Types of Health Insurance Policies

Point of Service Plans (POS)

A combo of HMO and PPO Plans. Employees do not have to be locked into one plan or make a choice between the two plans. Participants usually have access to a provider network that is controlled by a PCP plan members, however, have the option to seek care outside the network but at reduced coverage levels. Often referred to as open ended HMOs. If a nonmember physician is utilized the attending physician will be paid a fee for service but the member patient will have to pay higher coinsurance amount or percentage for the privilege.

Child and Dependent care expenses:

A dependent who is under age 13 when the care was provided and who can be claimed as an exemption on the employees federal income tax return A spouse who was physically or mentally not able to care for himself or herself A dependent who was physically or mentally not able to care for himself or herself and who can be claimed as an exemption Persons who cannot dress, clean, or feed themselves because of physical or mental problems are considered not able to care for themselves

Flexible Spending Accounts (FSAs)

A form of cafeteria plan benefit funded by salary reduction and employer contributions. The employees are allowed to deposit a certain amount of their paycheck into an account before paying income taxes. Then during the year, the employee can be directly reimbursed from this account for eligible health care and dependent care expenses. Subject to annual maximum and use or lose rule 2 types: a health care account for out of pocket health care expenses, a dependent care account to help pay for dependents care expenses which makes it possible for an employee and his or her spouse to continue to work Exempt from federal income taxes, social security (FICA) taxes, and in most cases, state income taxes, saving 1/3 or more in taxes

Health Maintenance Organization (HMO)

By means of the Health Maintenance Act of 1973, congress supported the growth of these. The act forced employers with more than 25 employees to offer the HMO as an alternative to their regular health plans. The main goal was to reduce the cost of health care by utilizing preventative care. Offer free annual check ups for the entire family, hope to catch diseases in the earliest stages, when treatment has the greatest chance for success. Also offer free or low cost immunizations to members. Provides benefits in the form of services and provides both the financing and patient care for its members. HMO offers service to those living within specific geographic boundaries, such as county lines or city limits Limited Choice of Providers Copayments Prepaid basis - operate on a capitated basis - receives a flat amount for each month attributed to each member whether they see a physician or not

Health Savings Accounts (HSAs)

Designed to help individuals save for qualified health expenses that they, their spouse, or their dependents incur. Can make a tax deductible contribution to an HSA, and use it to pay out for out of pocket medical expenses. To be eligible, an individual must be covered by a high deductible health plan, must not be covered by other health insurance, must not be eligible for Medicare, and can't be claimed as a dependent on someone else's tax return Each year eligible individuals are allowed to save up to certain limits, regardless of their plan's deductible An HSA holder who uses the money for a non health expenditure pays tax on it, plus a 20% penalty. After age 65, a withdrawal used for a non health purpose will be taxed, but not penalized

Key Employee Policy

Determined in terms of the potential loss of business income which could occur as well as the expense of hiring and training a replacement for the key person. The contract is owned by the business, the premium is paid by the business, and the business is the beneficiary, The person is the insured.

Primary Care Physician (PCP)

Gatekeeper. They will be regularly compensated for the care of that member, whether care is provided or not

Hospital Services/ Emergency Care

HMO provides the member with inpatient hospital care, in or out of the service area. The services may be limited for treatment of mental, emotional or nervous disorders, including alcohol or drug rehabilitation or treatment. If emergency care is being provided for a member outside the service ares, the HMO will be eager to get there member back into the service area

Conversion Factor

In order to determine the amount payable for the appendectomy, the assigned points of 200 are multiplied by this. It represents the total amount payable per point

Surgical Schedule

Lists the types of operations covered and their assigned dollar amounts. If the operation is not listed, the contract may pay for a comparable operation

Miscellaneous Hospital Expenses

Normally have a separate limit, this amount which pays for other miscellaneous expenses associated with a hospital stay, can be expressed either as a multiple of the room and board charge (such as 10 times the room and board charge) or as a flat amount. The policy may specify a maximum limit for certain types of expenses such as $100 for drugs. they may not pay for the full amount needed by the insured in the event of a lengthy hospital stay

Major Medical Expense Policies

Off a broad range of coverage under one policy. Provide comprehensive coverage for hospital expenses, catastrophic medical expense protection, benefits for prolonged injury or illness. Usually a blanket limit for specific expenses is stated in the policy. There is also a lifetime benefit per person limit. These policies usually carry deductibles, coinsurance requirements, and large benefit maximums.

Basic Medical Expense Coverage

Often referred to as Basic Physician's Nonsurgical Expense Coverage because it provides courage for nonsurgical service a physician provides. However, the benefits are usually limited to visits to patients confined in the hospital. There is no deductible with benefits, but coverage is usually limited to number of visits per day, limit per visit, or limit per hospital stay. Can be purchased to cover emergency accident benefits, maternity benefits, mental and nervous disorders, hospice care, home health care, outpatient care, and nurses' expenses. The insured is often required to pay a considerable sum of money in addition to the benefits paid by the medical expense policies

High Deductible Health Plans

Often used in coordination with MSAs, HSAs, or HRAs. Features higher annual deductibles and out of pocket limits than traditional health plans which means lower premiums. Except for preventive care, the annual deductible must be met before the plan will pay benefits. Credits a portion of the health plan premium into the coordinating MSA, HSA, or HRA on a monthly basis.

