Healthcare Plans and Concepts

Dental Insurance --- Choice of Providers There are as many choices of dental coverage as there are choices of health insurance. These choices are as follows:

-Conventional insured plans offered by insurers -Dental service plans -Dental HMO managed care plans or prepaid dental plans Dental plans must offer the insured a choice of providers regardless of the dental coverage selected. A dental HMO plan limits the choice to in-network dentists only.

Types of Dental Care

-Diagnostic/Preventive -Basic -Major Most plans will require a probationary period before providing coverage for major procedures which may have been pre-existing. Orthodontic care, if provided, will typically require a probationary period and pay reduced benefits for a specified period. For example, the plan may cover orthodontics at 30% after the policy has been in force for 1 year; 50% after 2 years; and 80% after 3 or more years.

Common Exclusions from Coverage--- Exclusions are causes or conditions listed in the policy that are not covered and for which no benefits are payable. The following exclusions are typical of those found in most medical expense policies:

-Pre-existing conditions may be excluded or subject to a probationary period -Intentionally self-inflicted injuries (suicide) -War or any act of war -Elective cosmetic surgery -Medical expenses payable under Workers' Compensation -Military service -Coverage payable under a government plan -Losses as a result of the commission or attempt of a felony

Exclusions in Dental Insurance

-Purely cosmetic services (unless necessitated by an accident) -Replacement of prosthetic devices -Duplicate dentures or prosthetic devices -Oral hygiene instruction or training -Occupational injuries covered by Workers' Compensation -Services furnished by or on behalf of government agencies -Certain services that began prior to the date of coverage

HMOs are deemed to be both a health care financing and servicing mechanism. The principal objectives are to reduce medical expenses by:

-Stressing preventive medicine through physical exams and diagnostic procedures -Reducing the number of unnecessary hospital admissions -Reducing the average number of days per hospital visit -Reducing duplication of benefits -Saving on administrative costs

Other Policies

-Vision -Cancer -Critical Illness or Specified Disease -Hospital Indemnity -Short-Term Medical -Limited Accident

What are ways to qualify for short-term medical?

-change in employment, -need proof of insurance to participate in special activities -need coverage while waiting to become eligible for Medicare.

The insured is free to choose any physician, surgeon, hospital, or other health care provider. These policies specify the benefit limit for covered expenses as either a:

-flat specified dollar amount -an amount based on a surgical fee schedule -percentage of expenses incurred. The benefit limit may be less than actual expenses incurred.

What does the IRS determine under HDHP?

The IRS also determines the maximum annual out-of-pocket expenses, which includes deductibles, copayments, and coinsurance.

Capital sum

50% of the face amount/principal sum, will be paid for a single dismemberment, which is the loss of one limb, or loss of eyesight, as long as the loss occurs within 90 days of the accident.

Dental Insurance

A dental plan offered by an insurer must state the benefits, the exclusions, and any limitations in coverage. may be offered as part of a medical expense plan or as a stand-alone plan. may be written on either an individual or group basis

The ABC corporation chose a high-deductible health plan (HDHP) for the purpose of: A. Coordinating with the HSA it intended to offer to its 700 full time employees B. Covering catastrophic losses but not the cost of preventative medical treatments C. Meeting the requirements of establishing a Flexible Spending Account for its 1,000 employees D. Providing a plan that offers First Dollar coverage to its employees

A. Coordinating with the HSA it intended to offer to its 700 full time employees HDHP plans cover preventative costs and are not required to establish an FSA. HDHPs are high deductible plans and therefore do not offer first dollar coverage. HSAs require a HDHP in order to be established.

are traditional plans that provide various coverages for hospital, surgical, and miscellaneous medical expenses.

Basic health insurance policies ---These coverages may be combined into one plan or offered as stand-alone plans.

Which of the following is true of traditional commercial insurers? A. They traditionally market reimbursement-type contracts that pay directly to the insured B. They offer only individual plans of insurance C. They traditionally market service-type contracts that pay directly to the provider of the service D. They offer only group plans of insurance

A. They traditionally market reimbursement-type contracts that pay directly to the insured Traditional commercial insurers market reimbursement contracts that pay directly to the insured.

Which of the following is true regarding coinsurance? It is: A. Written as a percentage and paid by both the insurer and the insured B. The initial out of pocket expense before benefits are payable C. Always written as 80%-20% D. Paid prior to the deductible

A. Written as a percentage and paid by both the insurer and the insured Coinsurance is a sharing of a medical expense between the insurer and the insured. It is written as a percentage and has a maximum out-of-pocket and pays after the initial deductible is met.

When does the coinsurance feature apply?

After the annual deductible has been met, the coinsurance feature applies

Newborn Infant Coverage

All individual and group health insurance policies providing coverage for dependents of the insured must provide coverage for the insured's newborn child from the moment of birth. Adopted children are covered at the date of placement for adoption.

What may HMO's require their members to do before an office visit or hospital service?

Although HMOs provide services on a prepaid basis, members may be required to make a copayment for office visits and hospital services.

What must subscribers do to seek treatment from a specialist?

An HMO will require subscribers to seek treatment through a PCP before seeing a specialist.

Do basic insurance plans have a deductible? And what are they known as?

Basic plans do not have a deductible; therefore, they are known as providing "First Dollar" coverage.

Does the individual have to be the one getting the HSA account?

An employer may establish an HSA on behalf of an individual and then account contributions are deductible to the employer.

Any Provider vs. Limited Choice

Any Provider -These are more flexible plans that allow the insured or subscriber to choose any provider to receive benefits. Limited Choice -Other plans may only provide benefits to a limited choice of providers who must be pre-approved by the insurer or service provider. These providers have typically agreed to reduce their fees.

