Learning Objective 4 - Government Programs

Question 1

Skwire chapter 9
Government Health Plans in the United States

171. Individuals eligible for Medicare coverage (132)

Answer 1

1. Aged - at least age 65 and eligible for Social Security or Railroad Retirement benefits
2. Disabled - entitled to Social Security or Railroad Retirement disability benefits for at least two years
3. End-stage renal disease (ESRD) - insured workers with ESRD, including spouses and children with ESRD
4. Some other aged and disabled individuals who pay mandatory premiums

Question 2

Skwire chapter 9
Government Health Plans in the United States

172. Types of Medicare coverage and funding (133)

Answer 2

1. Part A - hospital insurance (Ill)
   a) Eligible persons receive coverage automatically with no premium charge
   b) Funded through payroll tax rate of 1.45% of all earnings, with a matching employer tax
2. Part B - supplementary medical insurance (SMI)
   a) Requires a monthly premium ($99.90 in 2012, except higher for high incomes)
   b) Beneficiaries can decline coverage, but a premium penalty (10% per year) applies if coverage is elected at a later date
   c) Financed through general revenues (75%) and beneficiary premiums (25%)
3. Part C - Medicare Advantage
   a) Alternative to Parts A and B. Offered by private plans, which receive a capitation from Medicare, which varies by county and enrollee risk.
   b) Typically offer lower cost sharing plus coverage for some services not covered under Medicare
4. Part D - covers most prescription drugs. Provided through private insurers. Funded through general revenues (74.5%) and premiums (25.5%).
5. Medicare Supplement -private insurance to cover out-of-pocket costs and some other benefits not covered by Medicare

Question 3

Skwire chapter 9
Government Health Plans in the United States

173. Services covered by Medicare Part A (133)

Answer 3

1. Inpatient hospital - semi-private room and ancillary services and supplies
2. Skilled nursing facility (SNF) - semi-private room, meals, skilled nursing, and rehabilitative services after a related three-day inpatient hospital stay
3. Home health agency- services following discharge from a hospital or SNF
4. Hospice care - provided to terminally ill patients with life expectancies less than six months

Question 4

Skwire chapter 9
Government Health Plans in the United States

174. Medicare Part A cost sharing and coverage limits (133)

Answer 4

See slide 174

Question 5

Skwire chapter 9
Government Health Plans in the United States

175. Services covered by Medicare Part B (134)

Answer 5

1. Outpatient hospital (including emergency room)
2. Medical care by qualified health practitioners (including diagnostic tests, supplies, and durable medical equipment)
3. An initial preventive care visit within 12 months of enrolling in Part Band yearly wellness visits thereafter
4. Ambulance
5. Clinical laboratory and radiology
6. Physical and occupational therapy
7. Speech pathology
8. Outpatient rehabilitation
9. Radiation therapy
10. Transplants
11. Dialysis
12. Home health care beyond that covered by Part A
13. Drugs and biologicals that cannot be self-administered
14. Certain preventive services (such as an annual flu shot and cancer screenings)

Question 6

Skwire chapter 9
Government Health Plans in the United States

176. Medicare Part B cost sharing (134)

Answer 6

1. Calendar year deductible ($147 in 2015)
2. Coinsurance after the deductible (usually 20% of the Medicare-approved amount, but does not apply to clinical lab and certain preventive care services)

Question 7

Skwire chapter 9
Government Health Plans in the United States

177. Beneficiary cost sharing for the standard Part D benefit design

Answer 7

See slide 177

Question 8

Skwire chapter 9
Government Health Plans in the United States

178. Drug types excluded from standard Part D coverage (136)

Answer 8

1. Drugs covered by Part A or B
2. Anorexia and weight loss drugs
3. Fertility drugs
4. Cosmetic drugs (including hair loss)
5. Drugs used to relieve cough and cold symptoms
6. Vitamins and minerals (except for prenatal vitamins and :fluoride)
7. Over-the-counter drugs

