C.19 Health insurance and health care cost management (individual and group) Flashcards
Learners will be able to identify and compare the key features and cost-management strategies of individual and group health insurance plans, including deductibles, premiums, copayments, and coverage limits.
Mariana is evaluating her financial plan and is considering the purchase of a health insurance policy. She understands the importance of insurance in her financial portfolio but wants to ensure that she chooses a policy that aligns with the primary purpose of having health insurance. With that in mind, which of the following should Mariana consider the primary purpose of purchasing health insurance?
A. To cover all her medical and healthcare-related expenses.
B. To ensure she receives all forms of preventative care.
C. To safeguard against significant financial loss due to unforeseen medical emergencies.
D. To gain access to a range of experimental treatments for various conditions.
C. To safeguard against significant financial loss due to unforeseen medical emergencies.
The primary purpose of health insurance is to protect individuals from significant financial loss that may result from unexpected medical emergencies or conditions. While health insurance can provide coverage for preventative care and, depending on the policy, may cover some experimental treatments, it is not designed to cover all medical expenses in every circumstance. Instead, it acts as a financial safety net, helping to manage the risk of high costs associated with serious health issues.
C.19 Health insurance and health care cost management (individual and group)
Samantha has recently started a new job and is exploring her health care options. She has a choice of health insurance plans and is also considering additional ways to manage her out-of-pocket medical expenses. Samantha is particularly interested in a plan that offers a Health Savings Account (HSA). She is aware that an HSA has certain tax advantages but is unsure of its specific purpose.
Which of the following best describes what an HSA offers to Samantha?
A. A tax-advantaged account used to pay for qualified medical expenses.
B. A government-funded program designed to assist low-income individuals with their medical costs.
C. An insurance policy that provides coverage for preventive care only.
D. A health care program specifically tailored for individuals with pre-existing medical conditions.
A. A tax-advantaged account used to pay for qualified medical expenses.
An HSA is a savings account that allows individuals to put aside money on a pre-tax basis to pay for qualified medical expenses. HSAs are often paired with high-deductible health plans (HDHPs), providing financial benefits for individuals with these types of insurance plans. The funds contributed to an HSA are not subject to federal income tax at the time of deposit. Additionally, HSA funds can roll over and accumulate year to year if they’re not spent, and the interest or other earnings on the account are tax-free. This makes HSAs a valuable tool for individuals to manage their out-of-pocket medical expenses while receiving a tax advantage.
C.19 Health insurance and health care cost management (individual and group)
Jonathan and Lisa are evaluating their health insurance options during their company’s open enrollment period. They are looking for a plan that offers a network of healthcare providers and facilities with which it has negotiated preferred rates. They want the flexibility to visit specialists without a referral and also prefer having out-of-network coverage, though they understand it may be at a higher cost.
Which of the following types of managed care plans are Jonathan and Lisa considering?
A. Indemnity plan
B. Preferred Provider Organization (PPO)
C. Health Savings Account (HSA)
D. High-Deductible Health Plan (HDHP)
B. Preferred Provider Organization (PPO)
A Preferred Provider Organization (PPO) is a type of managed care plan that offers a network of healthcare providers and allows for flexibility when choosing specialists or receiving out-of-network care, though at higher costs. Indemnity plans, HSAs, and HDHPs do not specifically refer to the type of managed care network or the flexibility in choosing providers that is the hallmark of a PPO. An HSA is a savings account for health expenses, usually paired with a high-deductible plan, but it is not a type of managed care plan. An indemnity plan is a type of health insurance that reimburses the insured for medical expenses regardless of where they receive their care, and it does not have the negotiated rate benefits of a PPO. HDHPs are health insurance plans with higher deductibles and lower premiums but do not specify the network of providers or payment structure for services.
C.19 Health insurance and health care cost management (individual and group)
Susan is reviewing her health insurance policy to understand her potential out-of-pocket costs for a planned surgery. The policy includes various cost-sharing elements that will determine how much she will have to pay. Her health insurance policy has a $1,200 deductible, a 20% coinsurance fee after the deductible is met, and a $30 copayment for every visit to a specialist.