If an out-of-network provider is utilized, what occurs to the benefit and cost?

pays a reduced benefit and the subscriber will have a larger out-of-pocket cost.

D has an accidental death and dismemberment policy with a $200,000 principal sum and a $100,000 capital sum. While mowing the lawn, D cut off a finger. How much will the policy pay? A. $100,000 B. $0 C. $200,000 D. $50,000

B. $0 An accidental death and dismemberment policy will not pay for fingers or toes since they are not considered to be limbs.

Usual, Customary, Reasonable (UCR)

Benefits are based on the average fee charged by all providers in a given geographical area. Many insurers pay the UCR amount and the balance of any overcharges or costs of any disallowed services are the insured's responsibility.

An insured is covered under a major medical plan with a $500 deductible that has not been paid and 80/20 coinsurance requirement. A minor injury is suffered and the total covered cost for treatment is $1,500. How much will the insurance company cover? A. $1,200 B. $800 C. $700 D. $500

B. $800 The insurance company will pay $800 of the $1,500 loss. The insured is responsible for the initial deductible of $500. Of the remaining $1,000, the insurer is responsible for 80%, or $800.

Basic health plans provide "first dollar" coverage, which means: A. The insured must pay a deductible first before the insurer will pay any benefits B. Benefits are payable starting with the first dollar of expenses incurred up to a stated maximum benefit and without a deductible C. The insurance company pays 100% of all claims and the insured has no out-of-pocket expenses D. The beneficiary of an insured must pay the first dollar of expenses if an insured dies prior to paying the claim

B. Benefits are payable starting with the first dollar of expenses incurred up to a stated maximum benefit and without a deductible A first-dollar plan means that there is no deductible and the insurer pays benefits starting with the first dollar of expenses incurred up to a specified amount.

Which of the following causes of death is covered by an Accidental Death & Dismemberment policy? A. Heart attack B. Commercial airline crash C. Cancer D. Suicide

B. Commercial airline crash Such policies cover accidental, NOT unexpected, death. An airline crash would be accidental; while the other options are not.

The ABC corporation chose a high-deductible health plan (HDHP) for the purpose of: A. Covering catastrophic losses but not the cost of preventative medical treatments B. Coordinating with the HSA it intended to offer to its 700 full time employees C. Providing a plan that offers First Dollar coverage to its employees D. Meeting the requirements of establishing a Flexible Spending Account for its 1,000 employees

B. Coordinating with the HSA it intended to offer to its 700 full time employees HDHP plans cover preventative costs and are not required to establish an FSA. HDHPs are high deductible plans and therefore do not offer first dollar coverage. HSAs require a HDHP in order to be established.

Which of the following limitations is not included in most dental expense insurance plans? A. Deductibles for restorative care B. Deductibles for preventive care C. Coinsurance D. Coverage only for the least expensive treatment

B. Deductibles for preventive care Dental expense plans typically waive deductibles for preventive care.

Critical Illness or Specified Disease

Benefits are payable similar to a cancer policy, but are designated for a major illness or specified disease, such as heart disease or a stroke.

HMOs provide payments to member hospitals on a

predetermined basis

A High Deductible Health Plan is a: A. Health Maintenance Organization established to provide comprehensive medical services on a prepaid basis B. Health plan which requires the insured to absorb a relatively high deductible in exchange for a significantly reduced premium C. Health plan offered by large companies who are trying to minimize the growing cost of providing employee health insurance D. Basic medical expense plan which pays first dollar expenses

B. Health plan which requires the insured to absorb a relatively high deductible in exchange for a significantly reduced premium A high deductible health plan requires the insured to pay a large deductible out of pocket before the plan's benefits kick in. A high deductible plan carries a much lower premium than a plan with a lower deductible.

Newborn children are covered under medical expense plans beginning ___________. A. On the 15th day following birth B. Immediately at birth and for at least 31 days C. On the 31st day following birth D. On the 14th day following birth

B. Immediately at birth and for at least 31 days Newborn children are automatically covered immediately at birth and during the first 31 days following their birth. To continue coverage beyond the 31 days, the insured must notify the insurer and pay any required premium.

Common exclusions in accident and health insurance policies include all of the following, except: A. Medical expenses covered under Workers' Compensation B. Newborn infant C. Commission of a felony D. Elective cosmetic surgery

B. Newborn infant Commission of a felony, elective cosmetic surgery and expenses covered by Workers' Compensation are common exclusions. Newborns are required to have coverage.

A flexible spending account can only be opened if: A. A qualified long-term care coverage is purchased B. Offered through an employer-established benefit plan C. The insured is self-employed D. A High Deductible Health Plan is purchased

B. Offered through an employer-established benefit plan An FSA may only be opened through an employer-established benefit plan under a Section 125 cafeteria plan.

If an insured dies under the AD&D policy, which of the following will provide benefit payouts to the beneficiary: A. Principal investments B. Principal sum C. Capital funds D. Capital sum

B. Principal sum Death benefits payable under an AD&D policy are referred to as the principal sum.

Managed health care plans generally refer to covered persons as ____________. A. Beneficiaries B. Subscribers C. Insureds D. Providers

B. Subscribers Managed health care plans refer to covered persons as subscribers rather than insureds. Care outside of the network is covered, but limited to specific treatment. Emergency care must be covered for necessary services at the nearest emergency room.