Question 9

Skwire chapter 9
Government Health Plans in the United States

179. Funding sources for the Medicare program (136)

Answer 9

1. Medicare is funded on a pay-as-you-go basis
2. SMI
   a) Part Bis financed through contributions from the general fund of the Treasury (75%) and beneficiary premiums (25%)
   b) Part Dis financed through a separate account in the SMI trust fund, from general revenues (74.5%) and premiums (25.5%)
3. HI (Part A)
   a) Payroll tax rate is 1.45% of all earnings (not capped), with a matching employer tax
   b) The ACA added an additional 0.9% payroll tax and 3.8% tax on investment income for high-income taxpayers

Question 10

Skwire chapter 9
Government Health Plans in the United States

180. Approaches for improving Medicare solvency (137)

Answer 10

1. Increase taxes
2. Reduce or eliminate some covered services
3. Increase Medicare cost sharing through higher deductibles and copays
4. Raise the eligibility age for benefits to age 66 or 67
5. Adjust reimbursement to providers of care
6. Encourage new initiatives and expand existing initiatives that lower trend

Question 11

Skwire chapter 9
Government Health Plans in the United States

181. Medicare provider reimbursement ( 13 7)

Answer 11

1. Hospitals - reimbursed on a prospective payment system basis using the diagnosis-related grouping (DRG) methodology. Paid a set amount for each admission (which encourages hospitals to provide services efficiently) based on the patient’s condition and the services provided.
2. Physicians - uses a complex fee schedule to assign relative values to services. Reimbursement equals the sum of area-adjusted unit values, multiplied by a nationwide conversion factor. Unit values for the procedures are based on:
   a) Work value - measuring the time and skill required
   b) Practice expense - reflecting the cost of rent, staff, supplies, equipment, and overhead
   c) Malpractice value - measuring the associated professional liability costs
3. Outpatient services - reimbursed on an outpatient prospective payment system known as ambulatory payment classification

Question 12

Skwire chapter 9
Government Health Plans in the United States

182. Categories of Medicaid-eligible individuals (141)

Answer 12

1. Categorically eligible groups
   a) These groups include children, parents or other caretakers with dependent children, pregnant women, individuals with disabilities, and seniors
   b) Individuals in these categories must also meet income and asset requirements (the minimum criteria is set by the federal government). For example, states must cover all pregnant women and children under age 6 with incomes below 138% of the federal poverty level.
2. Medically-needy individuals - states often extend coverage to these individuals, who qualify when their medical expenses reduce income below defined limits
3. The ACA expanded eligibility to everyone under age 65 with income up to 138% of federal poverty level (in states that choose to expand)

Question 13

Skwire chapter 9
Government Health Plans in the United States

183. Services covered by Medicaid (143)

Answer 13

States must cover the following:

1. Inpatient and outpatient hospital
2. Physician
3. Lab and x-ray
4. Skilled nursing facility and home health care
5. Preventive care, prenatal care, screening, and vaccines for children
6. Family planning
7. Services at federally-qualified health centers and rural health clinics
8. Transportation
9. Medicare Part B premiums and cost sharing for low-income Medicare beneficiaries

Optional services, which nearly all states offer:

1. Dental
2. Outpatient prescription drugs
3. Prosthetic devices and hearing aids
4. Optometric services and eyeglasses
5. Rehabilitation and physical therapy

Question 14

Skwire chapter 9
Government Health Plans in the United States

184. Workers in the US who are not covered by Social Security (145)

Answer 14

1. Federal employees hired before 1984
2. About one-fourth of state and local government workers (those who are covered by plans that are comparable to Social Security)
3. A very small number of people who object to receiving governmental benefits on religious grounds
4. Certain agricultural and domestic workers
5. Railroad employees, who are covered by a program similar to Social Security

Question 15

Skwire chapter 9
Government Health Plans in the United States

185. Requirements for insured statuses under Social Security (146)

Answer 15

1. Disability-insured status - requires between six credits (at young ages) to 40 credits (at ages 62 or older).

Some credits must have been earned recently, as follows:

a) For those required to have 20 or more credits, 20 credits must be from the last 40 quarters
b) For those required to have between 6 and 20 credits, at least half must have been earned after age 21
c) For those required to have 6 credits, all must be from the last 12 quarters
2. Fully-insured status - requires credits equal to the worker’s age minus 22, with a minimum of 6 and a maximum of 40
3. Currently-insured status - requires ,6 credits in the 13 calendar quarters ending with the quarter of death

