Mr. Woodington’s Money Management II

 Review of Basic Insurance Concepts  Employer Provided Health Insurance Overview  How HMOs Work  How PPOs Work

 What is Risk?  Risk = The chance of loss or injury  What is insurance? ▪ A Risk Management strategy : Shifting Risk ▪ Transfers your risk to a larger group (sharing the risk) ▪ Bases off of statistical information ▪ As we remember: RISK IS EVERYWHERE!!!  Why is it important?  Provides Peace of Mind (Before) & Financial Security (After)

 How do we pay for insurance? ▪ Premium – The monthly/yearly cost of insurance – The bill ▪ Deductible – The out of pocket expense once peril occurs ▪ Must be paid before insurance coverage begins ▪ Not a part of all insurance programs! ▪ Co-Insurance – Not in every insurance plan! Expressed as a percentage of total cost. ▪ Co-Pays – NEW CONCEPT! Not in every insurance plan. Set dollar limits policyholder must pay out of pocket for select services

 How do I get me some of that there insurance?  Three providers ▪ Individual ▪ Government ▪ Employers

 Insurance is a group venture in nature. Employer provided health insurance can be viewed as a group-group venture!  Different Forms  Managed Care ▪ HMOs vs. PPOs  Cafeteria Plans  Health Savings Accounts

 Provides comprehensive coverage for employees  Typically the cheapest way for employers to provide this coverage for employees  Two main forms:  HMO (Health Maintenance Organizations)  PPO (Preferred Provider Organizations)

 An HMO administrator (insurance company) puts together a network of:  Doctors  Hospitals  Other healthcare providers  The HMO negotiates lower prices for the healthcare.  In return, the providers receive more business

 HMOs regularly review the care being provided to ensure the that healthcare is being used appropriately  When an employee enrolls in an HMO they choose a Primary Care Physician.  This doctor is their main contact with the healthcare system, and refers them to other professionals when they need specialist care.

 No deductibles. Most HMO plans have no deductible — Employees aren't stuck with huge — and annoying — out-of-pocket costs.  Large provider networks. Most HMO plans have statewide networks that include several thousand doctors — so finding a conveniently located provider is easy.  Monitored care. The HMO “pre-approval” process makes sure that care is being used properly… and that helps make sure premiums don't skyrocket.

 Similar to HMOs  PPOs establish a network of doctors, hospitals, and other healthcare providers  Employees enrolled in PPOs are encouraged to use providers within their network, but are not required to  Using providers outside of the network will result in higher out-of-pocket costs for the employee

 Employees have limited out-of-pocket costs  Employees have flexibility to get care outside the plan’s network  Low co-pays for employees to get care within the plan’s network

 Some plans have high deductibles that have to be met before coverage starts  Employees pay more for care you receive outside the network  Employees’ co-pays won’t be as low as other managed care plan

 Employer provided insurance has different forms  HMOs and PPOs are the two most popular forms of Managed Care Plans  HMOs provide employees a smaller set of options but are effectively cheaper on out of pocket expenses  PPOs provide employees more options but may cost the employee more out of pocket