Objective 8 : Health Insurance Plans

Question 1

(1) Traditional health insurance plans

Answer 1

use of “fee for service” or indemnity plan coverage.

allows patients to choose their own healthcare provider and reimburses the patient or provider at a certain percentage (usually after a deductible is paid) for services provided.

Providers :

• commercial insurers
• Blue Cross
• Blue Shield plans.

Purchasers of nongroup policies for family coverage tend to be over age thirty-five

Question 2

(2) Managed-care plans

Answer 2

involves an insurer negotiating benefits and fees with a network of healthcare providers.

customer receives significant premium savings and reduced out-of-pocket costs as a result, but often with reduced flexibility

3 most prevalent forms of managed-care plan
(1) Health maintenance organization (HMO)
- gatekeeper physician
- low, fixed, prepaid fee, with small co-payments for
routine visits
(2) Preferred provider organization (PPO)
- members may choose any provider,
- No primary care physician is required, and any
physician may make specialist referrals
- Includes some Blue Cross-Blue Shield
- more expensive forms of managed-care plans, but
they are popular because they blend the
advantages of both traditional indemnity plans and
HMOs
(3) Exclusive provider organization
- contract with insurers to provide healthcare to plan
members at a much lower premium than
healthcare provided by other plans
-small co-payments per visite
- Providers in an HMO receive payments from the
insurer on a monthly basis. Providers in an EPO
receive payment only for services they provide.
Plus, EPO premiums are frequently lower than
those for an HMO.
(4) Point-of-service (POS) plan
- has characteristics of both HMOs and PPOs, but
more closely resembles an HMO
- controls medical costs, but the member must
choose a primary care physician from within the
POS network
- If Kaleb’s primary care physician referred him to a
specialist outside the POS network, Kaleb’s insurer
would pay for a reduced portion of his covered
medical care. Kaleb would be required to pay the
specialist’s medical bills up front and then file an
insurance claim and await reimbursement.

Question 3

Blue Cross and Blue Shield plans

Answer 3

not-for-profit plans, although they are now often administered by for-profit organizations.

not described as “commercial insurers” and typically are regulated by state laws

provide :
- basic medical expense coverage
- major medical insurance ( usually have deductible)
on either an individual or a group basis.
- sponsor managed-care plans.

Blue Cross plans usually contract with hospitals and pay them directly, rather than paying insureds (also called “subscribers”),

Blue Shield plans often pay physicians directly.

Question 4

(3) Consumer-Directed Health Plans

Answer 4

provide consumers with access to high-quality care without requiring deductibles for preventive care.

CDHPs can provide healthcare benefits to those who might otherwise be uninsured

• An HSA or a health reimbursement arrangement (HRA)
• High-deductible medical coverage, with preventive care not charged against the deductible
• Access to informational tools for making informed healthcare decisions

pay lower premiums for their health coverage because the deductibles are high.

The money in an HRA is contributed by the employer and is not included in the employees’ income for tax purposes.The employer’s distributions to the employee are tax deductible, and unused funds in HRA accounts can be rolled over from year to year for future use.

Question 5

PPACA

Answer 5

• Insurers cannot decline insurance for children (under age 19) with pre-existing medical conditions
• Adult children (up to age 26) can join or remain covered under a parent’s healthcare plan.
• Insurers cannot retroactively cancel coverage because an insured or the employer made an honest mistake
• Insurers cannot place lifetime dollar limits on essential benefits;
• Insurers may be required to pay for certain preventative services
• Individuals can choose primary care physicians from within a plan’s provider network
• Insurers are required to spend set percentages of premiums received on direct medical care or improvements to the quality of care provided