types of insurance Flashcards
the tendency of those who experience greater health risks to apply for and continue their coverage under any given health insurance plan. When adverse selection increases, health insurance companies experience greater expenses and may raise rates.
Adverse risk selection
Individual accounts that may be set up by self-employed individuals and those who work for small companies. Funds in the accounts are used to pay medical expenses.
Archer Medical Savings Accounts
(“risk selection”) recruiting only healthier-than-average individuals so the insurer can make greater profits (one reason it can be very hard for individuals who need costly health care to get or keep insurance). One strategy would be to offer lower premiums and higher co-pays, as healthy people who don’t expect to use health insurance would choose this option.
Cherry picking
The amount you must pay for medical care after you have met your deductible. Typically, your plan will pay 80 percent of an approved amount, and your coinsurance will be 20 percent, but this may vary from plan to plan
Coinsurance
a concept which requires health insurance providers to offer health insurance policies within a given territory at the same price to all persons without medical underwriting, regardless of their health status.
Community rating
traditional (indemnity) health insurance where you and your plan each pay a portion of your health expenses, usually after you meet a yearly deductible. In most cases, you can choose any physician, hospital, or other provider (non-network based coverage).
Fee-for-service insurance
why this is a problem:
We pay our doctors, hospitals and other medical providers in ways that reward doing more, rather than being efficient.
Most insurers
Employees use pre-tax dollars to set up these accounts and draw down on them to pay qualified medical expenses during the year. Unused amounts are forfeited at the end of the year.
Flexible spending arrangements
—An insurance company’s list of covered drugs.
Formulary
a form of managed care in which you receive all of your care from participating providers. You usually must obtain a referral from your primary care physician before you can see a specialist.
HMO
Health reimbursement arrangement
An account established by an employer to pay an employee’s medical expenses. Only the employer can contribute to a health reimbursement account.
do you pay taxes on a health reimbursement arrangement
NO
who decides what you can pay for with a HRA
Your employer
usually have to use contributions that same year they are credited
Health savings account
- a medical savings account available to taxpayers who are enrolled in a High Deductible Health Plan. The funds contributed to the account aren’t subject to federal income tax at the time of deposit. Funds must be used to pay for qualified medical expenses. Unlike a Flexible Spending Account (FSA), funds roll over year to year if you don’t spend them.
a lot of people
High-deductible health plan
—A plan that provides comprehensive coverage for high-cost medical events. It features a high deductible and a limit on annual out-of-pocket expenses. This type of plan is usually coupled with a health savings account or a health spending account.
High-risk pool
A State-operated program that offers coverage for individuals who cannot get health insurance from another source due to serious illness. Typically, premium are much higher than one would pay for individual coverage if you were healthy (see “risk pools”).
Coverage purchased independently (not as part of a group), usually directly from an insurance company.
Individual health insurance
Individual market
Policies for people that aren’t connected to job-based coverage.
Individual rating
risk based on individual’s factors, premiums based on an individual’s likely health care needs
methods of paying for health care
out-of-pocket
individual private Insurance
employment based group private insurance-bismark
government financing-beveredge
(hybrid of out of pocket national systems – individual is paying the entire cost of the insurance, basically paying for their health care) and Bismark, and may supplement government programs (i.e. Medigap or Medicare Part D – Pharmacy coverage)
individual private insurance
employment based group private insurance
(Bismark – pure and simple)
goverment financing accounts for this amount of health care in the US
Pays for almost two-thirds of health care in the US
why do we pay so much for healthcare (8)
higher administrative costs
complicated system for billing
a 2-to-1 ratio of specialists to
primary care physicians
more standby capacity
more malpractice claims
less social support for the poor
higher drug prices
higher health care worker
incomes
what is meant by more standby capactiy
The United States has 4.2 times as many MRI scanners
Some initiatives very cost like
immunizations
what initiatives are not cost effective
BP and breast CA screening and treatment)
- Policies for people that aren’t connected to job-based coverage.
