Exam 3 Part D

Question 1

Managed Care Plans

Answer 1

HMO (Health Maintenance Organization

Question 2

HMO

Answer 2

• Health Maintenance Organization
• Removes incentives present under fee for service plans to do more rather than less
• Does not pay providers by just doing more
• Places providers/ hospitals at financial risk for over utilization

Question 3

Types Of HMOs

Answer 3

• Staff Models

- Group Model

Question 4

Staff Models

Answer 4

• Physicians are EEs of the HMO
• Paid by a salary
• Only see HMO patients

Question 5

Group Model

Answer 5

• Physicians are EEs of a separate group practice or part owners in the group practice
• HMO enrolls individuals and contracts with group practice to take care of HMO patient
• Group practice can see HMO and non HMO patients

Question 6

Two Disadvantages to HMOs

Answer 6

1. May have to change providers to join HMO

2. No coverage for out of plan utilization

Question 7

PPOs

Answer 7

• Preferred Provider Organization
• Have contracts with preferred providers (doctors, hospitals, etc)
• Agree to accept the PPO payment and deductibles or co payments as payment in full
• Discount services
• Cannot balance bill

Question 8

Consumer Directed Health Plans

Answer 8

• Designed for engaging people to make decisions on health and wellness based on consumerism
• Buy healthcare like other products; car, home
• Introduces consumerism
• Behavior responsible for 50% of healthcare cost
• Force employee to be aware of costs
• Enable empowered consumers
• 80/20 rule; 80% of the cost comes from 20% of population

Question 9

HRA & HSA Accounts

Answer 9

• High deductible ($1,000)
• Coinsurance
• Employer Funds account
• Employee can add funds (pre tax)
• If you spend to much, you pay more
• Catastrophic costs per person capped
• Pays 100% of preventative measures
• Focus on health and wellness and behavior
• Savings as opposed to spending

Question 10

Patient Protection Affordable Care Act

Answer 10

• Dependents covered to 26
• Lifetime limits are now barred
• $2,000 penalty for ERs who do not offer EE Health Insurance
• Individual Mandate
• Fees from penalties fund government healthcare option
• No charging higher rates for those with pre-existing conditions and coverage of those conditions may not be excluded
• All preventative care and check ups are free
• Taxes 40% on cadillac health plans

Question 11

Eligibility Standards: Pension Plans

Answer 11

• Usually more strict than those in other types of benefits
• Usually establish minimum age and minimum service requirements to establish eligibility
• Minimum age cannot exceed 21
• Minimum service requirement cannot exceed one year

Question 12

Retirement Ages

Answer 12

• Normal Retirement
• Early Retirement
• Late Retirement

Question 13

Normal Retirement Age

Answer 13

• NRA

- Earliest age at which EEs can retire and receive full benefits

Question 14

Early Retirement Age

Answer 14

• Earliest age at which an EE may retire and receive some benefit
• Usually paid a reduced benefit (full and equivalent)

Question 15

Late Retirement Age

Answer 15

• Retirement after normal retirement age
• ER should increase benefit
• Not required to do so

Question 16

Vesting

Answer 16

• The degree to which the plan’s participant’s rights are non fortifiable, regardless of whether the EE continues working for a particular ER
• The EE is always entitled to his/her own contributions with interest
• Vesting just refers to status to ER - contributions

Question 17

Vesting Rules

Answer 17

• Five Year Cliff Vesting
• Graded Seven Year Vesting
• 100% after 2 years with 2 year waiting period

Question 18

Five Year Cliff Vesting

Answer 18

• All or nothing

Question 19

Graded Seven Year Vesting

Answer 19

• 20% vested after 3 years of service
• 40% vested after 4 years of service
• 60% vested after 5 years of service
• 100% vested after 7 years of service

Question 20

Defined Contribution Plans

Answer 20

• Known annual ER contribution
• Unknown retirement benefit received at retirement
• Why?
  1. EE may also contribute
  2. Different EEs have different number of years of service
  3. Different EEs have different number of years of service
  4. Future Salary is unknown
• Uncertainty regarding future retirement income, investment, risk rests with EE
• ER liability is limited to cast contributions

Question 21

Defined Contribution Plans Advantages

Answer 21

• EEs see exact balance at all times throughout working lifetime
• EEs who changed jobs several times are easily able to move account balances to new ER’s plan (in most cases

Question 22

Defined Benefit Plans: Known

Answer 22

• Formula that determines benefit at retirement

- With proper information, an EE may be able to calculate benefit at retirement fairly precisely

Question 23

Defined Benefit Plans: Unkown

Answer 23

• Amount an ER must contribute in any particular year in order to fund the promised benefit
• ER bears uncertainty and investment risk