Considering these factors in Susan’s health insurance policy, which option(s) represent cost-sharing elements that Susan is required to pay?
A. Deductible only
B. Coinsurance only
C. Copayment only
D. Deductible, Coinsurance, and Copayment
D. Deductible, Coinsurance, and Copayment
The cost-sharing elements in a health insurance policy typically include deductibles, coinsurance, and copayments. These are out-of-pocket costs that the insured must pay as part of an agreement with the insurance company.
- The deductible is the amount Susan must pay before her insurance company begins to cover her medical expenses.
- Coinsurance is the percentage of the covered health care costs Susan is responsible for paying after she has paid her deductible.
- A copayment is a fixed amount Susan pays for certain medical services, like visiting a specialist.
C.19 Health insurance and health care cost management (individual and group)
John Doe recently visited the hospital for a minor surgery that resulted in a bill of $5,000. Under his health insurance policy, John has a $1,000 deductible and is responsible for a 20% coinsurance on the balance after the deductible is met.
Based on John’s insurance terms, how much is he required to pay out-of-pocket for his surgery?
A. $800
B. $1,000
C. $1,800
D. $2,000
C. $1,800
John must first pay his deductible, which is $1,000. After the deductible is met, the remaining balance of his bill is $4,000 ($5,000 - $1,000 = $4,000). John is responsible for 20% of this remaining balance, which is $800 (20% of $4,000). Therefore, the total amount John owes is the sum of his deductible and his coinsurance payment: $1,000 + $800 = $1,800.
C.19 Health insurance and health care cost management (individual and group)
Which of the following is not an essential health benefit required under the Affordable Care Act (ACA)?
A. Ambulatory patient services
B. Emergency services
C. Maternity and newborn care
D. Cosmetic surgery
D. Cosmetic surgery
Cosmetic surgery is not considered an essential health benefit under the ACA. Essential health benefits include ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance abuse disorder services, prescription drugs, rehabilitative and habilitative services and devices, laboratory services, preventive and wellness services and chronic disease management, and pediatric services.
C.19 Health insurance and health care cost management (individual and group)
Jonathan, a 45-year-old non-smoker, is evaluating his health insurance options during his company’s open enrollment period. He notices that the premiums quoted to him differ from those of his colleagues. Jonathan’s colleague, Maria, is 30 years old, his boss, Mr. Thompson, is a 60-year-old smoker, and his friend, Lisa, is a 40-year-old female.
Considering their different profiles, which of the following factors can affect the cost of health insurance premiums for each individual?
A. Age
B. Gender
C. Smoking status
D. All of the above
D. All of the above
Each of the factors listed can affect the cost of health insurance premiums. Insurers often charge higher premiums based on age, with older individuals typically paying more due to the increased risk of health issues as one ages. Smoking status is also a significant factor, as smokers are at a higher risk for many health complications, leading to higher premiums. While the impact of gender on health insurance costs can vary depending on regulations and the type of coverage, it has historically been a factor in determining insurance costs. Thus, all of the factors mentioned—age, gender, and smoking status—can influence the cost of health insurance for an individual.
C.19 Health insurance and health care cost management (individual and group)
Johnathan is reviewing his health care plan options and notices that one of the plans includes a cost containment measure that involves the health care provider being paid a single lump sum for all services provided for a particular treatment or condition, instead of billing for each individual service. This method is intended to encourage more efficient care by the provider.
Based on the description provided, which of the following is the cost containment method included in Johnathan’s health care plan?
A. Bundled payments
B. Fee-for-service
C. Balance billing
D. Out-of-pocket expenses
A. Bundled payments
Bundled payments are a method of cost containment in health care that involves paying health care providers a single lump sum for all services related to a specific treatment or condition rather than paying for each service individually. This approach can help to align incentives for providers to deliver efficient and high-quality care, as they would be rewarded for reducing unnecessary services and achieving better health outcomes.
