Employee Benefits & Retirement Chapter 5
Kristen has an individual medical expense policy with a $1,000 calendar-year deductible, a $5,000 out-of-pocket limit, and a 20 percent coinsurance requirement. Kristen was hospitalized for a surgical procedure in March, her first health care treatment received during the year. The total bill was $20,000. Considering the deductible and coinsurance, how much of this amount must Kristen pay?
$4,800
How much is an employee age 40 with family HDHP coverage allowed to contribute to her HSA account in 2021 if her employer also makes an $1,900 contribution to her HSA account?
$5,300
Under the Patient Protection and Affordable Care Act of 2010, private employers with at least ________ full-time employees or full-time equivalent employees are required to offer affordable health insurance to a minimum percentage of full-time employees or face potential penalties.
50
Average cost per employee varies by organization size. Which of the following size employer is most likely to have the least expensive plan?
50-99 employees
What's the maximum waiting period for new employees eligible for employer-sponsored health-care benefits?
90 days
Coinsurance
A feature of health insurance programs that refers to the percentage of covered expenses or a fixed dollar amount paid by the insured.
National Association of Insurance Commissioners (NAIC)
A nonprofit organization that addresses issues concerning the supervision of insurance within each state. Specifically, the NAIC has three main objectives: maintaining and improving state regulation, ensuring the reliability of insurance companies in matters of financial condition, and promoting fair, just, and equitable treatment of policyholders and claimants.
Essential Benefits
A requirement of the Patient Protection and Affordable Care Act of 2010, include items and services within 10 categories, for example, ambulatory patient services, emergency services, and hospitalization.
Experience Ratings
A system that establishes higher contributions (to fund insurance programs) for employers with higher incidences of claims (i.e., more people using the insurance).
Exclusive Provider Organization (EPO)
A variation of preferred provider organizations (PPOs). This type of managed care plan does not offer reimbursement for services provided outside the established network of health care providers.
Premium
Amount of money an individual or company pays to maintain insurance coverage.
Fully Insured Plan
Based on contractual relationship with one or more insurance companies to provide health-related services for employees and their qualified dependents.
All of the following are a requirement for an individual to be HSA-eligible EXCEPT?
Be covered by employer-sponsored health care
One of the primary goals of the ACA was to make affordable health insurance available to more people. Which of the following were included in the ACA to make this goal possible? I. Elimination of preexisting conditions under both individual and group health insurance plans.II. Providing premium credits and cost-sharing subsidies to eligible individuals to purchase health insurance.
Both I and II
Which of the following statement is true regarding individual and group health insurance plans that are ACA compliant. I. Tobacco users may be charged up to 50% more premium than non-tobacco users. II. Free smoking secession benefits are mandated.
Both I and II
Which of the following statements about high deductible health insurance plans is (are) true? I. Coverage under a high deductible health plan is necessary to establish a qualified health savings account (HSA). II. High deductible health plans provide a maximum limit on annual out-of-pocket expenses.
Both I and II
Which of the following statements is (are) true concerning high deductible health plans? I. An employee can withdraw money tax-free from a health savings account or health reimbursement account to pay covered medical costs. II. There is a cap on an employee's out-of-pocket expenses under the plan.
Both I and II
Which of the following statements is or are true regarding the provisions of the Affordable Care Act? I. Health insurers cannot use pre-existing conditions exclusions. II. Health insurers cannot impose annual benefit limits and lifetime benefit limits.
Both I and II
Deductibles and out-of-pocket maximums (OOPMs) for both in-network and out-of-network continue to rise. Which type of plan has an average $3,000 single deductible and $5,000 single OOPM for in-network benefits?
CDHP
Point of Service Plan (POS)
Combine features of fee-for-service systems and health maintenance organizations (HMOs). This type of managed care plan is almost identical to PPOs except, like HMOs, it requires the selection of a primary care physician.
Insurance Policy
Contractual relationship between an insurance company and beneficiary that specifies the obligations of both parties. For example, a health insurance company specifies that it will cover the cost of physical examinations, and a life insurance company agrees to pay a spouse an amount equal to double of his deceased wife's annual salary.
The effect of an annual out-of-pocket limit in an individual medical expense policy is to
Cover 100 percent of eligible medical expenses after an insured has incurred a specified amount of out-of-pocket expenses
Health Care Plan
Cover the costs of services that promote sound physical and mental health, including physical examinations, diagnostic testing, surgery, hospitalization, psychotherapy, dental treatments and corrective prescription lenses for vision deficiencies.
Inpatient Benefits
Covered expenses associated with hospital stays.
Outpatient Benefits
Covered expenses for treatments in hospitals not requiring overnight stays.
Usual, Customary, and Reasonable Charges
Defined as not more than the physician's usual charge, within the customary range of fees charged in the locality, and reasonable, based on the medical circumstances.
Primary Care Physician
Designated by HMOs to determine whether patients require the care of a medical specialist. This functions to control costs by reducing the number of medically unnecessary visits to expensive specialists.
All of the following statements about the tax treatment of Health Savings Accounts (HSAs) are true EXCEPT
Distributions from a qualified HSA used to fund qualified medical expenses are taxable income.
Managed Care Plan
Emphasize cost control by limiting an employee's choice of doctors and hospitals. They also provide protection against health care expenses in the form of prepayment to health care providers.
The Affordable Care Act requires all new medical expense plans to provide a comprehensive set of coverages and services. This comprehensive set of coverages and services that must be provided are called
Essential health benefits
Morbidity Tables
Express annual probabilities of the occurrence of health problems. In general, insurance companies set insurance rates higher as the probability of death or the occurrence of health problems increases.
Single Coverage
Extends health insurance benefits only to the covered employee.
