Health Insurance

Question 1

Two types of health insurance plans

Answer 1

prepaid and postpaid

Question 2

Covered loss limits

Answer 2

specifies the maximum dollar amounts that a health insurance plan will pay for specific types of losses (cancer, stroke, etc.)

Question 3

Lifetime Limits

Answer 3

Place an overall maximum on the total amount of reimbursement available over the life of a policy per person on the polocy

Question 4

Episode Limits

Answer 4

the total dollar limit for a particular health care episode from onset to recovery

Question 5

Time period Limits

Answer 5

Place limits on the coverage for all losses during a particular time period

Usually one year

Question 6

Pre-existing conditions

Answer 6

Medical conditions or symptoms that were known to the participant or diagnosed within a certain time period before the effective date of the plan

Usually one year exclusion

group policies are more lenient

Question 7

Recurring Clause

Answer 7

Defines when a recurrence of an illness is a continuation of an episode or a new episode

Question 8

Copayment

Answer 8

Requires you to pay a specific amount each time you have a specified covered item expence

For doctor, ER visits, and prescriptions

Question 9

Coinsurance

Answer 9

Require you to pay a portion of any loss (usually 80/20)

Question 10

Three Fundamental Plan Designs

Answer 10

Basic
Major Medical
Comprehensive

Question 11

Basic Plan

Answer 11

Primarily provide health care srevices that are connected with hospitalization

• Inpatient hostpial charges (room, board, supplies)
• In hospital visits by physicians (home or office visits are NOT covered)
• Surgical fees (includes anesthesiologists and other surgical assistants)

Question 12

Major Medical Plan

Answer 12

Covers medical services excluded from basic

Question 13

What do major medical plans usually EXCLUDE?

Answer 13

Doctor’s office visits
Dental
Vision
Hearing

Question 14

Comprehensive Plan

Answer 14

Combines basic and major medical

Question 15

Deductibles

Answer 15

the initial expense is paid by the employee (usually $100-$500) out of pocket

Usually “all causes” deductibles, but there may have “per cause” deductibles

Question 16

When are deductibles computed?

Answer 16

Annually

Question 17

Maximum coverage limit

Answer 17

“lifetime limit”

limits the max amount a plan will pay for any one individual’s medical expenses

Usually $500,000 to $1M

Question 18

Coordination of Benefits

Answer 18

a clause in health care plans which controls which plans are used first when multiple plans cover the same loss

Question 19

Who is covered in health insurance?

Answer 19

Employee and family members

Question 20

What age is a dependent child covered until?

Answer 20

26

Question 21

Commerical Health Insurance

Answer 21

Reimburses employees for covered medical procedure expenses

Question 22

Commercial health insurance is often limited to….

Answer 22

“Usual, customary, and reasonable” charges for a given procedure in a given geographical location

Question 23

If the company has 50 or more employees, the insurance premiums are _____ _____

Answer 23

“experience rated”

Question 24

“Experience Rated”

Answer 24

Insurer keeps separate records for the employer group and adjusts charges to reflect above or below average benefit utilization by the group itseld

Question 25

IRC Eligibility and Coverage Requirements for Group Health Insurance

Answer 25

• Conditions for which participants cannot be excluded or charged a higher premium
• Length of hospital stay (less than 48 hours; 96 for C-section)
• Benefit limits for mental illness must be no more restrictive than those for medical surgical benefits

Question 26

How many employees must a company have in order to qualify for COBRA?

Answer 26

20 or more employees on a typical business day in the preceeding year

Question 27

How many months can a plan continue after a qualifying event?

Answer 27

36 months

Question 28

Qualifying events to continue COBRA

Answer 28

• death of the employee
• divorce or separation of covered employee
• Employee’s entitlement to Medicare
• Bankruptcy where employee retired from employer
• A child ceasing to be a dependent for plan purposes

Question 29

If an employee is on leave under the FMLA of 1993 and does not return to work, when does the COBRA qualifying event occur?

Answer 29

Generally deemd to take place on the last day of the FMLA leave

Question 30

Health plan coverage must continue for ____ months if the employer termintates employment or reduce an employee’s work hours

Answer 30

18

Question 31

Health plan coverage must continue for ___ months if the termination is for a disability

Answer 31

29

Question 32

Continuation of coverage can terminate before the 36, 29, or 18 month period if…

Answer 32

• Employer terminates health plan for all employees
• Employee fails to pay share of premium
• Employee becomes covered under any other plan providing medical care

Question 33

A former employee or beneficiary’s share of the insurance premium under COBRA cannot be more than: (2)

Answer 33

• 102% of the insurance premium paid

- 105% of the insurance premium paid after the 18th month of continuation coverage for a disabled employee

Question 34

How much is the daily fine for noncompliance?

Answer 34

$100 per day

Question 35

4 Continuing health coverage for retirees alternatives:

Answer 35

1. Pay as you go
2. Earmarked corporate assets
3. Corporate owned life insurance
4. Increase pension benefits

Question 36

Are the cost of premiums tax deductible for the employer?

Answer 36

yes

Question 37

What is the deduction for pre-fund medical benefits limited to? (2)

Answer 37

• direct costs of the plan for a year
• contributors to an asset account up to
  35% of preceeding year’s direct costs

Question 38

When are employee premiums paid and benefits NOT tax free?

Answer 38

if highly compensated in a discriminatory plan

Question 39

What can the employee be eligible for unreimbursed out of pocket medical expenses?

Answer 39

an itemized deduction