C.19 Health insurance and health care cost management (individual and group)
Jeremy is studying for his Certified Financial Planner CFP® exam and is reviewing a case study where a health management organization (HMO) is assessing various metrics to determine the quality of care they provide. The HMO has gathered data on various aspects of their operations. As part of the study materials, Jeremy needs to identify which of the following metrics the HMO might consider as a health care quality measure:
Which of the following should Jeremy recognize as an example of a health care quality measure?
A. The overall satisfaction level of patients treated in the last year.
B. The total revenue generated by the hospital in the previous fiscal quarter.
C. The average insurance premiums paid by members of the HMO.
D. The annual salaries paid to healthcare providers employed by the HMO.
A. The overall satisfaction level of patients treated in the last year.
Health care quality measures are typically concerned with the effectiveness, safety, efficiency, and patient-centeredness of health care services. Patient satisfaction is a direct measure of the quality of care from the patient’s perspective, making it an important metric for health care quality. Options B, C, and D are financial metrics that relate to the economic aspect of the health care provider and do not directly measure the quality of care provided to patients.
C.19 Health insurance and health care cost management (individual and group)
Sarah has a health insurance plan with a $500 deductible and 20% coinsurance requirement. She recently had a hospital stay that cost $10,000. How much will Sarah have to pay out-of-pocket for this hospital stay?
A. $1,000
B. $2,000
C. $2,400
D. $3,000
C. $2,400
In Sarah’s case, the deductible and coinsurance work similarly to the previous example. Here’s how we calculate how much Sarah will have to pay:
Deductible: Sarah has a $500 deductible, which means she will have to pay the first $500 of her hospital stay.
After meeting the deductible, the remaining cost of the hospital stay is $10,000 - $500 = $9,500. Sarah is responsible for 20% of this due to her coinsurance requirement, and her insurance company will cover the remaining 80%.
20% of $9,500 equals $1,900 (0.20 * $9,500 = $1,900).
So, adding the deductible and coinsurance amounts together, the total amount Sarah will have to pay out-of-pocket for her hospital stay is $500 (deductible) + $1,900 (coinsurance) = $2,400.
C.19 Health insurance and health care cost management (individual and group)
Jonathan is a financial planner preparing a presentation for a client, Sarah, who is looking to reduce her monthly expenses. One of the areas they are reviewing is Sarah’s health insurance costs. Sarah is generally healthy, has no dependents, and is interested in a plan that has the lowest monthly premium. She understands that she might have to pay more out-of-pocket for healthcare services as a result. Jonathan presents her with several options but recommends one that typically offers the lowest monthly premiums while still providing the coverage she needs.
Which type of health insurance plan did Jonathan most likely recommend to Sarah for the lowest monthly premium?
A. Health maintenance organizations (HMOs)
B. Preferred provider organizations (PPOs)
C. Point-of-service (POS) plans
D. High-deductible health plans (HDHPs)
D. High-deductible health plans (HDHPs)
High-deductible health plans (HDHPs) typically offer lower monthly premiums compared to other types of plans like HMOs, PPOs, and POS plans. The trade-off is that the insured must pay more out-of-pocket costs up to a certain deductible before the insurance company starts to pay its share. These plans are often suitable for individuals who do not require frequent medical care and are looking to minimize their monthly expenses. For someone like Sarah, who is generally healthy and without dependents, an HDHP could be a financially sensible choice.
C.19 Health insurance and health care cost management (individual and group)
Jennifer has recently started a new job and is reviewing her health insurance options during the open enrollment period. She notices that the policy outlines various cost-sharing requirements for healthcare services, including deductibles, coinsurance, and copayments. Jennifer recalls her Certified Financial Planner mentioning that some of these cost-sharing requirements might not apply to preventive care services, such as vaccinations and annual check-ups, as per the Affordable Care Act.
As Jennifer’s Certified Financial Planner, which of the following cost-sharing requirements would you inform her may be waived for preventive care services under her new health insurance plan?
A. Deductible
B. Coinsurance
C. Copayment
D. All of the above
D. All of the above
Under the Affordable Care Act, many health insurance plans are required to offer a range of preventive care services without charging a deductible, coinsurance, or copayment. This means that services such as immunizations, screening tests, and annual physical exams can be accessed by patients free of any cost-sharing, assuming they are obtained from healthcare providers within the insurance network. This provision is designed to encourage individuals to seek preventive care that can lead to early detection of illnesses and reduce overall healthcare costs.
