ACC 577 - EB Chapter 5

This consumer-driven health care option allows employees to contribute pre-tax wages annually to pay for qualified medical expenses, but they will lose the balance not used at year's end. A. Flexible spending accounts B. Health reimbursement arrangements C. Health savings accounts D. Flexible savings accounts

Flexible spending accounts

Briefly discuss how insurers determine premiums.

• Plan providers use mortality tables and morbidity tables as well as experience ratings to determine the terms and premium amount • This decision-making process is known as underwriting • Mortality tables indicate yearly probabilities of death based on such factors as age and sex • Morbidity tables express annual probabilities of the occurrence of health problems • Experience ratings specify the incidence, type, and financial cost of insurance claims for groups (i.e., everyone as a whole covered under a group plan) • Experience ratings hold employers financially accountable for past claims, thus establishing the basis for charging different premiums • In other words, premiums will increase for employers whose employees experience greater incidences of hospitalization and surgical procedures than for employers whose employees experience far less of such incidences

The network model compensates physicians using a fee schedule. True/False

True

Health care premiums are quite high, often amounting to as much as ______ of annual benefits costs. A. one-quarter B. one-third C. one-half D. three-quarters

one-half

Employer's self-funded plans A. 1224% B. 450% C. 220% D. 860%

450%

These types of insurance plans are set up to cover things like dental care, vision care and prescription drugs A. Flexible savings plans B. Flexible services accounts C. Carve-out plans D. Health services accounts

Carve-out plans

Which of the following is not true for medical reimbursement plans? A. Reimburses employees totally or partially B. Usually associated with self-funded or independent indemnity plans C. Deductibles must be met D. Coinsurance usually 70%

Coinsurance usually 70%

Coinsurance rates are generally higher in HMOs than in fee-for-service plans. True/False

False

Exclusive provider organizations are similar to PPOs in that they offer reimbursement for services provided outside the established. network. True/False

False

FAS 106 does not affect the amount of net profit companies list on balance sheets. True/False

False

Flexible spending accounts permit employees to pay for health costs covered by an employer's insurance plan. True/False

False

Health insurance became part of the Social Security Act of 1935 during the Great Depression of the 1930s. True/False

False

IRC does not allow deductions for providing national health coverage. True/False

False

Which of the following statements is true of health care costs? A. Many private-sector companies require employees to contribute a portion of health-care premiums because of their considerable cost. B. The premiums for fully insured plans is likely to decrease. C. The highest paid workers contribute the most towards the cost of their health insurance. D. Employees contributed 42% of the cost for single coverage and 62% for family coverage.

Many private-sector companies require employees to contribute a portion of health-care premiums because of their considerable cost.

This prescription drug plan is usually associated with indemnity plans, pays benefits after the employee has met the deductible and tends to charge the most for filling the prescriptions. A. Drug prescription plan B. Mail order prescription drug program C. Medical reimbursement plan D. Prescription card program

Medical reimbursement plan

These indicate yearly probabilities of death based on such factors as age and sex. A. Experience ratings B. Formulary ratings C. Mortality tables D. Morbidity tables

Mortality tables

This type of group insurance plan is an arrangement made for employers with relatively small workforces. A single master trust holds each employer's contributions, and premiums are paid from the trust. A. Voluntary employee beneficiary associations B. Multiemployer plans C. Pooled coverage D. Multiple employer trust

Multiple employer trust

This law sets minimum standards for the length of hospital stays for mothers and newborns. A. Family and Medical Leave Act B. Newborns' and Mothers' Health Protection Act C. Pregnancy Discrimination Act D. Newborns' and Mothers' Discrimination Act

Newborns' and Mothers' Health Protection Act

What are the three specific forms of prepaid group practices? A. Universal model HMOs, group model HMOs, staff model HMOs B. Group model HMOs, network model HMOs, universal model HMOs C. Staff model HMOs, group model HMOs, network model HMOs D. Network model HMOs universal model HMOs, staff model HMOs

Staff model HMOs, group model HMOs, network model HMOs

This federal law requires group health plans to provide medical and surgical benefits for mastectomies. A. Women's Health and Cancer Rights Act B. Health Insurance Portability and Accountability Act C. Pregnancy Discrimination Act D. Women with Disabilities Act

Women's Health and Cancer Rights Act

. These are the three main types of dental plans. A. Dental fee-for-service, dental savings accounts, dental maintenance organizations B. Dental savings accounts, dental maintenance organizations, dental service plans C. Dental preferred provider organizations, dental maintenance organizations, dental service corporations D. Dental fee-for-service, dental service corporations, dental maintenance organizations

Dental fee-for-service, dental service corporations, dental maintenance organizations

Which of the following does not fall within the scope of the role of a primary care physician? A. Making initial diagnosis and evaluation of patient's condition B. Identifying applicable treatment protocols and practice guidelines C. Providing specialist diagnosis D. Deciding what treatment is warranted

