Group Medical Expense Insurance Flashcards
True or False
Group medical premiums paid by an employer are NOT deductible as a business expense to the employer
AND NOT reportable as taxable income to the employee
False; only the first statement is false
Group medical premiums paid by employer are deductible as business expense to the employer
What is the key purpose of group underwriting?
To avoid Adverse Selection
Describe how Association Health Plans (AHPs) work
The AHP provides large-group quality medical coverage at good rates to its members (an association of self-employed and small business employers)
Describe the differences between Noncontributory Plans vs Contributory Plans
(health insurance)
With a Noncontributory Plan, all premiums are paid by employer
With a Contributory Plan, premiums are shared by employer AND employee
3 types of Group Insurance Plans
- Group Life Insurance Plans
- Group Disability & Long Term Care Plans
- Group Medical Expense Plans
Compare and contrast the 2 common types of Traditional Indemnity Plans
Group Medical Expense Insurance
-
Hospital - Surgical Plans
(basic plans)
(cover the basics; lower premium) -
Major Medical Plans
(most common plans)
- Annual deductible
- Comprehensive range of services
- Coinsurance w/ max out of pocket limit
What is the goal “Managed Care” plans?
Group Medical Expense Coverage
Medical insurance plans whose goal is to lower cost of care AND provide more efficient medical services
What do Managed Care Plans provide?
Group Medical Expense Coverage
Generally provide comprehensive major medical coverage but…
have certain cost management characteristics
5 Characteristics of Managed Care Plans
- Preventative Care is encouraged
- Comprehensive case management (assess the effectiveness of treatment)
- Controlled access to providers
- Risk sharing (provide financial incentives to providers to minimize tests and be cost effective)
- Monitoring Providers (to ensure good service and care)
3 Primary types of Managed Care Plans
Managed Care Plans
- Health Management Organization (HMO)
- Preferred Provider Organization (PPO)
- Point of Service Plan (POS)
How do Health Maintenance Organizations (HMOs) work as a Managed Care Plan?
Type of Managed Care Plan:
- Provides medical care on a pre-paid basis to volunteer enrollees in a specified geographic area
- Widely available
- Can only go to doctors, specialists, hospitals in plan (except emergencies)
(also Advantage Plan Part C for Medicare)
How do Preferred Provider Organizations (PPOs) work as a Managed Care Plan?
Similar to traditional major medical plans except a PPO contracts w/ a wide range of medical care “preferred providers” to obtain lower costs
Providers are typically paid on a fee-for-service basis
How do Point of Service Plans (POSs) work as a Managed Care Plan?
Hybrid of HMO and PPO
It’s the most common and allows HMO members to go outside HMO network for higher coinsurance percentage
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)
Allows employees and specified dependents the option of continuing the same group medical expense insurance without proof of insurability for up to 36 months because of a “qualifying event.”
True or False
Departing employees who take the COBRA option must pay a percentage of the premium plus a small fee
False; FULL premium AND small admin fee