C.19 Health insurance and health care cost management (individual and group)
Samantha has a health insurance plan with ABC Health, which has a network of preferred providers. Recently, she had to visit various healthcare services for different health issues. She saw Dr. Johnson, her primary care physician, who is listed under her plan’s in-network providers. She was also referred to Dr. Ellis, a specialist in gastroenterology, but Dr. Ellis is not listed as a preferred provider by ABC Health. Additionally, Samantha had to visit QuickCare Urgent Center one weekend for an acute allergic reaction, and this center is also not a part of her insurance network.
Based on Samantha’s insurance plan with ABC Health, which of the following health care providers may be considered out-of-network and potentially subject to higher out-of-pocket costs for Samantha?
A. Dr. Johnson, her primary care physician
B. Dr. Ellis, the specialist in gastroenterology
C. QuickCare Urgent Center
D. Both B and C
D. Both B and C
In Samantha’s scenario, both the specialist, Dr. Ellis, and the QuickCare Urgent Center are not listed as in-network providers by ABC Health. Therefore, they would be considered out-of-network. In-network providers like her primary care physician, Dr. Johnson, have agreements with the insurance company to provide services at a discounted rate. Visits to out-of-network providers like Dr. Ellis and QuickCare Urgent Center, on the other hand, typically result in higher out-of-pocket costs because they do not have such agreements in place.
C.19 Health insurance and health care cost management (individual and group)
Mary Tanaka is a Certified Financial Planner CFP® preparing a comprehensive financial plan for her clients, the Johnson family. In reviewing their insurance coverage, Mary notes that the Johnsons are enrolled in a health care delivery model that focuses on coordinating care between their primary care physician, specialists, and hospitals. This model also has systems in place aimed at improving the quality of care and reducing unnecessary spending. Mary recognizes that this model is particularly designed to incentivize health care providers to work together to treat an individual patient across care settings—including doctors’ offices, hospitals, and long-term care facilities.
Based on the scenario, which type of health care delivery model are the Johnsons most likely enrolled in?
A. Accountable Care Organization (ACO)
B. Health Maintenance Organization (HMO)
C. Preferred Provider Organization (PPO)
D. Point-of-Service (POS) plan
A. Accountable Care Organization (ACO)
The key aspects of the scenario that point to an ACO are the emphasis on care coordination, quality improvement, and the incentivization for providers to work collaboratively across various care settings. ACOs are groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high-quality care to their Medicare patients. The goal of coordinated care is to ensure that patients get the right care at the right time, while avoiding unnecessary duplication of services and preventing medical errors. HMOs, PPOs, and POS plans are also types of health care delivery models, but they do not specifically emphasize coordinated care and quality improvement as ACOs do.
C.19 Health insurance and health care cost management (individual and group)
Martha, a human resources manager at XYZ Corp, is tasked with finding strategies to manage the rising healthcare costs for the company’s employees. XYZ Corp wants to ensure that the workforce remains healthy and productive while also keeping the budget in check. Martha is considering several strategies to contain these costs without reducing the quality of healthcare benefits offered to the employees. Which of the following strategies should Martha consider implementing as a cost containment measure for XYZ Corp’s healthcare plan?
A. Implementing comprehensive wellness programs for employees
B. Decreasing the overall salary package for new employees
C. Completely removing health insurance from employee benefits
D. Increasing the administrative staff to manage healthcare claims
A. Implementing comprehensive wellness programs for employees
Implementing comprehensive wellness programs for employees, is an example of a cost containment strategy because wellness programs can lead to healthier employees, which can reduce the overall healthcare costs for an employer. These programs often lead to a decrease in the number of insurance claims and can sometimes reduce the premiums for the employer. Wellness programs may include activities like health screenings, exercise and fitness incentives, smoking cessation programs, and stress management workshops.
C.19 Health insurance and health care cost management (individual and group)
