Insurance/Health Insurance

Question 1

What are the for major classes if traditional medical insurance?

Answer 1

Hospital

Surgical

Physicians

Major medical

Question 2

What is covered under Hospital expense?

Answer 2

Room and board, does cover physician fees

Question 3

What is covered under surgical expense?

Answer 3

Covers surgeon fees whether in our out of hospital

Question 4

What is covered by physicians expenses?

Answer 4

All nonsurgical physician expenses

Question 5

What is covered under major medical?

Answer 5

Hospitalization, physician and surgeon fees, physical therapy and prescription drugs

For health plans issued after September 2010, lifetime limits cap has been eliminated

Eye exams and dental are excluded

Question 6

What is the typical coinsurance clause?

How are deductibles handled?

Answer 6

80/20
Insurer pays 80% of expenses above the deductible and insured pays 20%

Coinsurance applies to each member of family

Each family member must satisfy a deductible with typically a maximum of 3 deductibles per family (can vary)

Question 7

What is a stop loss?

What are the steps?

Answer 7

The maximum amount the insured must pay in Coinsurance payments.

1. Insured always pays deductible first
2. Insured pays coinsurance percentage to stop loss amount
3. After paying coinsurance percentage of the maximum stop loss amount, insurer pays 100%

Question 8

Describe group hospitalization and major medical:

Answer 8

Insured only pays the out of pocket

All policies should now use out of pocket approach per the affordable Care act not the stop loss approach

Question 9

Under the patient protection and affordable Care act (PPACA) who is required to have coverage?

Is there a penalty?

Answer 9

Must US citizens and legal residents required to have health coverage

The tax penalty for non compliance will be zero for months beginning after December 31, 2018

Penalty: those without coverage pay a tax penalty of $695 per year up to a maximum of there times that amount ($2085) per family OR 2.5% of household income above the filing threshold, whichever is greater

Question 10

What are the employer requirements of the PPACA?

Answer 10

Assesses employers with 50 or more full time employees that do not offer coverage a fee of $2000 per full time employee, excluding the first 30 employees.

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.

Exempts employers with up to 50 full time employees from the above penalty.

Question 11

What are the benefit categories of the PPACA?

Answer 11

Bronze: minimum allowable coverage, covers 60% of the benefits costs of the plan with the out of pocket limit equal to the HSA limit
Silver: 70%
Gold: 80%
Platinum: 90%
Catastrophic: available to those up to agree 30 or those exempt from the mandate to purchase coverage and provides catastrophic coverage only to the coverage level set at the HSA law levels except that prevention benefits and coverage for three primary care visits would be exempt from the deductible. This plan is only available on the individual market

Question 12

What is an HMO?

Answer 12

Comprehensive health care in return for a periodic payment (premium)

Care managed by pcp or gatekeeper who determines what care is received

Disadvantage: no care outside the HMO

Question 13

What are the structural models of HMOs?

Answer 13

Staff: HMO is a corporation, medical staff members are employees of HMO

Group: aka network model, HMO contracts with groups of medical providers

Individual practice association: physicians have own office locations, but contract out to HMO on a fee for service basis

Question 14

What is a preferred provider organization?

Answer 14

Network of health insurance providers with whom an employer or insurance company contracts

Provider offers a discount on services

Insured receives a high rate of reimbursement when using providers within organization

A PPO preserves employees option to choose a provider outside of the network

Question 15

What is managed care/primary care physician?

Answer 15

PCP provides services or refers to specialist

Physicians need approval to perform certain procedures and it may reduce a patient’s options for care if not approved

Consumer pays a small co-payment or other deductible

Health Care providers agree to accept compensation provided under the plan

Question 16

Describe health savings accounts:

Answer 16

Provide employees and individuals a tax deduction for amounts contributed to their accounts as well as use money and earnings tax free for qualifying medical expenses

Question 17

Who can contribute to an HSA?

Answer 17

Employer, employee or both

Question 18

What determines eligibility for an HSA?

Answer 18

Individual must have insurance under a high deductible health plan (HDHP)

Question 19

What are the rules that disqualify eligibility for an HSA?