Question 16

Skwire chapter 9
Government Health Plans in the United States

186. Eligibility and benefit amounts for Social Security disability and survivor benefits (146)

Answer 16

1. Disabled-worker benefits
   a) Eligibility- must be disability insured and fully insured and be unable to engage in any “substantial gainful activity”
   b) Benefit amounts - calculated using essentially the same procedures used for retired-worker benefit amounts, using an assumed age of 62 and no early-retirement reduction factor
2. Survivor benefits
   a) Eligibility- family members may receive survivor benefits if the worker was either fully insured or currently insured at the time of death
   b) Benefit amounts - the worker’s primary insurance amount (PIA) is computed using the standard procedures and assuming an age of 62. Survivors receive a percentage of the PIA:
   i) 75% for eligible children
   ii) Grading linearly from 71.5% at age 60 to 100% at normal retirement age for eligible widows or widowers
   iii) 82.5% for an eligible surviving parent, or 75% each for two parents (a family maximum applies, which is typically 175%)

Question 17

Skwire chapter 18
The Affordable Care Act

187. ACA individual and group market reforms (292)

Answer 17

1. Improving coverage - requirements effective in 2010:
   a) Expanded dependent coverage - all plans must cover dependent children up to age 26
   b) Limits on rescissions of insurance coverage - these are prohibited except in cases of fraud
   c) Restrictions on lifetime and annual coverage limits - plans may not impose lifetime limits. And plans may impose annual limits only for non-essential health benefits.
   d) Preventive care coverage- services rated A or B by the US Preventive Services Task Force must be covered at 100%
2. Medical loss ratio (MLR) - plans must provide rebates to consumers if the MLR is below 85% for large groups (101 or more employees) or 80% for small group and individual plans
3. Premium rate reviews - established a process for reviewing health plan premium increases and requiring plans to justify “unreasonable” increases
4. Early retiree reinsurance program - set aside $5 billion to partially reimburse employers for high-cost retirees over age 55 who were not yet eligible for Medicare
5. National high-risk pool - provided subsidized coverage until 2014 for previously uninsured individuals with pre-existing conditions

Question 18

Skwire chapter 18
The Affordable Care Act

188. ACA rating requirements effective in 2014 (293)

Answer 18

1. Plans may not impose pre-existing condition exclusions
2. Rating variation is only allowed based on:
   a) Age (limited to a 3 to 1 ratio from highest to lowest age band)
   b) Geographic rating area
   c) Plan design and network relativities
   c) Tobacco use (limited to a 1.5 to 1 ratio)
   d) Family composition
3. Individual and small group plans must be offered on a guaranteed issue and renewal basis
4. Waiting periods for coverage must not exceed 90 days

Question 19

Skwire chapter 18
The Affordable Care Act

189. Categories of essential health benefits (EHBs) under the ACA (294)

Answer 19

1. Ambulatory patient services
2. Emergency services
3. Hospitalization
4. Maternity and newborn care
5. Mental health and substance use disorder services
6. Prescription drugs
7. Rehabilitative and habilitative services and devices
8. Laboratory services
9. Preventive and wellness services and chronic disease management
10. Pediatric services, including dental and vision care

Question 20

Skwire chapter 18
The Affordable Care Act

190. Provisions of the ACA health insurance exchanges (294)

Answer 20

1. Each state will have an American Health Benefit Exchange for individuals and a Small Business Health Options Program (SHOP) Exchange for businesses with up to 100 employees
2. Plans in the exchanges must cover EHBs, have an out-of-pocket limit at or below the HSA limit, and fall into one of the ACA metal levels (or the catastrophic plan) (described in separate list)
3. States have various options for establishing exchanges (see separate list)
4. Single risk pool- an insurer must combine all of its health plans (other than grandfathered plans) in a given market when setting premiums. All of its individual plans must be pooled together, and all of its small group plans must be pooled. Some states require the use of a combined risk pool for both markets.
5. Participating insurers must meet qualification requirements with respect to networks, marketing, reporting, and consumer assistance
6. Quality is to be rewarded through market-based incentives
7. Exchanges may also offer Consumer Operated and Oriented Plans ( CO-OPs) and multi-state plans

Question 21

Skwire chapter 18
The Affordable Care Act

191. Options for states when establishing exchanges (295)

Answer 21

1. State-based marketplace - the state performs all marketplace functions. Consumers apply for and enroll in coverage through websites maintained by the states.