Which policy utilizes a Corridor Deductible after Basic Medical Expense Coverage benefits have been exhausted and before Major Medical benefits begin? A. Comprehensive Major Medical B. Supplementary Major Medical C. Hospital Expense D. Surgical Expense

B. Supplementary Major Medical The question describes the characteristics of a Supplemental Major Medical Policy.

All of the following are characteristics of traditional health insurance plans, except: A. The insured submits a claim for reimbursement B. The insured must see a network provider C. A deductible and coinsurance feature apply D. Benefits are paid directly to the insured

B. The insured must see a network provider The insured may choose any provider and is not limited to network providers.

Joe suffers a broken leg while on vacation. With Joe's HMO, he may seek medical care at which of the following? A. A facility near his home, where he must return for treatment B. The nearest emergency room C. A military hospital D. An approved HMO facility

B. The nearest emergency room Since Joe's broken leg would qualify as an emergency, his HMO would pay for necessary services at the nearest emergency room.

Many insurers pay benefits based on the average fee charged in a geographical area. This is referred to as: A. Cash B. Usual, Customary, and Reasonable C. Scheduled D. Reimbursement

B. Usual, Customary, and Reasonable UCR is not scheduled, but is based on the average fee charged by all doctors in a given geographical area.

Fillings, periodontics, and root canals are considered to be basic care

Basic

What are the benefits based on with a traditional plan? Will the provider (doctor/hospital) charge more than provided?

Benefits may be based on a scheduled fee and the provider may charge more than the insurer will cover. The insured is responsible for paying the difference.

Basic Health Insurance plans do not have a deductible, so they are known as providing: A. "Non-Deductible" coverage B. "Designated" coverage C. "First Dollar" coverage D. "Catastrophe" coverage

C. "First Dollar" coverage Basic plans do not have a deductible; therefore, they are known as providing "First Dollar" coverage.

A typical hospital indemnity insurance plan provides payment of benefits in which of the following ways? A. A percentage of benefits based on a written schedule of common procedures and treatments B. An amount equal to the insured's deductible and coinsurance amounts C. A daily benefit based on a stated dollar amount paid to the insured without regard to the actual medical expenses D. As reimbursement for usual, customary and reasonable necessary medical expenses paid by the insured

C. A daily benefit based on a stated dollar amount paid to the insured without regard to the actual medical expenses Hospital indemnity plans will pay a daily benefit as stated in the policy, regardless of actual expenses incurred.

_______________ Major Medical insurance coverage combines the features of the Basic Medical Expense policies and a Major Medical policy into a single policy and includes reimbursement for covered expenses on a 'usual, customary, and reasonable' basis. A. Intensive B. Inclusive C. Comprehensive D. Exclusive

C. Comprehensive Comprehensive Major Medical insurance coverage combines the features of the Basic Medical Expense policies and a Major Medical policy into a single policy and includes reimbursement for covered expenses on a 'usual, customary, and reasonable' basis.

The deductible that applies after the Basic Plan is exhausted and before the Supplemental Major Medical Coverage begins is called: A. Coinsurance B. Payment Structure C. Corridor Deductible D. Stop Loss

C. Corridor Deductible A Corridor Deductible is used between the Basic Plan and before the start of coverage under the Supplemental Major Medical policy.

Sylvia is a participant in a Preferred Provider Organization and finds that if she opts to use a provider outside the network: A. Her PPO will pay only if the circumstances for care were precipitated by an emergency B. Her PPO will not pay at all C. Her PPO will pay a reduced amount with Sylvia paying the balance D. Her PPO will cover any charges in full

C. Her PPO will pay a reduced amount with Sylvia paying the balance Sylvia's PPO will provide the maximum benefit when she uses in-network providers.

All of the following are differences between a PPO plan and an HMO, EXCEPT: A. Providers charge a discounted fee negotiated in advance B. Use of a Primary Care Physician C. It is a managed care plan D. Freedom to choose any service provider

C. It is a managed care plan Both a PPO and an HMO are managed care plans.

Accident and health insurance policy exclusions typically include all of the following, except: A. Intentionally self-inflicted injuries B. Injuries covered under a government plan C. Nonoccupational injuries D. Elective cosmetic surgery

C. Nonoccupational injuries Nonoccupational injuries are covered. Job related or occupational injuries are typically excluded as they are covered by Workers' Compensation.

All of the following are characteristics of dental insurance plans, EXCEPT: A. Deductibles and coinsurance generally apply to basic and major services B. Cleaning and x-rays are preventive care services C. Orthodontic care is covered immediately following the effective date of the policy D. Purely cosmetic services are excluded from coverage

C. Orthodontic care is covered immediately following the effective date of the policy If orthodontic care is provided, a probationary period typically applies and benefits are reduced for a stated period of time.

The principal objectives of a HMO include all of the following, except: A. Keeping patients well with preventative medicine B. Reducing the average number of days per hospital visit C. Providing only inpatient medical care D. Reducing unnecessary hospital admissions

C. Providing only inpatient medical care The principal objectives of an HMO are to reduce medical expenses by emphasizing preventive medicine, reducing the number of unnecessary hospital admissions, reducing the average number of days per hospital visit, reducing duplication of benefits, and saving on administrative costs.

The principal objectives of a HMO include all of the following, except: A. Reducing the average number of days per hospital visit B. Keeping patients well with preventative medicine C. Providing only inpatient medical care D. Reducing unnecessary hospital admissions

C. Providing only inpatient medical care The principal objectives of an HMO are to reduce medical expenses by emphasizing preventive medicine, reducing the number of unnecessary hospital admissions, reducing the average number of days per hospital visit, reducing duplication of benefits, and saving on administrative costs.

How do PPOs save consumers money? A. They charge minors less than adults B. They waive their charges in cases of emergency care C. They charge patients utilizing providers contracted with the PPO less than those who are not contracted with the PPO D. They offer senior discounts

C. They charge patients utilizing providers contracted with the PPO less than those who are not contracted with the PPO The organizers and the providers agree upon medical service charges that are generally less than the providers would charge patients not associated with the PPO.

Does changing the deductible affect the premium? Higher the deductibles creates a higher/lower premium?

