Group Medical Expense Insurance Flashcards
True or False
Group medical premiums paid by an employer are NOT deductible as a business expense to the employer
AND NOT reportable as taxable income to the employee
False; only the first statement is false
Group medical premiums paid by employer are deductible as business expense to the employer
What is the key purpose of group underwriting?
To avoid Adverse Selection
Describe how Association Health Plans (AHPs) work
The AHP provides large-group quality medical coverage at good rates to its members (an association of self-employed and small business employers)
Describe the differences between Noncontributory Plans vs Contributory Plans
(health insurance)
With a Noncontributory Plan, all premiums are paid by employer
With a Contributory Plan, premiums are shared by employer AND employee
3 types of Group Insurance Plans
- Group Life Insurance Plans
- Group Disability & Long Term Care Plans
- Group Medical Expense Plans
Compare and contrast the 2 common types of Traditional Indemnity Plans
Group Medical Expense Insurance
-
Hospital - Surgical Plans
(basic plans)
(cover the basics; lower premium) -
Major Medical Plans
(most common plans)
- Annual deductible
- Comprehensive range of services
- Coinsurance w/ max out of pocket limit
What is the goal “Managed Care” plans?
Group Medical Expense Coverage
Medical insurance plans whose goal is to lower cost of care AND provide more efficient medical services
What do Managed Care Plans provide?
Group Medical Expense Coverage
Generally provide comprehensive major medical coverage but…
have certain cost management characteristics
5 Characteristics of Managed Care Plans
- Preventative Care is encouraged
- Comprehensive case management (assess the effectiveness of treatment)
- Controlled access to providers
- Risk sharing (provide financial incentives to providers to minimize tests and be cost effective)
- Monitoring Providers (to ensure good service and care)
3 Primary types of Managed Care Plans
Managed Care Plans
- Health Management Organization (HMO)
- Preferred Provider Organization (PPO)
- Point of Service Plan (POS)
How do Health Maintenance Organizations (HMOs) work as a Managed Care Plan?
Type of Managed Care Plan:
- Provides medical care on a pre-paid basis to volunteer enrollees in a specified geographic area
- Widely available
- Can only go to doctors, specialists, hospitals in plan (except emergencies)
(also Advantage Plan Part C for Medicare)
How do Preferred Provider Organizations (PPOs) work as a Managed Care Plan?
Similar to traditional major medical plans except a PPO contracts w/ a wide range of medical care “preferred providers” to obtain lower costs
Providers are typically paid on a fee-for-service basis
How do Point of Service Plans (POSs) work as a Managed Care Plan?
Hybrid of HMO and PPO
It’s the most common and allows HMO members to go outside HMO network for higher coinsurance percentage
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)
Allows employees and specified dependents the option of continuing the same group medical expense insurance without proof of insurability for up to 36 months because of a “qualifying event.”
True or False
Departing employees who take the COBRA option must pay a percentage of the premium plus a small fee
False; FULL premium AND small admin fee
What are “qualifying events” for COBRA?
-Death of covered employee
-Loss of dependent child status
-Divorce
-Employee enrolls in Medicare
-Retirement
-Disability
-Termination (not gross misconduct)
True or False
Group dental plans are rarely convertible to individual coverage, but are subject to COBRA continuation rules
TRUE
Group dental insurance is usually available as one of these 2 types of plans…
List them and explain
- Scheduled Plans - provide a list of fixed allowances for each procedure. Insured pays differences of higher than expected charge.
- Non-scheduled Plans - (aka comprehensive plans) mimic payment process of major medical plans. Plan pays benefits for procedures based on actual charges (if usual, customary, and reasonable)
Describe the benefit design of Group Dental Plans
-Emphasize routine diagnostic procedures and preventative care
-Treatments have different levels of severity/cost
What are Cafeteria Plans?
They allow employees to tailor their benefits and help employers save money; choose what you need from a menu
3 most common types of “Cafeteria Plans”:
-Cafeteria Plan with employer contributions
-Cafeteria Plan paid for with employee contributions
-Flexible Spending Account (FSA)
Define how the “Cafeteria Plan with employer contributions” works:
Employee chooses between 2 or more available benefits with employer provided $. If not, can receive cash that is taxed
Define how the “Cafeteria Plan paid for with employee contributions” works:
Employees purchase benefits with pre-tax dollars (payroll deducted)
One specialized type of Cafeteria Plan reduces employee compensation so employer can pay premiums. What is it called?
Premium-conversion plan
What is a Flexible Spending Account (FSA)?
Allows eligible employees to fund cost of qualified benefits on a pre-tax basis (Health Care and Dependent Care)
- Contribution limits apply
- Use it or lose it
What is a Health Reimbursement Arrangement (HRA)?
A type of health care plan that reimburses employees for qualified medical expenses.
Who makes the contributions to a Health Reimbursement Arrangement?
Employers; HRA is an Employer owned account