Individual market
Managed care
An organized way of getting health care services and paying for care. Managed care plans feature a network of physicians, hospitals, and other providers who participate in the plan.
when does open enrollment usually occur
—A set time of year when you can enroll in health insurance or change from one plan to another without benefit of a qualifying event (e.g., marriage, divorce, birth of a child/adoption, or death of a spouse). Open enrollment usually occurs late in the calendar year, although this may differ from one plan to another.
Moral hazard describes
Moral hazard describes how behavior changes when people are insured against losses.
Preferred provider organization
, but your out-of-pocket expenses will be lower if you see only plan providers.
The prevailing cost of a medical service in a given geographic area.
Reasonable and customary charge
Risk pool
Health insurance risk pools are special state government programs created by state legislatures to provide a safety net for the “medically uninsurable”
everything that might affect the individual’s risk of incurring expenses, or pay-outs, by the insurance company (
Underwriting, variables
is a tax-exempt account used to pay or reimburse you and your family’s medical expenses if you are covered by a high-deductible health insurance plan.
Health Savings Account (HSA)
. The money you take out of the account is tax-free if you use it for qualified medical expenses
HSA requirements
- You must be covered by a high-deductible health plan (HDHP) on the first day of the month, with a minimum deductible of $1,300 for individual coverage or $2,600 for family coverage.
helps those employees of small businesses and self-employed people who are covered by a high-deductible health plan to pay the health care costs of themselves, their spouses, and their dependents.
Medical Savings Account (Archer MSA)
If you are employed who can contribute to MSA
either you or your employer may contribute to your Archer MSA in any given year, but not both.
Requirements for an Archer MSA
You are employed by a “small employer
You are covered by a high-deductible health plan (HDHP).
The maximum annual contribution to an MSA
MSA is 75% of your family health plan’s annual deductible amount, or 65% of the deductible if you have a self-only plan
Indemnify.
To compensate for loss; to provide security for financial reimbursement for costs incurred by health care expenses.
1986 - COBRA
What is the excpetion with COBRA
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) requires employers with 20 or more employees to offer continued health coverage to terminated employees and dependents for a specified period (18 or 36 months).
Required to provide but not pay for it … thus doubling, tripling, or increasing costs even more for terminated employees.
The percentage of total average health care costs for covered benefits that a plan will cover.
Actuarial Value
The higher the actuarial value, the ____
For example, if a plan has an actuarial value of 70%
less patient cost-sharing the plan will have on average
on average, you would be responsible for 30% of the costs of all covered benefits.
When given a choice, people who choose to purchase insurance are likely to be a group with higher than average losses. (Also applies to a choice between low-option and high-option plans.)
Adverse selection
Risk aversion
the degree to which a certain income is preferred to a risky alternative with the same expected income.
what is meant by the phrase Loading cost
administrative and other costs associated with underwriting insurance policies
Loading cost =
risk premium + administrative costs + marketing costs + profits
variables assessed in underwriting
Health history Age Gender Occupation Geographic location Genetic makeup?
payments that are episode based
bundled
Episode based
care coordinated payments
Share savings; move towards global budget
accountable care organiztions
Quality reporting and EHS use incentive program
Merit-Based Incentive Payment System (MIPS)
a hybrid of HMO and PPO plans.
Point-of-Service Plans (POS)
Point-of-Service Plans (POS)
Like an HMO, participants designate an in-network physician to be their primary care provider. But like a PPO, patients may go outside of the provider network for health care services.
When patients venture out of the network, they’ll have to pay most of the cost, unless the primary care provider has made a referral to the out-of-network provider, in which case, the medical plan will pick up the tab.
gives employers flexibility to offer various combinations of benefits in designing their plan
Health Reimbursement Arrangements
HSA is limited to a
hdhp
FSA is limited to
no plan but your employer owns it
actuary value of bronze plans
60%
actuary value of silver plans
70%
actuary value of gold plans
80%
actuary value of platinum plans
90%