Changing the deductible will affect the premium cost Higher deductibles result in a lower premium.

Can contributions into an HSA account exceed the amount of the annual deductible?

Contributions to an HSA cannot exceed the amount of the annual deductible and may only be made if the taxpayer purchases a High Deductible Health Plan (HDHP).

Can coverage be provided outside the area under HMO's?

Coverage will not be provided outside the service area, except in cases of an emergency.

Victor's AGI is $100,000. His disability income policy premium was $3,500, his LTC premium was $4,000, and he had $5,500 in unreimbursed medical expenses. Based on this information, Victor may deduct: A. $5,500 B. $9,500 C. $3,000 D. $2,000

D. $2,000 While the total amount is $13,000, part of that total refers to disability insurance premiums, which are not deductible. Minus that amount, the other expenses add up to $9,500, which exceeds 7.5% of Victor's AGI by $2,000. Therefore, Victor can deduct the excess amount

W has a health insurance policy with an 80/20 coinsurance and a $1,000 deductible. In January, W goes into the hospital for an overnight stay and incurs $900 in covered hospital expenses. How much of the $900 is W's responsibility? A. $180 B. $720 C. $200 D. $900

D. $900 W must satisfy the deductible every year starting in January before the co-insurance kicks-in. Since the deductible is $1,000, W must pay the entire $900.

Which statement is incorrect regarding HMOs? A. HMOs emphasize wellness programs and diagnostic screenings for early detection which reduces unnecessary treatment in the future B. Coverage will not be provided outside the service area except in case of emergencies C. Members are required to pay a small copayment for basic health care services to discourage unnecessary use of medical resources D. HMOs must provide basic health care services including physical therapy, vision and dental care

D. HMOs must provide basic health care services including physical therapy, vision and dental care Usually optical services, physical therapy, and dental care are supplemental and offered as an option.

Which statement DOES NOT apply to an Accidental Death and Dismemberment Policy? A. A smaller amount (capital sum) may be paid for the loss of sight in one eye or the loss of one limb B. It may be written separately or added to a Health/Disability or Life Policy as a rider C. It usually provides that the death benefit (principal sum) will also be paid if the insured loses sight in both eyes or loses any two limbs D. It provides coverage for specified travel or events

D. It provides coverage for specified travel or events A Limited Accident Policy provides blanket coverage for large groups, offering benefits for injuries associated with specific travel such as while on a common carrier. The other options refer to an Accidental Death and Dismemberment Policy.

HMOs usually require patients to select a ___________ as the person who will oversee and direct their basic health care in most cases. A. Medical social worker B. Care coordinator C. Insurance agent or broker D. Primary Care Physician

D. Primary Care Physician Selecting a primary care physician (PCP) is generally a requirement when a person enrolls in an HMO. If a PCP is not designated, the HMO will assign the person to a physician located close to the place of residence. A PCP may be changed as often as desired, but the change only becomes effective on the first day of the month following a requested change.

To fund an HSA, an individual must: A. Be enrolled in an FSA B. Designate up to $2500 of pre-tax income to be withheld for payment of medical expenses C. Purchase a basic hospital expense plan D. Purchase a High Deductible Health Plan

D. Purchase a High Deductible Health Plan A Health Savings Account (HSA) can only be funded if an individual has purchased a high deductible health plan.

The terms "usual, customary, and reasonable" refer to which of the following? A. The standard accepted medical procedure for a given illness or injury B. The most commonly performed operations or treatments in a given territory C. A non-physician's evaluation and approval of a medical procedure recommended by a patient's physician or surgeon D. The average charge for a medical procedure, treatment, or service in a defined geographical area

D. The average charge for a medical procedure, treatment, or service in a defined geographical area UCR is the method by which medical health insurers evaluate and pay claims for services provided to a patient. What is UCR in the local network may be more or less than the cost of the same services in another part of the U.S., and in no event will a claim be paid above 100% of the actual expense.

An insured covered under a $1 million accidental death and dismemberment policy is involved in an accident that resulted in the loss of both legs 3 days after the accident. Following a lengthy hospital stay, her losses included $300,000 in medical bills, $100,000 in hospital expenses, and $10,000 in loss of income due to her inability to work. Which of the following is payable from the AD&D policy? A. The capital sum of $500,000 for dismemberment B. $410,000 for medical expense, hospital expense, and loss of income and $500,000 for the dismemberment C. Medical expense reimbursement of $300,000 D. The principal sum of $1 million for double dismemberment

D. The principal sum of $1 million for double dismemberment The AD&D policy will pay for the double dismemberment since the loss of both limbs occurred within 90 days of the accident for a total of $1,000,000 (the principal sum). AD&D policies do not cover medical expenses, hospital expenses, or loss of income.

Benefit payments made on a ____________ basis are not scheduled, but are based on the average fee charged by all doctors in a given geographical area. A. Reimbursement B. Fee-for-service C. Pre-paid D. Usual, customary, and reasonable (UCR)

D. Usual, customary, and reasonable (UCR) Usual, Customary, Reasonable (UCR) is not scheduled, but is based on the average fee charged by all doctors in a given geographical area. Many insurers pay the (UCR) amount and the balance of any overcharges or costs of any disallowed services are the insured's responsibility.

Do deductibles vary in cost?

Deductibles can vary in cost and are designed to allow the insured to assume a portion of the risk.

Deductibles & Coinsurance in Dental Plans

Deductibles include an annual amount ($50 to $100) that must be paid before the plan will cover any losses. ---Once the deductible is met, the plan will impose a coinsurance feature of 20% to 50% for basic and major services ---Diagnostic and Preventive care is not usually subject to a deductible or coinsurance. Both annual and lifetime maximums are imposed.

How are contributions made in FSA?

Employee contributions are made on a pre-tax basis into a specifically designated account.