For the following options, consumers enroll in coverage through healthcare.gov

2. Federally-supported state-based marketplace - still considered state-based marketplaces, but the states rely on the federally-facilitated marketplace IT platform
3. State-partnership marketplace-the state administers in-person consumer assistance, and HHS performs the remaining functions
4. Federally-facilitated marketplace - HHS performs all marketplace functions

Question 22

Skwire chapter 18
The Affordable Care Act

192. Cost sharing requirements for non-grandfathered individual and small group plans (295)

Answer 22

1. These plans, with the exception of catastrophic plans, must have an actuarial value that is within two percentage points of one of the metal levels. Actuarial value is the percentage of total allowed costs covered by the plan.
2. The metal levels and target actuarial values are:
   a) 90% for platinum plans
   b) 80% for gold plans
   c) 70% for silver plans
   d) 60% for bronze plans
3. Insurers may offer a catastrophic plan to enrollees under age 30

Question 23

Skwire chapter 18
The Affordable Care Act

193. ACA coverage mandates (298)

Answer 23

1. Individual mandate- beginning in 2014, US citizens and legal residents must have qualifying health coverage or pay a tax penalty, unless an exemption applies. The penalty is the greater of:
   a) A dollar amount per person (up to 3 per family): $695 in 2016 (indexed thereafter)
   b) A percent of income: 2.5% in 2016 and later
2. Employer mandate - beginning in 2015, employers with 50 or more full-time employees must offer coverage or pay a fee. The fee = $2,000 * (full-time employees - 30), but is adjusted based on the number of employees who receive a premium tax credit.

Question 24

Skwire chapter 18
The Affordable Care Act

194. ACA provisions related to Medicare (299) .

Answer 24

1. Linking payments to quality outcomes - e.g., providing incentives to hospitals that meet certain performance standards
2. Establishing a national strategy to improve health care quality
3. Encouraging development of new patient care models- e.g., the Medicare Shared Savings Program
4. Medicare plan improvements, such as: . .
   a) Medicare Advantage plans can receive bonuses or re-allocations of rebates based on certain quality measures. These plans are also now subject to MLR requirements.
   b) For Medicare Part D, beneficiary coinsurance in the coverage gap will be phased down from 100% to 25% by 2020
5. Ensuring Medicare sustainability- e.g., temporary adjustment to the calculation of Part B premiums
6. Health care quality improvements - e.g., establishing community health teams to support patient-centered medical homes
7. Prevention and wellness provisions - cost sharing for preventive services was eliminated
8. Creating new demonstration programs
9. Improving coordination of Medicare/Medicaid dual eligibles

Question 25

Skwire chapter 18
The Affordable Care Act

195. Other ACA health insurance market reforms (294, 297, 302)

Answer 25

1. Essential health benefits (EHBs) - all qualified individual and ·small group health benefits plans must offer an EHB package (see separate list of categories of EHB benefits)
2. Grandfathering of existing plans - plans in existence when the ACA was enacted are exempt from many ACA requirements. But most of the benefit and coverage requirements do still apply.
3. Premium credits and cost-sharing subsidies for those with low incomes (see separate lists in Implications of individual subsidies in the ACA ‘’)
4. Small business tax credits (see separate list in Rosenbloom chapter 32)
5. Medicaid- expanded to all non-Medicare eligible individuals with incomes up to 133% of FPL. Due to Supreme Court ruling, federal government can’t withhold original Medicaid funding from states who do not expand.
6. Revenue provisions
   a) New health insurer tax collected $8 billion in 2014, grading up to $14.3 billion m 2018, and indexed thereafter
   b) Excise tax for high-cost health plans (beginning in 2018)
   c) Limitations to tax-favored allowances for FSAs
   d) New taxes on certain medical devices

Question 26

Morneau Shepell chapter 3, pages 71-74 and 79-84
Determination and Payment of Benefits