Group Coverages
Extends health insurance coverage to a group of employees and their dependents under a single master contract.
A married couple may make two HSA catch-up contributions as long as at least one spouse is at least age 55. True or False?
False
An individual eligible to contribute to an HSA may also contribute to an employer-provided medical FSA? True or False?
False
Exclusive provider organizations (EPOs) are similar to PPOs in that they offer reimbursement for services provided outside the established network. True or False?
False
Self-only (single) coverage extends to the employee's dependents. True or False?
False
Single employees pay a larger percentage of their health care premium than employees with family coverage pay. True or False?
False
The 2012 Supreme Court ruling on the constitutionality of the ACA upheld the requirement that all states must expand Medicaid for eligible adults with incomes below 138% of the Federal Poverty Level (FPL). True or 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 or 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.
Fee-for-Service Plans
Which of the following statements is true regarding 2021 contribution limits to Health Savings Accounts (HSAs)?
For 2021, $3,600 for Individuals with self-only coverage and $7,200 for individuals with family coverage.
An HMO physician who determines if medical care from a specialist is necessary is called a(n)
Gatekeeper
Which of the following type plans have the lowest cost of care?
Health Maintenance Organization (HMO) Plan
Which of the following does not allow an employee contribution?
Health Reimbursement Account (HRA)
An employee is covered by an employer-sponsored medical plan that is not a High Deductible Health Plan (HDHP). Which of the following tax-advantages health care plans would she not be eligible to participate if offered through her employer?
Health Savings Account (HSA)
This consumer-driven health care option contains contributions made by employers and the balance can be carried-over to the next year.
Health Savings Accounts
The cost of care varies by industry type. Which of the following sector has a lower cost than average, making employees in this industry among the least expensive to cover?
Hospitality
Mortality Tables
Indicate yearly probabilities of death based on factors such as age and sex established by the Society of Actuaries. Insurance companies rely on these tables in the underwriting process.
Grandfathered Plan
Individual and group health plans already in existence prior to the enactment of the Patient Protection and Affordable Care Act of 2010 (PPACA).
Under the Affordable Care Act, if a health insurer does not meet the minimum loss ratio requirement, the insurer must
Issue rebates to the people the insurer covered
Which of the following size employer is most likely to have adopted wellness plans to help manage the cost of care?
Large employers (500+ employees)
An employee is covered by a High Deductible Health Plan (HDHP) offered through her employer. Which of the following would she not be eligible to participate in if offered through her employer?
Medical Flexible Spending Account (medical FSA)
Which of the following is a provision of the Affordable Care Act?
No cost-sharing for certain preventative services
Copayment
Nominal payments individuals make for office visits to their doctors or for prescription drugs.
Marv is covered by a group health insurance plan at work. His employer funds the entire cost of the group health insurance. Because of this characteristic, the group health insurance plan can be described as
Noncontributory
The HSA distribution for Qualified Medical Expenses (QMEs) made by an eligible individual account holder over age 65 is
Not subject to income tax nor a tax penalty
Which of the following statements about health savings accounts (HSAs) is true?
Once an individual has reached age 65 or is covered by Medicare, no additional contributions to the HSA may be made.
Prepaid Plan
Pays health-care providers a fixed amount according to the number of individuals covered by the plan.
Prior to passage of the Affordable Care Act, insurance policies typically contained a provision excluding coverage for impairments that were present or were treated during a specified period prior to the effective date of the policy. This provision is a(n)
Preexisting-Conditions Clause
Health Maintenance Organization Act (HMO Act)
Promoted company use of health maintenance organizations (HMOs) by providing HMOs with financial incentives subject to becoming federally qualified.
Fee for Service Plans
Provide protection against health care expenses in the form of cash benefits paid to the insured or directly to the health care provider after receiving health care services. These plans pay benefits on a reimbursement basis.
One provision of the Affordable Care Act is designed to benefit young adults up to age 26. This provision allows these young adults to
Remain covered under their parents' health insurance policies
Employer Mandates
Requires that companies with at least 50 full-time equivalent employees are required to offer affordable health insurance to its full-time employees or face possible penalties.
Which of the following size employer is least likely to have a self-funded health insurance plan?
Small employers (fewer than 100 employees)
Which of the following size employer is most likely to implement a five- and six-tier prescription drug plan?
Small employers (fewer than 100 employees)
Regional cost of care varies from the national picture. Which of the following regions has the lowest overall average costs per employee?
Southeast
The HSA distribution for Non-Qualified Medical Expenses (NQMEs) made by an eligible individual account holder over age 65 is
Subject to income tax but not a tax penalty
Which of the following statements about group insurance is true?
The actual experience of a large group is a factor in determining the premium that is charged.
Hospitalization Benefits
The items that an insurance company will provide coverage for, related to stays in the hospital such as the cost of the room and necessary medical supplies.
An HSA can be contributed to by an employer on behalf of an eligible individual. True or False?
True
An individual's HSA contribution limit is reduced by any employer contributions made to her HSA. True or False?
True
Consumer-Driven Health Plans (CDHP) enrollment is fairly evenly distributed across network types (e.g., PPO, HMO, POS). True or False?
True
Generally, fee-for-service health plans pay expenses according to a schedule of usual, customary and reasonable (UCR) charges. True or 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 or False?
True
The majority of employer-sponsored health insurance plans are fully-insured. True or False?
True
Under the Patient Protection and Affordable Care Act, starting January 2019, only employers are subject to monetary penalties for failure to provide or carry insurance coverage. True or False?
True
Self-Funded Plans
Under this type of health-care plan, the employer determines what benefits to offer, pays medical claims for employees and their families, and assumes all of the risk.