Exclusions for accidental death and dismemberment

Exclusions include loss due to sickness or loss of use of a limb (or limbs), such as paralysis.

Carryover Provision

Expenses that did not satisfy the previous year's deductible and were incurred in the last 3 months of that year are used towards satisfying the current year's deductible

Dependent Child Limiting Age Requirements

Federal law requires that every policy providing coverage for a dependent child extends coverage up to age 26 (through age 25). This includes natural children, adopted children, married or unmarried, even if eligible for other insurance. There is no requirement for a dependent child to be enrolled as a full time student to qualify.

Fee for Service vs. Prepaid Plan

Fee for Service ---Pay benefits based on actual services provided. Prepaid Plan ---Provide benefits based on a designated fee (capitation fee), regardless of any services provided.

Payment and Benefit Structure for Healthcare plans

Fee-for-Service - Provides a separate payment to a healthcare provider for each medical service received by a patient. Prepaid - Medical benefits are provided to a subscriber in exchange for predetermined monthly premiums paid in advance. Usual, Customary, Reasonable (UCR) - Benefits are based on the average fee charged by all providers in a given geographical area. Many insurers pay the UCR amount and the balance of any overcharges or costs of any disallowed services are the insured's responsibility. Lifetime Limit - The maximum a policy will pay for covered losses during the lifetime of an insured. Annual Limit - The maximum a policy will pay for covered losses per year. Per-Cause - The maximum a policy will pay for covered losses per claim.

Basic

Fillings, periodontics, and root canals are considered to be basic care

What are a Primary Care Physician or primary care provider (PCP) also called?

Gatekeeper

Do basic insurance plans cover catastrophic losses?

Given the basic nature of these plans, they are not designed to provide coverage for catastrophic losses.

Identify which of the following characteristics are associated with an HMO, Basic Health Insurance Plan or Major Medical policy -Annual deductible paid by the insured -Provides catastrophic coverage -Utilizes a Primary Care Physician -Hospital benefits based on a daily limit -Coinsurance -Stresses preventive care -Provide First Dollar coverage -Surgical expenses based on a surgical schedule fee -Copayment must be paid by subscribers -Managed Care Plan -Include a high maximum lifetime limit -Limited miscellaneous hospital and medical expenses

HMO -Copayment must be paid by subscribers -Stresses preventive care -Utilizes a Primary Care Physician -Managed Care Plan Basic Health Insurance Plans -Provide First Dollar coverage -Limited miscellaneous hospital and medical expenses -Surgical expenses based on a surgical schedule fee -Hospital benefits based on a daily limit Major Medical Policy -Coinsurance -Include a high maximum lifetime limit -Annual deductible paid by the insured -Provides catastrophic coverage

are required to provide basic health care services including the usual physician, hospitalization, laboratory, x-ray, urgent care, emergency and preventive services, and out-of-area coverage for emergency care. Payments are provided to member hospitals on a predetermined basis. Emergency care outside of the network must be covered for necessary services at the nearest emergency room. Other supplemental benefits such as medical equipment, dental care, vision, physical therapy, chiropractic services, and some pharmaceutical benefits are optional.

HMO's

What do HMO's emphasize?

HMOs emphasize preventive medicine by providing prepaid routine medical exams, wellness programs, and diagnostic screenings. Early detection of a condition reduces unnecessary procedures, surgeries, and hospitalizations.

How are HSA's funded?

HSAs are funded with pre-tax income, grow tax-deferred, and may be used tax-free to pay for qualified medical expenses.

Determine which of the following characteristics apply to a Health Savings Account or a Flexible Spending Account -Contributions can only be made if a High Deductible Health Plan is purchased -Funds remaining in the account at the end of the plan year or grace period cannot be used (use it or lose it) -Contribution limits are determined by the IRS -Contributions cannot exceed the amount of the annual deductible -Can only be offered through employer-established benefit plans -Funds remaining in the account at the end of the calendar year will continue to be rolled over indefinitely until used

Health Savings Account -Funds remaining in the account at the end of the calendar year will continue to be rolled over indefinitely until used -Contributions cannot exceed the amount of the annual deductible -Contributions can only be made if a High Deductible Health Plan is purchased Flexible Spending Account -Can only be offered through employer-established benefit plans -Contribution limits are determined by the IRS -Funds remaining in the account at the end of the plan year or grace period cannot be used (use it or lose it)

How are healthcare plans generally classified as?

Healthcare plans are generally classified as either Traditional or Managed Care plans.

Family Deductible

If a family is insured, a maximum of 2 or 3 deductibles will satisfy the deductible requirement for the entire family per calendar year

What occurs to the HSA if an HDHP is not renewed?

If an HDHP is not renewed, the remaining funds in the HSA can continue to be used to pay for qualified expenses, but additional contributions cannot be made into the account.

What occurs if the funds remain in the account at the end of the calendar year?

If funds remain in the account at the end of the calendar year, they will continued to be rolled over for use in the following years until exhausted.

Common Accident Deductible

If several family members are injured in the same accident, only one deductible is applied

What occurs if the subscriber stays in network under Point of Service?

If the subscriber stays in network, benefits are paid as an HMO. ---A Primary Care Physician, or gatekeeper, will apply and referrals will be necessary if the plan is being utilized as an HMO.

What occurs if the subscriber uses an out-of-network provider under Point of Service?

If the subscriber uses an out-of-network provider, they will have a higher out-of-pocket responsibility. This feature is similar to an indemnity plan and the provider will be paid based on a fee-for-service.

Does vision provide lenses/frames/contact lenses?

It may also provide payment for the cost of lenses, frames, or contact lenses and is usually subject to an annual deductible, coinsurance, and maximum annual limits.

