Types of Health Policies 10% Flashcards
What is grouped into what is referred as Medical Expense Insurance?
Basic hospital, surgical, and medical policies
and also major medical policies
How are the 3 basic coverages (hospital, surgical, medical) purchased?
separately or together
Why are the 3 basic coverages (hospital, surgical, medical) referred to as FIRST-DOLLAR coverage?
they usually do not require the insured to pay a deductible
What is covered in the Basic Hospital expense coverage?
hospital room and board and miscellaneous hospital coverages (lab, x-rays, medicine, operating room use and supplies) while insured is confined in hospital
What is the deductible on Basic hospital expenses?
No deductible
What is the limit for room and board set at?
set at a specified dollar amount per day up to a maximum number of days
may not cover full amount of charges incurred by insured
Since miscellaneous coverage normally has a separate limit than the basic hospital expense coverage, what is the amount of coverage expressed as?
either as a multiple of the room and board charge or as a flat amount
What other types of limits may be covered in Miscellaneous hospital expense?
may specify a maximum limit for certain types of expenses like drugs or operating room use
may also not cover all expenses incurred
What does the Basic Medical expense coverage usually cover and what is it referred to as?
referred to as Basics physicians nonsurgical expense
and usually covers nonsurgical services a physician provides
and some pay for office visits
What are the limits in the basic medical expense coverage?
benefits usually limited to visits to patients confined in a hospital
and usually limited to number of visits per day, limit per visits, or limit per hospital stay
Is there a deductible for basic medical expense coverage?
No
In addition to nonsurgical physicians expenses, basic medical expense coverage can also be purchased for what?
emergency accidental benefits, maternity benefits, mental and nervous disorders, hospice care, home health care, outpatient care, and nurses expense
What is the difference between Basic Medical and Major Medical policies?
Basic medical only offers limited benefits that are subject to time limitations and may require the insured to pay a considerable sum of money for whatever expense aren’t fully paid off by the basic policy
Which basic coverage is written in conjunction with Hospital expense policies?
Basic Surgical expense coverage
What does the Basic Surgical expense coverage pay for?
costs of surgeons services, whether surgery is performed in or out of hospital
What is covered in the Basic surgical coverage?
surgeons fees, anesthesiologists, and the operating room (when not covered by miscallaneous medical item)
Is there a deductible for Surgical Expense coverage?
No, but coverage is limited
Each contract for basic surgical has a surgical schedule list included, what is in that list?
the types of operations covered and their assigned dollar amounts
What happens when a specific coverage is not listed? in surgical expense
contract may pay for a comparable operation
What is in a Special schedule?
may express the amount payable as a percentage of the maximum benefit, lists a specified amount, or assign a relative value that when multiplied by it’s conversion factor gives the benefit payable
What happens when a relative value approach is used in the special schedule on the basic surgical expense?
each surgical procedure will be assigned a number of points that are relative to that number of points assigned to the maximum benefit and that is what the insurer would pay
What is covered in the Major medical policies?
offers a broad range of coverage
covers:
1) Comprehensive coverage for hospital expenses (room and board and miscellaneous expenses, nursing services, physicians services, etc.)
2) Catastrophic medical expense protection
3) benefits for prolonged injury or illness
What limits are in the Major medical policies?
blanket limit for specific expenses stated in the policy
also a lifetime benefit per-person limit
What are the fees that are carried in the Major Medical policies?
deductibles, coinsurance requirements, and large benefit maximums
What are the two types of Major Medical policies available?
Supplemental Major Medical policies
and
Comprehensive Major medical policies
What does the supplemetal major medical policies do?
used to supplement the coverage payable under a basic medical expense poicy
What does the supplemental policy cover?
cover expenses that weren’t covered by the basic policy and expenses that exceed the maximum
and will also cover the the time limitations once the basic policy time limitations were used up
What deductibles are expected in the major medical expenses before coverage?
insured may pay a corridor deductible
firstly, will not have to pay the basic expense deductible
What does a corridor deductible mean?
applied between the basic coverage and the major medical coverage
What is the Comprehensive Major Medical policies?
combination of basic coverage and major medical coverage that features low deductibles, high maximum benefits, and coinsurance
Which act forced employers with more than 25 employees to offer Health Maintenance Organizations (HMO) as an alternative to their regular health plans?
