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Employer-Sponsored Health Insurance McGraw-Hill/Irwin Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved. Chapter 5

5-3 HEALTH INSURANCE PROGRAMS Fee - for - Services Plans Managed Care Plans Point - of - Service Plans

5-4 INDIVIDUAL COVERAGE Protection for Employee Sometimes Covers Dependents Based on Underwriting Process –Evidence of Health Status –Mortality Tables –Morbidity Tables

5-5 GROUP PLANS Single Employer Arrangements Pooled Coverage Multiple Employer Welfare Arrangements Multiple Employee Trusts Voluntary Employee Beneficiary Assoc. Collective Bargaining Agreements

5-6 FEDERAL REGULATIONS ON HEALTH INSURANCE Health Maintenance Organization Act of 1973 (HMO) Employee Retirement Income Security Act of 1974 (ERISA) Americans with Disabilities Act of 1990 (ADA) IRS Tax Regulations

5-7 HMO ACT Regulated at Federal & State Levels Amended in 1988 to Encourage Employers to Offer Choices Must be Offered, if under FLSA Must Follow Department of Health and Human Services Guidelines Dual Choice Requirements

5-8 ADA Prohibits Discrimination in Employment Based on Disability Administered by EEOC Permits Employers to Make Disability - Based Distinctions in Benefit Plans

5-9 FEE - FOR - SERVICES PLANS Cash Benefits to Employee or Provider, after Services Rendered Eligible Expenses Include: –Hospital –Surgical –Physician Charges

5-10 FEE - FOR - SERVICES PLANS Indemnity –Contract between Employer & Provider –Insurance Benefits Paid from Financial Reserves Self - Funded –Benefits Paid from Company Assets –Burden Less than Policy Premiums

5-11 FEE - FOR - SERVICES PLANS BENEFITS Hospitalization –Inpatient –Outpatient Surgical –Usual, Customary, Reasonable Charges –Not for Elective Surgeries Physician Charges –Hospital, Office, and Home Visits

5-12 FEE - FOR - SERVICES PLANS COST - CONTROL STIPULATIONS Deductibles Coinsurance Out - of - Pocket Maximums Preexisting Condition Clauses Preadmission Certification Second Surgical Opinions Maximum Benefit Limits

5-13 SUPPLEMENTAL MAJOR MEDICAL PLANS Covers Expenses Exceeding Maximum Benefit Limits May Include: –Prescription Drugs –Medical Equipment & Appliances –Private Duty Nursing –Ambulance Service Same Stipulations as Fee - for - Service

5-14 COMPREHENSIVE MAJOR MEDICAL PLANS Extends Coverage to More Services Usually a Single Deductible for all Services Reduces Coverage Duplication

5-15 MANAGED CARE PLANS Health Maintenance Organizations (HMOs) Preferred Provider Organizations (PPOs) Point - of - Service Plans (POSs)

5-16 HMOs Provide Prepaid Medical Services Fully Covered or Copayments 2 Main Types –Prepaid Group Practices, or –Individual Practice Associations

5-17 PREPAID GROUP PRACTICES Staff Model Group Model Network Model

5-18 PPOs Select Group of Providers Employers, Providers, or Third-Party Administrators Guarantee Patient Load Exclusive Provider Organization Similar Stipulations, Different Levels than HMOs

5-19 POSs Features Similar to HMOs and Fee - for - Service Plans Nominal Copayments Employees can Seek Care Outside of Network

5-20 SPECIALITY INSURANCE Also Called Carve - Out Plans Part of Specialty HMOs & PPOs Includes: –Dental Coverage –Vision Coverage –Prescription Drug Coverage –Maternity Care

5-21 COST CONTROL Formularies –Lists Cost Effective, Appropriate Drugs –Plans Vary Multiple-Tiers –Generic ($ 5- $10 per) –Formulary Brand Name ($10 - $25 per) –Non-formulary Brand Name ($25 +)

5-22 CONSUMER - DRIVEN HEALTH CARE Controls Costs Increases Choice Kinds –Flexible Spending Accounts –Health Reimbursement Arrangements Plans Have Higher Deductibles