Major

Major dental care includes any crowns, dentures or bridge work, and orthodontics

Are medical and dental expense benefits taxable?

Medical and dental expense benefits received as proceeds are not taxable.

Prepaid

Medical benefits are provided to a subscriber in exchange for predetermined monthly premiums paid in advance.

Dependent Children Benefits

Medical expense plans include specified dependent children benefits and provisions as determined by federal and state regulation. If applicable, additional information about these topics is presented in the state law chapter.

Are there any exclusions in the Vision plan?

Medical expenses incurred from disease or injuries to the eye, such as cataracts, are excluded from coverage under this policy -->but are covered under medical expense insurance.

What are members enrolled in managed care plans called?

Members enrolled in managed care plans are called subscribers, as opposed to insureds.

Is there a requirement for a dependent child to be in school or be a natural child?

No requirement for a dependent child to be a full time student nor does he/she need to be a natural child.

Does vision replace frames/lenses that are lost or broken, sunglasses, or safety glasses?

No. Coverage is not provided for the cost to replace frames or lenses that are lost or broken, sunglasses, or safety glasses.

Can a person eligible for Medicare still contribute to the HSA?

No. Once eligible for Medicare, individuals are no longer eligible to contribute to the HSA.

Can someone receive the accidental Death and Dismemberment if he/she loses one limb?

Not The principal sum will pay if an insured loses any two limbs, called a double dismemberment, within 90 days of an accident ---you receive 50% of principal sum 50% of the face amount/principal sum, will be paid for a single dismemberment, which is the loss of one limb, or loss of eyesight, as long as the loss occurs within 90 days of the accident.

Diagnostic/Preventive

Routine diagnostic and preventive care services includes routine checkups, x-rays, and cleaning

Hospital Indemnity

Pays directly to the insured a specified dollar amount per day during hospitalization. ---Payment is based solely on the number of days the insured is hospitalized. ---It pays the daily amount stated in the policy without regard to the actual medical expenses and any other insurance coverage.

Primary Care Physician vs. Specialist Physician

Primary Care Physician -(Gatekeeper) monitors health care needs and helps to control costs by recommending only necessary tests and services or referrals to other physicians and specialists. Not utilizing the primary care physician will cause a claim to be denied. The Primary Care Physician will determine if the covered person needs ongoing care from a specialist. Specialist Physician -(Referral Physicians) will treat a member if the Primary Care Physician has made a referral, usually after all other treatments have been exhausted. Examples of specialists include neurologists, cardiologists, and oncologists.

Fee-for-Service

Provides a separate payment to a healthcare provider for each medical service received by a patient.

Who owns the HSA account?

Regardless of which party makes the contributions, the account is owned by the insured individual.

If a preferred provider is utilized, what occurs to the benefit and cost?

Since these plans typically require the subscriber to pay a deductible and coinsurance, they pay a lower amount when receiving services through a preferred provider.

Do subscribers have to deal with deductibles, claims, or bills?

Subscribers do not pay deductibles, file claims, or receive a bill.

Do subscribers have more options for healthcare providers under PPO or HMO?

Subscribers have more choices among doctors and hospitals under a PPO arrangement. ---Subscribers can choose an in-network (preferred) provider or out-of-network provider.

What plan provides for Major Medical coverage that is designed to supplement a Basic Plan?

Supplemental Major Medical Policy

Short-Term Medical

Temporary coverage that provides limited benefits for a short period of time, typically 30 days to 12 months. Short-term plans are designed as "interim plans" to immediately fill coverage gaps temporarily for individuals who have lost coverage due to change in employment, need proof of insurance to participate in special activities, or need coverage while waiting to become eligible for Medicare. While the premiums are considerably lower than major medical plans, these policies do not cover pre-existing conditions and are not guaranteed issue.

Taxation of Personal Medical Expenses and Proceeds

The amount of unreimbursed medical and dental expenses that exceeds 7.5% of adjusted gross income may be tax deductible. ---This includes amounts paid as premiums and expenses paid for a spouse or dependents, and is allowable as an itemized deduction. ---Funeral/burial expenses, nonprescription drugs, toiletries, and most cosmetic surgeries do not qualify. Self-employed individuals may be eligible for a health insurance deduction of all medical and dental expense premiums as an adjustment of income rather than an itemized deduction.

Why are copayments used?

The copayment helps to discourage unnecessary use of medical resources, such as emergency room services for non-emergency care.

What must newborn infant coverage include?

The coverage must include injury and sickness, including the necessary care and treatment of medically diagnosed congenital defects and birth abnormalities. Notification of birth or adoption and payment of the required premium must be within 31 days after the date of birth or adoption, in order to continue coverage. The newborn cannot be denied coverage at that time.

Can an employee make withdrawals out of their FSA?

The employee may withdraw funds from this account to pay for qualified out-of-pocket medical and dental expenses such as: -prescription and over-the-counter medications -medical equipment and supplies -deductibles -copayments -coinsurance. Insurance premiums, long-term care coverage, and amounts covered under another plan are not qualified expenses.

Who determines the allowable limits that can be contributed?

The employer determines the allowable limits that may be contributed, up to a maximum per employee per year, as determined by the IRS.

Can the employer make contributions into the FSA?

The employer may make contributions to the employee's account, but it is not required. ---Funds in the account are available immediately, even though the account is not fully funded.

Can the insured select a provider? Is he/she restricted to how many times to use the insurance?

The insured can select any provider (doctor or hospital) and is not limited by the number of visits.

How much will the insurer pay to the insured?

The insurer will pay benefits directly to the insured up to the amount of expenses.

Does the limit include deductibles and coinsurance amounts?

The limit does not include the out of pocket expenses the insured pays, including deductibles and coinsurance amounts.