Health Maintenance Act of 1973
What is the main concept unique only to HMO’s different from other services by insurance companies?
it provides both the financing and patient care for it’s members
What are the benefits of the HMO?
provides benefits in the form of SERVICES rather than in the form of reimbursement for the services of the physician or hospital
What is stated in the ‘Limited Service’ area rule in the HMO?
HMO provides services to those living within the specific geographic boundaries (such as county or city limits) and those who don’t live within the boundaries are ineligible for services
What is stated in the ‘Limited Choice of Providers’ section in an HMO?
HMO tries to limit costs by only providing care from physicians that meet their standards and are willing to provide care at a pre-negotiated price
Are copayments needed in an HMO?
Yes, the specific part of the cost of care or a flat dollar amount that must be paid by the member
What does the HMO operate on?
A capitated basis (prepaid basis)
How does the capitated (prepaid) basis function in the HMO?
HMO receives a flat amount each month attributed to each member, whether they see a physician or not
it is a prepaid plan in essence
As a member, they receive all services necessary from the member physicians and hospitals
What is the main goal of the HMO?
reduce the cost of health care by utilizing preventative care
What does the HMO hope when they offer preventative care (free annual check-ups for entire family, etc.)?
hope to catch diseases in the earliest stages, when treatment has the greatest chance of success
**offers free or low-cost immunizations to members
What happens when an individual becomes a member of the HMO?
they get to choose their primary care physician (gatekeeper)
What is happens with the Primary Care physicians?
The PCP or HMO will be regularly compensated whether care is provided or not
*should be in their best interest to keep this member healthy to prevent future time for treatment of disease
What must be done in order for a HMO member to get to see a Specialty (referral) Physician?
member must be referred
What does the referral system in an HMO do?
keep members away from higher priced specialists unless truly necessary
Why is a primary care physician more inclined to use alternative treatments before referring a patient to a specialist?
there is a financial cost TO the primary care physician
The HMO provides services for members with inpatient hospital care in or out of the service are, but may limit what types of treatment?
limited to treatment of mental, emotional, or nervous disorders including drug or alcohol rehab or treatment
If emergency care if being provided outside the service area, why would the HMO want to get the member back in the service area?
to reduce costs that can be provided by a salaried member
What is a PPO and what does it stand for?
PPO= Preferred provider organizations
is a group of physicians and hospitals that contract with employers, insurers, or third party organization to provide medical care services at a reduced fee
How do PPO’s differ than HMO’s?
first: they do not provide care on a prepaid basis but the physicians are paid a FEE FOR SERVICE
second: subscribers are not required to use physicians or facilities that have contracts with the PPO’s
Why would a member of PPO be encouraged to use a physician agreed upon contract versus a not approved physician?
there are benefits that the approved physician will cost less, less out-of-pocket costs for in-network physicians, higher out-of-pocket costs for out-of-network providers
(ex: 90% of cost covered) rather than not an approved physician (ex: 70% of cost covered)
What is the Point-of-Service (POS) plan in essence?
merely a combo of HMO and PPO plans
What is the purpose of a POS plan?
offers a different choice between HMO or PPO that can be made every time a need arises for medical services
**employees do not have to be locked into one or choose between the two plans
What is another name POS plans may be referred as?
Open-ended HMO’s
In POS plans, what do members have access to?
access to providers in a network that are gatekeeped and out-of-network physicians at reduced coverages
What is gatekeeping?
when primary care physicians control the provider network
What happens if a member of a POS plan seeks an out-of-network physician?
members’s copays, coinsurance, and the deductibles may be substantially higher
In a POS plan, what happens when a member seeks services for a physician out-of-network?
attending physician will be paid a fee for service
but member will have to pay a higher coinsurance amount or percentage for the privilege
What is a cafeteria plan?
type of employee benefit plan that allows insured to choose between different types of benefits
What is a Flexible Spending account (FSA) plan?
a form of cafeteria plan benefit funded by salary reduction and employer contributions
How does the FSA plan work?
employees are allowed to deposit a certain amount of their paycheck into an account before paying income taxes and then during the year, employee can be directly reimbursed from this account for eligible health care and dependent care expenses
What are the two types of Flexible Spending Accounts?