Referral (Specialty) Physician

The PCP must refer the member, the referral system keeps the member away from higher priced specialists unless it is truly necessary

Qualified life event changes:

The insured may change benefits during open enrollment after that no other changes can be made during the plan year. 1. martial status 2. number 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 4. The insured, the insureds spouse, or dependent changes employment status 5. Change in dependent care provider 6. Family medical leave

Preferred Provider Organizations (PPO)

The physicians are paid fees for their services rather than a salary, but the member is encouraged to visit approved member physicians that have previously agreed upon the fees to be charged. May provide 90% of the cost of a physician on their approved list, while possibly providing for 70% of the cost if the member chooses to utilize a physician not included in the PPOs approved list. A group of physicians and hospitals that contract with employers, insurers, or third party organizations to provide medical care services at a reduced fee. They do not provide care on a prepaid basis but physicians are paid a fee for service. Secondly, subscribers are not required to use physicians or facilities that have contracts with the PPO

Basic Surgical Expense Coverage

These policies pay for the costs of surgeon's services, whether the surgery is performed in or out of the hospital. Coverage includes surgeon's fees, anesthesiologist, and the operating room when it is not covered as a miscellaneous medical item. There is no deductible but coverage is limited.

Supplementary Major Medical Policies

Used to supplement the coverage payable under a basic medical expense policy. The basic expense policy will provide coverage on a first dollar basis. After the limits of the basic policy are exhausted, the insured must pay a corridor deductible before the major medical coverage will pay benefits.

First Dollar Coverage

Usually do not require the insured to pay a deductible

Business Overhead Expense

a unique type of policy that is sold to small business owners who must continue to meet overhead expenses such as rent, utilities, employee salaries, installment purchases, following a disability. Reimburses the business owner for the actual overhead expenses that are incurred while the business owner is totally disabled. Does not reimburse the business owner for their lost salary, compensation, or other form of income that is lost as a result of disability. Usually an elimination period of 15-30 days, benefit payments are usually limited to 1-2 years. Benefits are usually limited to covered expenses incurred or the maximum monthly benefit stated in the policy. Premiums paid for BOE insurance are tax deductible to the business as a business expense. The benefits received are taxable to the business as received

Elimination Period

a waiting period that is imposed on the insured from the onset of disability until benefit payments commence. It is a deductible measured in days, instead of dollars. The purpose is to eliminate coverage for short term disabilities in which the insured will be able to return to work in a relatively short period of time. Ranges form 30 - 180 days. A longer elimination period translates into a lower premium for disability income insurance. Payments are made in arrears. The insured will be eligible for benefits on the 91st day but payments will not begin until the 121st day.

Benefit Limitations

amount of monthly benefit that is payable under most disability income policies is based on a percentage of the insured's past earnings. The benefit limits are the maximum benefits the insurer is willing to accept for an individual risk Rarely will an insurer write a disability income policy that will reimburse the individual for 100% of lost income Reduce the chance of malingering on the part of the insured. The individual would have no incentive to return to work as quickly as possible Most insurers will adjust benefits in accordance with any amounts that the insured may be receiving form social security or worker's comp.

Probationary Period

another type of waiting period, does not replace the elimination period, but is an addition to it. often 10 - 30 days form the policy issue date during which benefits will not be paid for illness related disabilities. Purpose is to reduce the chances of adverse selection against the insurer. This helps the insurer guard against those individuals who would purchase a disability income policy shortly after developing a disease or other health condition that warrants immediate action

Basic Hospital Expense Coverage

covers hospital room and board,and miscellaneous hospital expenses, such as lab and x-ray charges, medicines, use of operating room and supplies, while the insured is confined in a hospital. there is no deductible and the limits on room and board are set at a specified dollar amount per day up to a maximum number of days.

Accidental Bodily Injury

damage to the body is unexpected and unintended

Disability Income Insurance

designed to replace lost income in the event of this contingency and is a vital component of a comprehensive insurance program.

Relative Value Approach

each surgical procedure will be assigned a number of points that are relative to the number of points assigned to the maximum benefit.

Accidental

indicates that the cause of the accident must be unexpected and unintended A policy that uses the accidental bodily injury definition will provide broader coverage than a policy that uses accidental means definition

Presumptive Disability

provision that is found in most disability income policies, specifies the conditions that will automatically qualify the insured for full disability benefits. Provides a benefit for dismemberment the loss of any two limbs, total and permanent blindness, or loss of speech or hearing.

Recurrent Disability

provision that specifies the period of time usually 3-6 months, during which the recurrence of an injury or illness will be considered as a continuation 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

Benefit Period

refers to the length of time over which the monthly disability benefit payments will last for each disability after the elimination period has been satisfied. 1 year, 2 years, 5 years, and to age 65. The longer this is, the higher the premium will be

Business Disability Buyout Policy

specifies how the business will pass between owners when one of the owners dies or becomes disabled. Generally have extremely long elimination period. possibly 1 or 2 years. These policies funding buy- sell agreements also provide a large lump sum benefit to buy out the business rather than monthly benefits. The premiums paid by the business are not tax deductible and the benefits are received tax free. Buyout plans usually allow for a lump sum payment of the benefit