196. Canada and Quebec pension plan benefits (79)

Answer 26

1. Retirement pension - starts at 25% of the contributor’s average monthly pensionable earnmgs and increases based on the Pension Index
   a) Each year’s earnings are capped at the year’s maximum pensionable earnings (YMPE) and adjusted for wage inflation based on YMPE changes
   b) Then the average is taken from age 18 to the date of the claim, with some periods being ignored (such as periods of unemployment or low earnings)
2. Disability benefits - consist of a pension for the disabled contributor (a flat rate plus 75% of the contributor’s retirement pension) and an additional pension for any eligible dependent children .
3. Survivor pension - consists of a pension to an eligible spouse or common-law partner and a pension to dependent children
   a) The surviving spouse benefit is tied to the age of the spouse at the time of the contributors death. Is a flat rate plus 37.5% of the contributor’s retirement pension for ages 45-64, and phases down to 0 for ages below 35.
   b) The surviving children each receive a flat-rate pension until attaining age 18 or (for Canadian pension plan only) to age 25 if attending school full time
4. Lump-sum death benefit-is six times the contributor’s retirement pension, up to a maximum of $2,500

Question 27

Morneau Shepell chapter 16
Workers’ Compensation

197. Assessments and experience rating for workers’ compensation in Canada (381)

Answer 27

1. Workers’ compensation is funded solely by employer assessments applied to annual payroll. Assessments
   a) Individual liability - used frequently for government agencies and large transportation organizations. Each employer is individually liable for costs as they occur.
   b) Collective liability- used by the vast majority of industries. Employers are divided into industry classes and/or rate groups according to similar business activity and hazard risks. The cost experience of each class is used to determine assessment rates as a percentage of payroll.
2. Experience rating is used for employers subject to collective liability. Common types are: .
   a) Prospective- a discount or surcharge is applied to each employer’s rate, based on the employer’s experience in past years
   b) Retrospective- after the year is over, refunds or surcharges are applied based on the employer’s actual experience

Question 28

Morneau Shepell chapter 16
Workers’ Compensation

198. Categories of coworkers’ compensation benefits in Canada (384)

Answer 28

1. Health care - covers all medical expenses incurred as a result of a workplace accident or disease
2. Short-term disability (STD)
   a) A benefit of 75-90% of net earnings is payable until the employee is able to return to the prior occupation or is capable of earning at the same level in a different job
   b) A disabled employee who cannot return to work or who is incapable of replacing pre-accident earnings becomes eligible for LTD benefits
3. Long-term disability (LTD)
   a) The “dual-award” system provides a monthly benefit until age 65 based on earnings lost (usually 90% of net loss of income) and a lump-sum payment for the non-economic impacts of the impairment
   b) Most jurisdictions also provide, some form of pension after age 65
   c) Benefits are adjusted annually for cost-of-living increases
4. Rehabilitation -provides services such as counseling, job search assistance, tuition, and on-the-job training in order to facilitate a return to work
5. Survivor benefits - if the employee dies as a result of a workplace injury or disease, pays a lump-sum benefit for burial expenses and benefits for a surviving spouse and children

Question 29

Morneau Shepell chapter 17
Employment Insurance

199. Benefits covered by Employment Insurance in Canada (389)

Answer 29

1. Regular benefits - payable to individuals who become unemployed due to loss of work through no fault of their own. To qualify, claimants must have worked between 420 and 700 (depending on the region’s unemployment rate) in the last 52 weeks or since the last benefit period. The maximum payment period is 45 weeks.
2. Special benefits - to qualify, claimants must have worked for 600 hours in the last 52 weeks or since the last claim. More than one type of special benefit may be claimed within one benefit period, up to a maximum of 50 weeks. (see separate list of types of special benefits)
3. Supplemental plans- employers may provide supplemental benefits to increase an employee’s income while receiving maternity, parental, or compassionate care benefits

The basic benefit amount for regular and special benefits is 55% of average weekly earnings of up to $882 in 2012 (from GHC-600-16 this is $952 in 2015) after a two-week waiting period. Additional benefits are provided to low-income families with children.

