Chapter 1: Health + Accident Flashcards
What are the three categories of health insurance?
- Medical Expense Insurance
- Disability income Insurance
- Accidental death and dismemberment insurance
Five types of renewability provisions in health insurance
- Cancellable
- Optionally Renewable
- Conditionally renewable
- Guaranteed renewable
- Noncancelable
Define subrogation
The right of the insurer to pursue a third party that caused an insurance loss to the insured
Aka recover payment made to the insured from the negligent party
Name two benefits of group health insurance coverage
- Less out of pocket cost
- Guaranteed coverage when no longer working for same job because of conversion factor built into policy
Benefits of a business providing health insurance to employees:
- Morale and Productivity
- Helps employees pay for needed benefits that would otherwise come out of pocket (therefore decrease wage increase demands)
- Plans keep employer at competitive position in hiring and retaining employees
- Employer can obtain tax deductions
Cafeteria Plans
Employees can pick and choose from a menu of benefits that tailors to their specific needs
- Called a 125 plan, not taxable
- S-Corp Owner with a greater than 2% share cannot participate in a 125 plan
Business Overhead Expense Insurance
Designed to reimburse a business for expenses and payroll in the event the owner becomes disabled
- Premiums are not taxed but benefits when paid are treated as taxable income
Disability buy-sell Plans
- Sets forth terms for selling and buying a partners or stock owners share of a business in the event of a disability
- Proceeds are tax free
Key Person Disability Insurance
- Pays a monthly benefit to a business to cover expenses for additional help or outside services when an essential person is disabled
- Premiums are not tax deductible so benefits are tax free
Contracts for Group Health Insurance
- Between insurance company and employer
- Employer Receives master policy
- Employees receive certificates of insurance
- Enrollment periods (time in which employees can sign up for insurance)
Individual Eligibility
- Minimum of one to three months employment
- Full-Time Employment
- People age 65 and over should be offered same health benefits as younger employees
Noncontributory
Employer pays the entire premium
- Require 100% participation by members
Contributory
Employee pays portion of premium
Requires 75% participation by members
three characteristics that determine health insurance premiums for group
- Size of group
- Claim experience with previous insurers
- Ages of group members
Shared funding arrangement
Employer can self-fund health care expenses up to a certain limit then insurance company assumes risk
Minimum premium arrangement
Employer self-insures the normal claims up to a given amount (insurance company pays the difference)
Retrospective Premium Arrangement
The insurer agrees to collect provisional premium but may collect additional premiums or make a premium refund at the end of the year based on actual losses
Self-Funding Arrangement
Large employers may elect to fully self-fund
Health Insurance Portability and Accountability Act (HIPPA)
Ability to transfer or continue health insurance coverage for millions if American workers and families when they change or lose a job
HIPAA Privacy Rule
Provides federal protection for an individuals health information and rights to that information
HIPAA Security Rule
Provides technical safeguards to assure the confidentiality, integrity and availability of electronic protected health information
COBRA Continuation of Benefits
Requires employers with 20 or more employees to continue group medical coverage for terminated workers for up to 18 months
- Employee dies: 36 months of coverage for dependents
Blanket Health Benefits
Insurance that covers a group that may have been exposed to the same risk
No certificates issued like other plans
Franchise Health Plans
Coverage to members of an association or professional society
Credit Accident and Health Plans
Help the insured pay off a loan in the event that they become disable due to an accident or sickness
Non-occupational Health Plans
A policy that DOES NOT cover injuries sustained while at work because those injuries are covered by workers compensation
Health Savings Accounts (HSAs)
Tax favored account for accumulating funds to cover medical expenses
- Ages under 65
- Tax free
- Only for certain qualified expenses
Taxation of Group Health Insurance
- Employers can take a tax deduction for premiums paid
- Medical Benefits are not taxable income
- Disability benefits are taxable
Coordination of Benefits
Coordination of Benefits is the provision that applies when an enrollee is covered by two health plans at the same time. The provision is designed so that the payments of both plans do not exceed 100% of the allowed charges