Lifetime Limit

The maximum a policy will pay for covered losses during the lifetime of an insured.

Per-Cause

The maximum a policy will pay for covered losses per claim.

Annual Limit

The maximum a policy will pay for covered losses per year.

What does a traditional plan typically requires what?

The plan typically requires the insured to pay up front for services, and then submit a claim for reimbursement. Traditional plans also require the insured to pay a deductible and coinsurance.

Are the HDHP premiums lower/higher than the other plans?

The premiums payable are significantly lower than other plans, but the insured is responsible for paying more out-of-pocket.

Double Dismemberment

The principal sum will also pay if an insured loses any two limbs

Upon the completion of this chapter, you will be able to: -Distinguish which providers have insureds and which have subscribers -Compare and contrast the characteristics of an HMO, PPO and a POS -Explain the role of a Primary Care Physician or Gatekeeper -Define the terms coinsurance, copayment, and deductible -Identify the dependent children benefits -Differentiate between the principal and capital sum of an Accidental Death and Dismemberment policy

The purpose of this chapter is to explain the characteristics and features that distinguish many of the various healthcare providers and plans, including HMO's, PPO's, and POS plans, and their philosophies on the delivery of health care. This chapter will also provide an overview of the traditional Medical Expense Plans available and the benefits, provisions, and exclusions associated with these plans. Other types of medical expense plans will also be reviewed, such as Accidental Death and Dismemberment, Cancer and Critical Care policies, Vision plans, and Dental insurance.

TRICARE Plans

There are three plans available, depending on the member's service status, such as active duty, National Guard/Reserves, or retired. The plans are Standard, Prime, and TRICARE For Life. As long as the person is on active duty, Prime coverage is mandatory with no out-of-pocket expenses for treatment at a military medical facility.

What types of groups/individuals purchase limited accident?

These policies tend to provide blanket coverage for large groups of people and can be purchased through a travel agency or credit card.

Gatekeeper

This is a physician who provides both the first contact for a person with an undiagnosed health concern as well as continuing care of varied medical conditions.

Supplemental Major Medical Policy

This plan provides for Major Medical coverage designed to supplement a Basic Plan. It is written to pay benefits once the Basic Plan benefits are exhausted. The Basic Plan provides first dollar coverage. Once the Basic Plan benefits are exhausted, a Corridor Deductible is required to be paid before the start of coverage under the Supplemental Major Medical plan.

Limited Accident

This policy provides benefits for accidental injuries associated with specific events, such as foreign travel or while on a common carrier, such as an airplane or cruise ship. ---These policies tend to provide blanket coverage for large groups of people and can be purchased through a travel agency or credit card.

How long does short-term medical last?

Typically 30 days to 12 months

How is the HMO contracted provider compensated?

Typically, the HMO provider is paid a set fee, known as a capitation fee, per enrollee. Coverage will not be provided outside the service area, except in cases of an emergency.

How is a PPO different from an HMO?

Unlike an HMO prepaid plan, the providers perform services to subscribers and charge a discounted fee negotiated in advance. Payment is made directly to the provider after treatment is received.

How many routine examinations does "Vision" provide?

Usually provides for one routine annual examination.

Vision Plan

When purchased as an individual standalone plan, it usually provides for one routine annual examination. It may also provide payment for the cost of lenses, frames, or contact lenses and is usually subject to an annual deductible, coinsurance, and maximum annual limits. ---Vision plans may require the insured to seek treatment from an in-network provider. Coverage is not provided for the cost to replace frames or lenses that are lost or broken, sunglasses, or safety glasses. Medical expenses incurred from disease or injuries to the eye, such as cataracts, are excluded from coverage under this policy, but are covered under medical expense insurance.

What occurs to withdrawals for nonqualified expenses made prior to age 65? made after 65?

Withdrawals for nonqualified expenses made prior to the account owner's age 65 are subject to ordinary income tax and a penalty tax. After age 65, funds withdrawn will not be subject to a penalty, however, nonqualified withdrawals will still be subject to ordinary income tax. Once eligible for Medicare, individuals are no longer eligible to contribute to the HSA.

Must subscribers live within a certain area under HMO's?

Yes, called the service area The HMO has a contract with medical providers within the service area and subscribers must seek treatment from a contracted provider.

Are adopted children covered under the newborn infant coverage?

Yes. Adopted children are covered at the date of placement for adoption.

Can dental insurance be written for a group of people?

Yes. May be written on either an individual or group basis

Under HMO's, physician services include care provided by?

a Primary Care Physician or primary care provider (PCP)

Health Savings Accounts (HSAs)

allow individuals with high deductible health plans to set aside money to pay for qualified medical expenses for the insured, spouse and dependents.

What is traditional health insurance also referred to as?

also referred to as an indemnity or fee-for-service plan

After an HMO has been in operation for 24 months, it may have an

annual open enrollment period of at least 1 month during which it accepts enrollees up to the limits of its capacity.

Traditional Plans

are issued by commercial insurers and require the insured to pay a monthly premium in addition to other costs.

Preferred Provider Organizations (PPOs)

are managed care plans arranged through a network of healthcare providers, independent hospitals and medical practitioners, which become preferred providers in a specific geographic area. ---Traditional (commercial) insurance carriers provide the benefits and the contracted network controls the cost of providing benefits to consumers.

Major Medical Policy

provide benefits for potentially catastrophic and/or prolonged injury or illness. ---These policies include a high maximum limit, generally up to a million dollars.