Providing specialist diagnosis

State health instructor laws address all BUT which of the following A. Extending coverage to particular services, treatments or health conditions B. Reimbursing recognized health-care providers for health care services C. Employer's self-funded plans D. Length of time coverage must be available to employees who terminate employment

Employer's self-funded plans

In 2015, half of the private-sector workers in opposite-sex partnerships had access to health-care benefits. True/False

False

In consumer-driven health care plans, the third tier is the difference between the amount of money in the individual's pretax account and the insurance plan's deductible amount. True/False

False

Most dental insurance covers cosmetic improvements. True/False

False

Network model HMOs primarily use contracts with established practices of physicians that cover multiple specialties, but do not directly employ physicians. True/False

False

Often times, consumer-driven health care plans are referred to as two-tier payment systems. True/False

False

Plan providers use mortality tables and morbidity tables to determine the terms and premium amount, a decision-making process known as experience ratings. True/False

False

Preadmission testing is offered under the inpatient hospitalization benefit of a health-care plan. True/False

False

Preexisting condition clauses require physicians receive approval from a registered nurse or medical doctor employed by an insurance company before admitting patients to the hospital on nonemergency basis. True/False

False

Single employees pay a larger percentage of their health care premium than employees with family coverage pay. True/False

False

The Cadillac tax is due to take effect in 2020 but only applies to health-care plans within certain states. True/False

False

The Mental Health Parity Act, which play s a prominent role in establishing parity requirement for mental health plans, was enacted in 2003. True/False

False

There is a variety of health-care plans design alternatives. The US Bureau of Labor Statistics provides four questions to help distinguish amount them. The first question is: Does the plan have a designated network? True/False

False

Title XVIII of the Social Security Act established the Medicaid program. True/False

False

Under the Patient Protection and Affordable Care Act, only employers are subject to monetary penalties for failure to carry insurance coverage. True/False

False

Under the employer mandate of the Patient Protection and Affordable Care Act, companies with at least 10 employees are required to offer affordable health insurance to its full-time employees. True/False

False

These types of insurance plans provide protection against health care expenses in the form of cash benefits paid to the insured or directly to the provider after the services are rendered. A. Point-of-service plans B. Managed care plans C. Fee-for-service plans D. Health savings accounts

Fee-for-service plans

Companies can choose from which of the following ways to provide health-care coverage? A. Fee-for-service plans, alternative managed care plans, consumer-driven health care plans B. Indemnity plans, health savings accounts, fee-for-service plans C. Point-of-service plans, fee-for-service plans, managed care plans D. Self-funded plans, managed care plans, point-of-service plans

Fee-for-service plans, alternative managed care plans, consumer-driven health care plans

What are the three common forms of managed care plans? A. Individual practice organizations, point-of-service plans, health maintenance organizations B. Health maintenance organizations, preferred provider organizations, point-of-service plans C. Preferred provider organizations, point-of-service plans, individual practice organizations D. Preferred provider organizations, health maintenance organizations, individual practice organizations

Health maintenance organizations, preferred provider organizations, point-of-service plans

This consumer-driven health care option contains contributions made by employers and the balance can be carried-over to the next year. A. Flexible spending accounts B. Health reimbursement arrangements C. Health savings accounts D. Flexible savings accounts

Health reimbursement arrangements

_____ pay medical service providers a fixed amount based on the number of people enrolled, regardless of services received. A. Indemnity plans B. Fee-for-service plans C. Self-funded plans D. Prepaid plans

Prepaid plans

What is coinsurance? A. When both parents have employer-sponsored insurance coverage for their children B. Two insurance companies combine to offer a group policy to an employer C. The amount an employee has to pay out-of-pocket before the insurance kicks in D. The percentage of covered expenses paid by the insured

The percentage of covered expenses paid by the insured

Which of the following is not true of the Cadillac tax? A. Its implementation has been delayed until 2020. B. The tax will apply to high-cost employer-sponsored health plans. C. Cost limits are subject to change from year to year. D. The tax will equal 60% of the amount that exceeds certain stated limits.

The tax will equal 60% of the amount that exceeds certain stated limits.