Answer 19

Covered in any way by a non (HDHP)

General purpose HRAs and health FSA count as other health insurance coverage

Medicare participation

Individuals who MAY be claimed as a dependent on another’s return are also disqualified

Question 20

What are the deductible and out of pocket limits for an HDHP?

Answer 20

Deductible at least: Single $1350, family $2700

Max out of pocket: single $6750, family $13,500

Question 21

What are the contribution limits to an HSA?

Answer 21

Single $3500, family $7000

$1000 catch up for those 55 and older, note difference between IRA catch up of 50+

Question 22

Who can deduct HSA contributions?

Answer 22

The employer who contributes

The employee who contributes

Any eligible family member who receives contributions in their behalf

Question 23

What type of health insurance premiums are permitted as qualified expenses)

Answer 23

Long term care premiums

COBRA premiums

Health coverage while receiving unemployment

Medicare and other health Care coverage (not medigap policies) if you were 65 or older

Dental and vision

No on cosmetic surgery and OTC drugs have an RX and tax payer copays

Question 24

How are distributions for non qualified medical expenses treated for tax purposes?

Answer 24

20% penalty and subject to income tax before 65

Income tax at 65 and older

Question 25

What is a non cancelable health insurance policy?

Answer 25

Continuous and guarantee an insured the right to renew until a specific age or stated number of years

Insurer cannot raise premiums and cannot cancel the policy

Question 26

What is a guaranteed renewable insurance policy?

Answer 26

Right to renew guaranteed until a specific age or stated number of years

Insurer cannot cancel the policy, but they can raise the premiums as long as they are raised for the entire group or class of policy holders

All policies must now be guaranteed renewable under provisions of the ppaca

Question 27

What is HIPAA?

Answer 27

Note: the ppaca no longer allows the imposition of pre-existing condition clauses***

Health insurance portability and accountability act

enacted to protect workers ability to obtain health insurance when changing jobs, being laid off, or retiring.

Allows for individuals to obtain coverage without restrictions on pre-existing conditions if switching from one group plan to another group plan.

HIPAA does not apply if switching from a group plan to an individual plan or individual to 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. late enrollment is defined as any enrollment other than the first period in which the individual is eligible to enroll.

creditable coverage is any health coverage held immediately prior to applying in the new plan and after any significant breaks, 63 or more days, and coverage.

Question 28

What is Cobra?

Answer 28

An extension of group health insurance with the same coverage.

Question 29

How much can an employer charge 4 cobra?

Answer 29

An employer May charge 2% for administrative expenses. Total expense to the employees 102% of actual insurance cost

Question 30

Who can apply for cobra?

Answer 30

Applies to loss of coverage for the covered employee, employee spouse and or dependent children

Question 31

What is required to be eligible for cobra?

Answer 31

Group coverage must terminate because:

Covered employee dies
Employees voluntarily or involuntarily terminated
Hours are reduced from full-time to part-time
Covered employee separate from spouse
Employee becomes eligible for Medicare
Independent child has no longer eligible for coverage (age, married, left school)

Question 32

What employers does Cobra apply to?

Answer 32

Only applies to employers who offer a group health plan and have at least 20 employees.

Note, both full-time and part-time employees count towards the 20, that part-time employees count as a fraction of employee based upon their hours worked.

Question 33

Who is a qualified beneficiary for cobra?

Answer 33

Any individual covered by a group health plan on the day before a qualifying event who is either an employee, the employee’s spouse, or an employee’s dependent child

Question 34

What are the specific time periods an employer must offer Cobra coverage?

Answer 34

18 months for reduction in hours or normal termination

36 months for death, divorce, Medicare eligibility, loss of dependency status by children of employee

up to 29 months if employee meets social security definition of disabled

Note: if cfp board tests any event other than a reduction in hours or normal termination, then it will be 36 months

Question 35

Under what conditions can Cobra coverage be terminated before the designated term ends?

Answer 35

Employer terminates its health plan for all employees as a result of the company going out of business

The employee your beneficiary fails to make premium payments

the employee becomes covered under any other plan providing medical Care