Health Care Account (for out of pocket health care expense)
Dependent Care Account (subject to annual contribution limits) to help pay for dependent care expense
What is an FSA exempt from?
1) federal income taxes
2) Social Security (FICA) taxes
3) state income taxes
* **saving 1/3 or more in taxes
When isn’t an employee in an FSA plan exempt from federal income taxes
when the plan favors them as highly compensated employees
What does the IRS control in Dependent Care accounts in FSA?
limits annual contributions to a specified amount that gets adjusted annually for cost of living (called family limit)
What is the family limit in the dependent care accounts?
both parents have access to flexible care accounts but combined contributions cannot exceed the amount stated by the IRS
When can changes be made or not made in an FSA accounts?
benefits may be changed during open enrollment, no other changes can be made during the plan year
What are the qualified changes that can be made in an FSA account?
1) Marital status
2) # of dependents
3) one of dependents becomes eligible for or no longer satisfies the coverage requirements under the Medical reimbursement plan for unmarried dependents due to attained age, student status, or any similar circumstances
4) Insured, spouse, or qualified dependents employment status changed that effects eligibility under the plan (at least 31 day break in employment)
5) change in dependent care provider
6) Family medical leave
What is featured in a High-deductible Health plan (HDHP)?
higher annual deductibles and out-of-pocket limits than traditional health plans but have lower premiums
What must be met before the HDHP plan before the plan will pay benefits?
annual deductible must be met first
What is the only care that can be provided BEFORE the annual deductible must be met in an HDHP plan?
preventative care (first dollar coverage or paid after copayments)
What is the HDHP plan used in coordination with?
Medical Savings Account (MSA) or
Health Savings Account (HSA)
Health Reimbursement Accounts (HRA)
What happens with the health accounts in the HDHP plans?
a portion of the health plan premium gets put into the accounts on a monthly basis which the insured can take out later for future medical expenses or medications
What are the Health Savings Accounts (HSA) designed to do?
to help individuals save for qualified health expenses that they, their spouse, or their depends incur
How are the HSA’s funded and used?
funded by tax-deductible contributions from the insured
used to pay out-of-pocket medical expenses
Is the contributions in an HSA inclded in the individuals taxable income?
No
How can an individual be eligible for an HSA?
1) must be covered by a HDHP
2) not covered by other health insurances (except injury & accident, disability, dental, vision, long-term care)
3) not be eligible for Medicare
4) can’t be claimed as a dependent on someone else’s tax return
What are the established minimum deductibles a person may obtain under a qualified health insurance within an HSA?
$1,400 for singles
$2,400 for families
in 2020
What are the limits that a certain individual can contribute into an HSA each year despite plan’s deductibles?
$3,500 singles
$7,100 for families
What is the additional contributions in an HSA for taxpayers aged 55 or older?
$1,000 additional
What is the age an individual must be in order to open an account for HSA?
under age of medicare eligibility
What are the penalties an HSA holder pays who uses the money for a non-health expenditure?
tax plus 20% penalty
after age 65, withdrawal taxed but not penalized
What is Disability Income Insurance?
designed to replace lost income in the event of disablitiy and is a vital component of a comprehensive insurance program
How can disability income insurance be purchased?
purchased individually or through an employer on a group basis
What disability provision specifies the conditions that will automatically qualify the insured for full disability benefits?
Presumptive Disability
The presumptive disability benefit provides benefit for what?
a benefit for dismemberment (loss of use of any two limbs), total and permanent blindness, or loss of speech or hearing
***some policies require actual severance of limbs rather than loss of use
Which feature of a policy provision specifies the period of time (usually within 3-6 months) during which the recurrence of an injury or illness will be considered as a continuation of a prior period of disability?
Recurrent Disability
What is the significance of the Recurrent Disability feature?
the recurrence of a disabling condition will not be considered to be a new period of disability so that the insured is not subjected to another elimination period