Question 30

Morneau Shepell chapter 17
Employment Insurance

200. Types of special benefits for Employment Insurance in Canada (390)

Answer 30

1. Maternity benefits - payable for up to 15 weeks to the biological mother who is unable to work because she is pregnant or has recently given birth
2. Parental benefits - payable either to the biological or adoptive parents while they are caring for a newborn or an adopted child, up to a maximum of35 weeks
3. Sickness benefits -paid for up to 15 weeks to an individual who is unable to work or whose weekly earnings are reduced by more than 40% due to sickness, injury, or quarantine.
4. Compassionate care benefits - paid for up to 6 weeks to an individual who has to be absent from work to provide care or support to a gravely ill family member at risk of dying within 26 weeks. Must show a decrease of more than 40% of regular weekly earnings.

Question 31

Morneau Shepell chapter 17
Employment Insurance

201. Taxation of Employment Insurance in Canada (397) ‘

Answer 31

1. Premiums paid by the employer are a tax-deductible expense and do not create taxable income for the employee
2. Employee premiums create a federal tax credit of 15% of premiums paid
3. Benefits are taxable income to the recipient
4. Repayment of regular (but not special) benefits is required for high income individuals who are not first time claimants. These individuals will be required to repay 30% of the lesser of:
   a) Net income in excess o f$57,375 in 2012 (from GHC-600-16 this is $61,875 in 2015)
   b) The total regular benefits paid during the tax year

Question 32

GHC-639-15, pages 3-4
Passage of New Brunswick’s Prescription and Catastrophic Drug Insurance Act

202. Minimum standards for all private group plans due to the New Brunswick Prescription and Catastrophic Drug Insurance Act (3)

Answer 32

1. Insurers will be required to:
   a) Offer drilg coverage if offering a private health service plan (such as a medical plan)
   b) Cover services listed as minimum requirements in the New Brunswick Drug Plan formulary
   c) Extend coverage to the entire family unit
2. Insurers will not be allowed to:
   a) Impose restrictions on eligibility with respect to age, sex, or health status
   b) Impose an annual or lifetime limit on drug coverage
3. The maximum out-of-pocket copayment must be one of the following:
   a) A maximum out-of-pocket for each individual no greater than $2,000 per year
   b) No deductible, and a copayment that is no greater than $30 per prescription

Question 33

GHC-639-15, pages 3-4
Passage of New Brunswick’s Prescription and Catastrophic Drug Insurance Act

203. Considerations in aligning private plans with the New Brunswick Drug Plan minimum requirements (4)

Answer 33

1. Retiree programs - unless special exemptions are created, plan sponsors of retiree programs may be required to begin offering drug coverage or expand eligibility for coverage
2. Consumerism-focused design - due to the copayment restrictions that will apply to traditional plans, sponsors who want to encourage consumerism may want to. adopt flexible benefit plans
3. Administration - employers should review their current administrative practices in light of the new mandatory participation requirements
4. Increased exposure to catastrophic risk - due to the mandatory formulary and prohibition of plan limits
5. Impact on collective agreements - plan sponsors should assess the impact of the mandatory terms on their collectively-bargained plans

Question 34

GHC-651-16
The high-stakes battle of medications, insurers, and the government

204. Ways in which Canadian employers control costs of drug benefit plans (5)

Answer 34

1. Introducing deductibles, coinsurance, and caps on high-cost claims
2. Requiring employees to share in premium payments
3. Pushing plan members toward generic drugs whenever possible
4. Embracing case management services that monitor specialty drug use
5. Making sure plan members apply for government assistance where possible

Question 35

GHC-652-16
Quebec Amends the Act Respecting Prescription Drug Insurance and the Health Insurance Act - Mercer Communique, April 2015

205. Recognized services that Quebec pharmacists are authorized to perform (1)

Answer 35

1. Renew a physician’s prescription
2. Prescribe a medication when no diagnosis is required
3. Prescribe laboratory analyses in a community pharmacy
4. Adjust the form, dosage, or quantity of a medication (for example, to achieve therapeutic targets or ensure the safety of the patient)
5. Substitute a prescribed medication with another of the same therapeutic subgroup if the prescribed medication is unavailable in Quebec
6. Prescribe medication for a minor condition for which the diagnosis and treatment are known
7. Administer a medication to demonstrate appropriate usage