High Deductible Health Plan (HDHP)

are similar to other health insurance plans, however they require a higher deductible as well as higher annual out-of-pocket limits than traditional plans. The premiums payable are significantly lower than other plans, but the insured is responsible for paying more out-of-pocket. To qualify as high deductible health insurance, the annual deductible must meet a minimum dollar amount as defined by the IRS. The IRS also determines the maximum annual out-of-pocket expenses, which includes deductibles, copayments, and coinsurance. Other than preventive care, which must be made available as first dollar coverage (with no deductible), benefits for all covered health care expenses are not paid until the annual deductible has been satisfied. An HDHP can be combined with a Health Savings Account (HSA) to allow for qualified medical expenses to be paid with untaxed funds.

Medical Expense Plans provide:

benefits to help cover the costs associated with the prevention or treatment of illnesses or injuries provided by a doctor or hospital in case you get sick or are injured in an accident. ---A variety of coverages are offered, including hospital, surgical, vision, dental, and accidental injury.

Flexible Spending Accounts/Arrangements (FSAs)

can only be offered through employer-established benefit plans (self-employed persons are not eligible) and may be offered with other benefits as part of a cafeteria plan.

Point of Service (POS)

combine PPO and HMO benefits. ---Members can choose (at the point of service) which part of the plan to use. If the subscriber stays in network, benefits are paid as an HMO. A Primary Care Physician, or gatekeeper, will apply and referrals will be necessary if the plan is being utilized as an HMO. If the subscriber uses an out-of-network provider, they will have a higher out-of-pocket responsibility. This feature is similar to an indemnity plan and the provider will be paid based on a fee-for-service.

Comprehensive Major Medical Policy

combines the features of the Basic and Major Medical policy into a single policy. Benefits provide for reimbursement of covered expenses on a "usual, customary, and reasonable" basis. The insured has the freedom to choose any hospital, physician, or surgeon, or other health care providers. This policy requires an initial Flat Deductible that is paid before the Basic plan begins to provide coverage. An additional Integrated Deductible must be met before the Major Medical benefits are payable. This policy provides the most comprehensive coverage of all medical expense plans.

To qualify as high deductible health insurance, the annual deductible must meet

meet a minimum dollar amount as defined by the IRS.

Do Short Term Medical policy cover pre-existing conditions?

do not cover pre-existing conditions and are not guaranteed issue.

Deductible

is an initial dollar amount the insured must pay per year before the benefits apply. An initial amount the insured must meet per year before benefits are paid.

Copayment

is considered an administrative fee and is not based on the specific services provided.

Cancer Plan

is designed to provide benefits to the insured, based on the policy limit purchased, in addition to any other health insurance coverage for losses associated with a cancer diagnosis. ---Oftentimes this coverage will provide for experimental treatments that traditional insurance excludes and will pay for losses before other coverage to help prevent an insured from reaching annual or lifetime policy limits.

TRICARE

is primarily for active duty and retired members of the U.S. military and their dependents.

Health Maintenance Organizations (HMOs)

is regarded as a managed health care system providing a comprehensive array of medical services on a prepaid basis, which means little or no out-of-pocket expenses. All subscribers must live within a specific geographic region called the service area.

Coinsurance

is the percentage the insured shares with the insurer once the deductible is paid. is a cost sharing feature and is stated as a percentage, such as 80/20, of sharing between the insurer and the insured; the insurer pays the larger percentage For example, once the deductible is paid, the insured must pay 20% of the covered loss (and the insurer pays 80%) until a maximum limit has been met each year.

Qualified medical expenses include costs for:

legal medical services provided by physicians, surgeons, dentists, or other licensed practitioners, medical supplies, prescriptions, nonprescription medication (not including vitamins), and diagnostic charges. Qualified expenses also include premiums for medical expense insurance, limited amounts paid for qualified long-term care insurance, and amounts paid for qualified long-term care services.

Basic Hospital Expense Plan

provides a benefit for hospital room and board (semi-private) based on a daily limit of coverage, such as $1,000 per day, and a maximum number of days per policy period. Miscellaneous hospital expenses may also be provided up to a specified limit per day for the cost of x-rays, lab fees, operating room charges, medication, including the cost of anesthesia, nursing services and inpatient doctor visits.

Basic Medical Expense Plan

provides benefits for miscellaneous medical expense charges including office visits, diagnostic x-rays, laboratory charges, ambulance charges, and nursing expenses when not hospitalized and not related to surgery. Some plans may include coverage for prescription drugs. Coverage is limited and subject to a waiting period for maternity, mental illness, substance abuse, and pre-existing conditions.

Basic Surgical Expense

provides benefits for surgeon and anesthesiologist fees for the cost of a surgical procedure. Benefits are either based on a surgical schedule fee which specifies benefit limits for each covered surgical procedure, or a relative value scale which assigns a value to a procedure with the highest level of difficulty and benefits for all other covered procedures are based on a percentage.

Accidental Death and Dismemberment

provides that the face amount, or principal sum, will be paid if the insured dies due to an accident within 90 days from the date of the accident. ---The principal sum will also pay if an insured loses any two limbs, called a double dismemberment, within 90 days of an accident Accidental Death and Dismemberment plans may also provide double or triple indemnity benefits for an additional premium. ---If these benefits are added, the policy will pay double or triple the face amount upon an accidental death. Exclusions include loss due to sickness or loss of use of a limb (or limbs), such as paralysis.

Managed Care Plans

require its plan participants, called subscribers, to pay a premium or subscription fee. The plan pays benefits directly to the providers of health care on behalf of a subscriber, rather than as a reimbursement to the insured. The plans can be prepaid or have a contractual agreement with a healthcare provider to accept a negotiated fee for services. Managed care plans reduce costs to its members (subscribers) by requiring them to use specific healthcare providers that are "in-network" to maximize benefits. Subscribers may be required to pay a copayment, which is a stated dollar amount that applies per claim, rather than a percentage. Types of managed care plans include HMO, PPO, and POS plans.

Orthodontic Care

will typically require a probationary period and pay reduced benefits for a specified period.