Chapter 13 : Health and Accident Insurance Flashcards
Medical expense insurance
Pays benefits for nonsurgical doctors’ fees commonly rendered in the hospital
Accidental death and dismemberment insurance
Purest form of accident insurance. Provides the insured with a lump-sum benefit amount in the event of accidental death or dismemberment under accidental circumstances
Participating Plan
Policy owner receives shares (dividends) of divisible surplus of the company
Patient Protection and Affordable Care Act
AKA Affordable Care Act
Obamacare
Only applies to specific medical coverage
Renewability Provisions (5)
- Cancellable
- Optional renewable
- Conditionally renewable
- Guaranteed renewable
- Noncancellable
Premium factors for health insurance (8)
- Interest
- Expense
- Types of benefits
- Morbidity
- Claims experience
- Age
- Sex
- Occupation of the insured
Experience-rated plans
Group health plan
Premium reductions retroactive for 12 months
Cafeteria Plan
AKA 125 Plan
Employer contributes
Employee chooses benefits
Employee CAN contribute more money to get more benefits, however it is considered taxable as income to the employee
*S-Corp owner with a greater than 2% share
Business Overhead Expense Insurance
Reimbursement for business expenses and payroll in case the business owner becomes disabled. May include:
1. Rent
2. Utilities
3. Telephones
4. Leased equipment
5. Employees salaries
Disability Buy-Sell Plan
Selling and buying of a partners stock in the event of a disability.
Policy proceeds are normally tax free.
Key Person Disability Insurance
- Benefits are business tax free
Contract for Coverage
AKA Certificate of Coverage
Between the insurance company and the employer
Master policy is issued to the employer
Small groups vs Large Groups
Small groups : 1-50 employees
Large groups : 51+ employees
Typical minimum for a group policy
10-15 people
Individual Eligibility Requirements (3)
- 1-3 months employment service
- Full-time employment
- 65+ must be offered the same benefits as younger employees
Non-contributory vs Contributory
Non-contributory: employer pays the entire premium
100% participation by eligible members
vs
Contributory: Employees share the cost of the premium
75% participation by eligible members
Shared funding arrangement
Employer to self-fund health care expenses up to a limit.
Minimum premium agreement
Employer self-insures the normal and expected claims up to a given amount, insurer funds excess.
Retrospective premium arrangement
Insurer agrees to collect provisional premiums but may collect additional premium or make a premium refund at the end of the year based on the actual incurred losses
Self-funding arrangement
Large employers
Small Employer
1-50
How long does an employee have to make an application for a converted policy?
Usually 31 days
HIPPA Privacy Rule
Provides federal protection for an individual’s health information and gives patients an array of rights with respect to that individually identifiable health information.
20+ employees must allow former employees to continue benefits.
HIPPA rules apply to all types of group health plans except disability income plans
COBRA
Requires employers with 20+ employees to continue group medical expense coverage for terminated workers for up to 18 months after termination
Permits the employee to elect to continue within 60 days
18 months after termination
29 if disabled
36 for dependents if employee dies
36 if employee becomes eligible for medicare
36 if employee divorces or legally separates
102% OF PREMIUM
Group disability income plan
% of individual’s earnings;
usually 50-100%
13-26 weeks of coverage
Paid weekly
Group long term - 2+ years;
limited to 60% of income
HSA
Tax-favored; grows tax free and can be withdrawn tax-free to cover current and future qualified health care costs.
65 and under
55 - 65 can make additional catch-up contributions.
100% of individual’s health plan deductible
Qualified Health Care Expenses
- Doctors fees
- Prescription and non prescription medicines
- Necessary hospital services
- Retiree health insurance premiums
- Medicare expenses (not medigap)
- Qualified long-term care services
- COBRA coverage
Early withdrawal = 20% penalty
Accidental results
Less restrictive and stipulate only that the injury must result from an accident that is unintentional.
Limited Benefit Policies
- Provide benefits for expenses incurred for accidental injury only
- Policies that pay fixed dollar amounts for specified diseases or other specified impairements
- Policies that provide benefits for specified limited services
- Indemnity policies and other policies that pay a fixed dollar amount per day
Hospital indemnity/income
Provides a flow of income from the first day to the last day in the hospital.
Pay daily, weekly or monthly
All plans must include: (10)
- Ambulatory patient services
- Emergency services
- Hospitalization
- Maternity and newborn care
- Mental health and substance
- Prescription drugs
- Rehab services and devices
- Lab services
- Preventative wellness services
- Pediatric services
Medical Loss Ratio (MLR)
Limits the portion of premium dollars health insurers may send on administration marketing and profits.
MLR Individual: 80%
MLR group: 85%