A point-of-service plan requires the selection of a primary care physician, similar to HMOs. True/False

True

A premium is the amount an employer pays to establish and maintain a health-care plans. True/False

True

Canada, as opposed to the US, has a single-payer health-care system. True/False

True

Company-sponsored care benefits appeared in the late 1800s for mining and railroad workers when companies hired doctors to provide medical services to employees. True/False

True

Employers can offer health-care plans using fully insured or self-funded plans. True/False

True

Fee-for-service plans pay benefits on a reimbursement basis and they generally do not rely on networks of health-care providers. True/False

True

Formularies are lists of drugs proven to be clinically appropriate and cost effective. True/False

True

Generally, health plans pay expenses according to a schedule of usual, customary, and reasonable charges. True/False

True

Health-care plans generally offer hospital expense, surgical expense, and physician expense benefits. True/False

True

In consumer-driven health care plans, the first tier is a pretax account that allows employees to pay for services using pretax dollars. True/False

True

Individual health insurance coverage can also cover the employee's dependents. True/False

True

Morbidity tables express annual probabilities of the occurrence of health problems. True/False

True

Most plans specify the maximum amount a policyholder must pay per calendar year or plan year, known as the out-of-pocket maximum provision. True/False

True

Physicians that work in individual practice associations work out of their own facilities and work on HMO patients as well as the ones in their private practice. True/False

True

Staff model HMOs own the medical facilities and employ the medical and support staffs that work on the premises. True/False

True

The National Association of Insurance Commissioners deals with the state level issues relating to supervision of insurance. True/False

True

The Patient Protection and Affordable Care Act distinguished between health plans that existed prior to the enactment date and those that come into existence afterward. True/False

True

There has been much controversy over the Patient Protection and Affordable Care Act with arguments focused on the individual mandate. True/False

True

FAS 106 does not do which of the following? A. requires that companies disclose substantial information about the economic value and costs of retiree health-care plans. B. Reduces the amount of net profit companies list on balance sheets C. Benefits such as health care coverage establish an exchange between the employer and employee D. Post-retirement benefits are part of employee's compensation package

requires that companies disclose substantial information about the economic value and costs of retiree health-care plans.

The prices for medical care services overall have increased more than 450% since 1984 (compared to a 237% increase for all goods and services purchased by consumers during the same period). Describe the factors which account for this much higher rate of increases in medical service costs.

• The substantially higher rate increases for medical services may be explained by several factors, all of which translate into higher utilization of health benefits: o Longer life expectancies. o Aging baby-boom-era individuals, who place higher demands on health care. o Advances in medical research that include additional diagnostic tests and treatments, such as substantially more effective (and expensive) treatments to save low-birth-weight babies. o A general tendency for the health profession and family members to treat death as unnatural rather than as a natural ending to life, leading to higher expenditures to prolong the lives of the terminally ill. • There is no reason to expect that health-care costs will decrease in the foreseeable future.

Discuss and compare multiple-payer versus single-payer systems.

● A multiple-payer system is predominant in the US. ● In a multiple-payer system, more than one party is responsible for covering the cost of health care, including the government, employers, employees, or individuals not currently employed. ● A variety of forces have contributed to the existence of a multiple-payer health care system in the US. ● In a single-payer system, the government regulates the health care system and uses taxpayer dollars to fund health care, as in Canada and some other countries. ● Single-payer systems are often referred to as universal health care systems because the government ensures that all of its citizens have access to quality health care regardless of their ability to pay.

Discuss consumer-driven health-care plans briefly.

● Refers to the objective of helping companies maintain control over costs while also enabling employees to make wise choices about health care ● Consumer-driven health-care plans (CDHPs) combine a pretax payment account with a high-deductible health plan ● High-deductible health insurance plans require substantially higher deductibles and low out-of-pocket maximums compared to managed care plans ● Oftentimes, CDHPs are referred to as three-tier payment systems • A pretax account that allows employees to pay for services using pretax dollars • The difference between the amount of money in the individual's pretax account and the insurance plan's deductible amount, referred to as the coverage gap • Insurance plan covers the cost of medical care amounts greater than insurance plan deductible amount ● High-deductible health insurance plans • Flexible spending accounts (FSAs) • Health reimbursement accounts (HRAs) • Health saving accounts (HSAs) ● Flexible Spending Accounts permit employees to pay for specified health care costs that are NOT covered by an employer's insurance plan ● HRAs are different to FSAs • Employers make the contributions to each employee's HRA • HRAs permit employees to carry over unused account balances from year to year

Discuss the various FASB rulings associated with retiree health insurance.

● The Financial Accounting Standards Board (FASB) is a nonprofit company responsibility for improving standards of financial accounting and reporting in companies and implemented FAS 106 in 1990, FAS 132, and implemented FAS 158 in 2005 ● FASB 106 • Changed the method for how companies recognize the costs of nonpension retirement benefits, including health insurance, on financial balance sheets • Reduces the amount of net profit companies list on balance sheets by listing the costs of these benefits as an expense • Benefits such as health-care coverage establish an exchange between the employer and employee • Post-retirement benefits are part of employee's compensation package ● In 2003, FAS 132 was instituted • Requires companies to disclose substantial information about the economic value and costs of retiree health-care plans • Companies without sufficient current assets are unlikely to offer retiree benefits • In 2005, FAS 158 established requirements to enhance further transparency through accounting practices for other postretirement employee benefits.