Health Insurance Flashcards
Two types of health insurance plans
prepaid and postpaid
Covered loss limits
specifies the maximum dollar amounts that a health insurance plan will pay for specific types of losses (cancer, stroke, etc.)
Lifetime Limits
Place an overall maximum on the total amount of reimbursement available over the life of a policy per person on the polocy
Episode Limits
the total dollar limit for a particular health care episode from onset to recovery
Time period Limits
Place limits on the coverage for all losses during a particular time period
Usually one year
Pre-existing conditions
Medical conditions or symptoms that were known to the participant or diagnosed within a certain time period before the effective date of the plan
Usually one year exclusion
group policies are more lenient
Recurring Clause
Defines when a recurrence of an illness is a continuation of an episode or a new episode
Copayment
Requires you to pay a specific amount each time you have a specified covered item expence
For doctor, ER visits, and prescriptions
Coinsurance
Require you to pay a portion of any loss (usually 80/20)
Three Fundamental Plan Designs
Basic
Major Medical
Comprehensive
Basic Plan
Primarily provide health care srevices that are connected with hospitalization
- Inpatient hostpial charges (room, board, supplies)
- In hospital visits by physicians (home or office visits are NOT covered)
- Surgical fees (includes anesthesiologists and other surgical assistants)
Major Medical Plan
Covers medical services excluded from basic
What do major medical plans usually EXCLUDE?
Doctor’s office visits
Dental
Vision
Hearing
Comprehensive Plan
Combines basic and major medical
Deductibles
the initial expense is paid by the employee (usually $100-$500) out of pocket
Usually “all causes” deductibles, but there may have “per cause” deductibles
When are deductibles computed?
Annually
Maximum coverage limit
“lifetime limit”
limits the max amount a plan will pay for any one individual’s medical expenses
Usually $500,000 to $1M
Coordination of Benefits
a clause in health care plans which controls which plans are used first when multiple plans cover the same loss
Who is covered in health insurance?
Employee and family members
What age is a dependent child covered until?
26
Commerical Health Insurance
Reimburses employees for covered medical procedure expenses
Commercial health insurance is often limited to….
“Usual, customary, and reasonable” charges for a given procedure in a given geographical location
If the company has 50 or more employees, the insurance premiums are _____ _____
“experience rated”
“Experience Rated”
Insurer keeps separate records for the employer group and adjusts charges to reflect above or below average benefit utilization by the group itseld
IRC Eligibility and Coverage Requirements for Group Health Insurance
- Conditions for which participants cannot be excluded or charged a higher premium
- Length of hospital stay (less than 48 hours; 96 for C-section)
- Benefit limits for mental illness must be no more restrictive than those for medical surgical benefits
How many employees must a company have in order to qualify for COBRA?
20 or more employees on a typical business day in the preceeding year
How many months can a plan continue after a qualifying event?
36 months
Qualifying events to continue COBRA
- death of the employee
- divorce or separation of covered employee
- Employee’s entitlement to Medicare
- Bankruptcy where employee retired from employer
- A child ceasing to be a dependent for plan purposes
If an employee is on leave under the FMLA of 1993 and does not return to work, when does the COBRA qualifying event occur?
Generally deemd to take place on the last day of the FMLA leave
Health plan coverage must continue for ____ months if the employer termintates employment or reduce an employee’s work hours
18
Health plan coverage must continue for ___ months if the termination is for a disability
29
Continuation of coverage can terminate before the 36, 29, or 18 month period if…
- Employer terminates health plan for all employees
- Employee fails to pay share of premium
- Employee becomes covered under any other plan providing medical care
A former employee or beneficiary’s share of the insurance premium under COBRA cannot be more than: (2)
- 102% of the insurance premium paid
- 105% of the insurance premium paid after the 18th month of continuation coverage for a disabled employee
How much is the daily fine for noncompliance?
$100 per day
4 Continuing health coverage for retirees alternatives:
- Pay as you go
- Earmarked corporate assets
- Corporate owned life insurance
- Increase pension benefits
Are the cost of premiums tax deductible for the employer?
yes
What is the deduction for pre-fund medical benefits limited to? (2)
- direct costs of the plan for a year
- contributors to an asset account up to
35% of preceeding year’s direct costs
When are employee premiums paid and benefits NOT tax free?
if highly compensated in a discriminatory plan
What can the employee be eligible for unreimbursed out of pocket medical expenses?
an itemized deduction
