Health Insurance Flashcards
4 major classes of medical expenses
1.Hospital expense.
Covers expenses associated with hospitalization such as room and board charges, but it
cover physician fees.
- Surgical expense.
Covers surgeon fees whether in a hospital or outside of a hospital.
3.Physician’s expense.
Covers all nonsurgical physician expenses.
- Major medical.
Covers hospitalization, physician and surgeon fees, physical therapy, and prescription drugs
For health plans issued after September 2010, the lifetime limits cap on new health policies has
been eliminated.
Eye exams and dental care are excluded from coverage.
Usually an 80/20 coinsurance clause where the insurer pays 80% of expenses above tHe deductible and the insured pays 20% of expenses above the deductible.*
Each family member must satisfy a deductible with typically a maximum of 3 deductibles per family.*
The coinsurance portion also applies to each family member.*
*Specifics on these points will vary, but these are common requirements.
Out of pocket
Insured only pays the out of pocket max for group hospitalization and major medical.
All policies should now use the out of pocket approach per the affordable care act.
Patient protection and affordable care act (PPACA)
- requires us citizens and legal residents to have health insurance
- those without coverage pay a tax penalty of the greater of $695 per year up to 3X that Amount ($2805) per family or 2.5% of household income above filing threshold.
- requires guarantee issue and renew ability and allows rating variation based only on age, premium rating area, family composition and tobacco use.
- provides dependent coverage for children up to age 26 for all individual and group policies
- prohibits lifetime limits (2010) and annual limits (2014) on the dollar value of coverage.
PPACA - employer requirements
Employer Requirements:
-Assesses employers with 50 or more full time employees that do not offer coverage a fee of $4,250 per full-time employee, excluding the first 30 employees from the assessment.
-Requires employers with more than 200 employees to automatically enroll employees into health insurance plans offered by the employer. Employees may opt out of coverage.
This Exempts employers with up to 50 full-time employees from the above penalty.
PPACA - Four Benefit Categories
- Bronze plan represents minimum allowable coverage and covers 60% of the benefit costs of the plan with an out-of-pocket limit equal to the Health Savings Account (HSA) limit.
- Silver plan covers 70% of the benefit costs of the plan, with the HSA out-of-pocket limits;
- Gold plan covers 80% of the benefit costs of the plan, with the HSA out-of-pocket limits;
- Platinum plan covers 90% of the benefit costs of the plan, with the HSA out-of-pocket limits:
-Catastrophic plan available to those up to age 30 or to those who are exempt from the mandate to
purchase coverage and provides catastrophic coverage only with the coverage level set at the HSAb.
levels except that prevention benefits and coverage for three primary care visits would be exempt fina
the deductible. This plan is only available in the individual market.
Health Maintenance Organizations (HMO’s)
- Delivers comprehensive health care in return for a periodic payment (premium).
- Care is managed by a primary care physician (gatekeeper) who determines what care is received.
- The primary disadvantage is that there is no coverage “outside” of the HMO.
HMO - three structural models
- Staff Model - The HMO is a corporation, and medical staff members are employees of the HMO.
- Group Model - This structure is sometimes known as the network model where the HMO contracts
with groups of medical providers to care for insured plan subscribers. - Individual Practice Association - This HMO model is made up of physicians who have their own
office locations, but contract out to the HMO on a fee-for-service basis.
Preferred provider Organizations (PPO)
Network of health care providers with whom an employer or insurance company contracts.
The provider offers a discount on services.
The insured receives a high rate of reimbursement when using providers within the organization.
Insured may seek care elsewhere, but will suffer a penalty in the form of increased deductibles and coinsurance.
A PPO preserves employee’s option to choose a provider outside of the network.
Managed Care - primary care physician (PCP)
Insured accesses care via a primary care physician who provides services or refers to a specialist.
Physicians need approval to perform certain procedures and it may reduce a patient’s options for care if not
approved.
The consumer pays a small copayment or other deductible.
Health care providers agree to accept
compensation provided under the plan.
Health Savings Accounts (HSA’s)
- tax deduction for amounts contributed to the plan as well as tax free withdraw of contributions/earnings if used for qualifying medical expenses.
- to qualify individual must have medical insurance under a high deductible plan.
- funds can be carried over, don’t have to be used in year contributed.
- see image for contribution limits, $1000 catch up if 55 and older
HSA’s - rules that disqualify eligibility
- individuals are not eligible if they are covered in anyway by a non-HDP
- if they are already covered by an FSA or HRA
- Medicare participant
- claimed as a dependent on another’s return.
What HSA contributions are deductible?
- Employee who contributes
- Employer who contributes
- Eligible family members who receive contributions on their behalf
HSA - qualified expenses
- OTC drugs are not qualified unless the taxpayer has prediction
- cosmetic surgery cost
- Health insurance premiums are not permitted as qualified medical expenses unless the premiums are for:
Long-term care insurance premiums
COBRA premiums
Health care coverage while receiving unemployment compensation under federal or state law
Medicare and other health care coverage (not including Medigap policies) if you were 65 or older
Dental (including orthodontics) and vision care
HSA - Distribution for non qualified expenses
- taken before age 65 subject to income tax and 20% penalty
- taken after age 65 subject to income tax
Noncancellable policies
- insurer cannot raise premiums and cannot cancel the policy
- these policies are continues and guarantee an insured the right to renew until a specific age or stated number of years
HIPAA
- enacted to protect workers ability to obtain health insurance when changing jobs, being laid off, or retiring.
- HIPAA allows for individual to obtain coverage without restrictions on preexisting conditions if switching jobs, being laid off, or retiring from one group plan to another group plan.
- does not apply from one individual plan to another individual plan
- there is a 12 month exclusion window (18 months for late enrollment) for new employees. Which is reduced for each month of creditable coverage before enrolling.
- creditable coverage is any health coverage held immediately prior to applying in the new plan and after any significant breaks (63 or more days) in coverage.
Qualifying events that trigger COBRA and time frame of coverage
- 18 months for reduction in hours or normal termination.
- 36 months for death.
- 36 months for divorce.
- 36 months for Medicare eligibility.
- 36 months for loss of dependency status by children of employee.
- Up to 29 months if employee meets Social Security definition of disabled.
Chart taxation of insurance products
