The company must always keep an amount on deposit to cover current and expected future costs should the claims be higher than expected.
claim experience.
taxes
reserves
When a company takes all financial risk for claims, it becomes _________. This may be either on a “pay-as-you-go” basis or by establishing reserves to level out payments. If the company establishes a trust in accordance with Section 501(c)(9) of the Internal Revenue Code, it can take a deduction for the amount contributed to the trust or voluntary employees bene ciary association (VEBA).
Additionally, earnings of the trust are not subject to taxes, thus making contributions very cost-effective. While the trust is constructed to hypothetically meet all claim expenses, unusual circumstances could completely exhaust the funds before paying all claims. Rather than face this possibility, some companies purchase _______ protection that stipulates at what point the insurer will assume the responsibility for losses.
self-insured
stop-loss
A win-win scenario for the health care provider and patient is home health care where hospital services are provided at home rather than in a hospital. The provider avoids costly hospital charges, and the patient is permitted to recuperate at home. Plans may vary in terms of their coverage. The equipment, nursing and therapy, and service aide may be provided. Home health care may be provided directly through an independent contractor or indirectly through the health care provider.
Home health care helps patients _______ the health issue within the friendlier confines of their homes. Home health care covers the range from recuperation to long-term care to terminal diseases, which may require hospice care. In addition to providing emotional support and pain relief, assistance with household chores may also be included. Insurance coverage can also be obtained to pay for long-term care in an assisted living center, nursing home, adult day care and in-home services for self, spouse, parents, parents-in-law and grandparents.
self-manage
Medicare is national health insurance for those aged ___ and older. in effect since 1966, it consists of part A and part B. part A is focused on ______. part B is for _______, primarily physician services. Blue Cross/Blue shield and commercial insurance companies offer policies to supplement medicare coverage often referred to as ______ policies. (p. 304)
(medicare-eligible individuals also have the option of purchasing prescription drug coverage through medicare part ___. the program provides the bene ts through private prescription drug plans that are subsidized by the federal government.)
65
inpatient care
outpatient care
medigap
d
Medical exams are very important to the executive since they are intended to identify _______ problems before they advance into major concerns. The exam could be given by the executive’s own doctor, a clinic and/or the company doctor. Some examinations are performed at the employee’s place of work or in his or her own community. Others are coincidentally located near resort communities. Eligibility may be a function of job grade or organization rank, but the frequency and extent of examination is in some instances related to age. Medical exams are very cost-effective, as a recipient has no imputed income whereas the company has a _____.
A physical fitness program is a key component of a wellness program. In some companies, tness programs are limited to executives. Physical activity may also reduce work-related stress. Thus, the tness program does not simply promote better physical being, but also assists in shedding the tensions and pressures of work. In addition to stress management, nutrition information, smoking cessation and weight control programs are often available. Often under the supervision of trained company medical staff, executives are given perhaps three hourly sessions per week to work through a concentrated schedule of activity. To date, physical tness programs are tax-deductible to the company and do not result in _______ to the individual.
correctable
tax advantage
imputed income
Dental policies are either _________ or __________-type plans. Many plans pay the full cost of normal checkups, x-rays and cleaning to encourage early detection of problems. Thus, early diagnosis and treatment should reduce the need for expensive restorative care. In addition to preventive care, plans provide basic care (restorations and basic oral surgery) as well as major care (complex restoration, crowns, root canals and perhaps orthodontics). While preventive care may be fully reimbursable, the patient pays a portion for basic and even more for major care.
scheduled
comprehensive
Consumer-directed health plans are funding vehicles with the goal of getting individuals more involved in making health care _______.
These plans are designed to reduce health care costs by permitting the payment of such costs on a pretax basis. CDHPs typically combine a high- deductible health plan with one of two types of individually controlled accounts (HRAs or HSAs) that can be used to pay deductibles and other costs not covered by the high-deductible plan. The basic plan structure provides first-dollar coverage through either an HRA or HSA fund. The _______ then bears full responsibility for the difference between the fund amount and the deductible. Once the deductible is met, the plan coinsurance and copayment features apply.
There are no speci c or legally required features mandated, per se, for a CDHP at the federal level. Neither the Employee Retirement Income Security Act (ERISA) nor federal tax laws impose additional requirements on CDHPs beyond those generally applicable to health plans. However, federal law does precisely define how the tax-favored individual health accounts (both HSAs and HRAs) common to CDHPs must be structured. Federal law also establishes some basic requirements for the high-deductible plans that must accompany HSAs if the accounts are to receive certain tax benefits.
decisions
employee
__________ are individual employee accounts funded by pretax payroll deductions. Beginning in January 1, 2013, the IRS imposed a limit on contributions to FSAs. The ________ amount must be determined prior to the beginning of the year. It can be used to pay out-of-pocket expenses such as the deductible, the employee portion of coinsurance, as well as expenses not covered by the medical plan. Unused amounts are ________ after a speci ed period.
flexible spending accounts (FSAs)
contribution
forfeited
A ___________ permits individuals to set aside pretax dollars into a separate savings account. To be eligible the person must be a taxpayer and a participant in a medical plan with a high annual deductible and significant maximum out-of-pocket cost. Unused amounts at the end of the year may be __________
health savings account (HSA)
rolled into the following year.
The two provisions of the Patient Protection and Affordable Care Act that are viewed as having a direct impact on executives are:
An additional income tax of ____% and a Medicare tax of ___% on investment income over a stipulated amount based on the taxpayer’s ling status
The so-called Cadillac tax, a ____% excise tax on employer-sponsored plans spending more than stipulated amounts for individuals and for families; the tax is expected to dissuade employers from continuing to offer rich health care plans. The effective date of this provision has been delayed until ______.
- 8
- 9
40
2018
The most basic form of life insurance is _______, in force for a person’s entire life. Premiums may be paid until death or for a limited period. A limited period payment is expressed either in the number of years during which premiums are required or the age at which the policy will be considered paid in full. Such policies are more common with individual rather than group policies.
Each year a portion of the premium is credited to a reserve created to meet the financial obligation incurred by the insurance company. The carrier invests this amount in things such as mortgages. The cash value is available to the policyholder during the period of insurance protection in the form of a ______ against the value of the policy. The rate of interest is specified in the contract. For many, these rates are signi cantly below what the individual would have to pay a bank.
Typically, the employee can be expected to be taxed on the employer’s contribution to permanent insurance unless the policy is _______ at the time of termination.
whole life
loan
forfeitable
Insurance that specifies the term or period during which the value of the policy is in force is called term insurance. The cost of term insurance is ______, especially if purchased while young. However, the cost increases with _____. By the time one has reached the 60s, the cost has increased very dramatically. Term insurance is pure insurance protection, paying only at time of death if the policy is still in force. There is no ______. Some policies are renewable. A renewable policy may continue for another prescribed period of time without the insured having to undergo a medical examination.
Term is the typical form of insurance provided by companies to their employees. Called _______, it identi es a group of eligible employees and provides insurance coverage typically until (1) the employee leaves or (2) the contract expires (traditionally the contract is renewed annually), whichever occurs rst.
very low
age
cash value
group term
