The Basics Understanding Health Insurance Terms Jennifer Flory, HIA, CPIW, CGBA

Medicare The U.S. government's health insurance program for: The U.S. government's health insurance program for: – people 65 years of age or older, – certain younger people with specific disabilities, and – people with end-stage renal disease (ESRD) Medicare has four parts: Medicare has four parts: – Part A – Hospital insurance (earned by working) – Part B – Medical insurance (monthly premium) – Part C – Medicare Advantage plans (premium usually) – Part D – Prescription drug coverage (monthly premium)

Medicaid Medicaid is a state administered program that pays for medical assistance for the elderly, blind or disabled as well as pregnant women and children. Medicaid is a state administered program that pays for medical assistance for the elderly, blind or disabled as well as pregnant women and children. Funding a combination of Federal & State money Funding a combination of Federal & State money To receive Medicaid, you must apply and meet certain eligibility requirements. Each state sets its own eligibility and services guidelines. To receive Medicaid, you must apply and meet certain eligibility requirements. Each state sets its own eligibility and services guidelines.

Insurance The transfer of the risk of a defined loss, from one entity to another, in exchange for payment of a premium. The transfer of the risk of a defined loss, from one entity to another, in exchange for payment of a premium. Insurance involves pooling funds from many insureds in order to pay for unexpected loss. Insurance involves pooling funds from many insureds in order to pay for unexpected loss. A contract/policy defines the conditions and circumstances under which the insured will be compensated. A contract/policy defines the conditions and circumstances under which the insured will be compensated.

Self Funded/ Self Insured A risk management approach in which an entity sets aside funds to pay claims instead of transferring the risk of loss to another party by purchasing an insurance policy. A risk management approach in which an entity sets aside funds to pay claims instead of transferring the risk of loss to another party by purchasing an insurance policy. This term self insured is a misnomer because no insurance is involved. This term self insured is a misnomer because no insurance is involved. Self funded and self insured are used interchangeably. Self funded and self insured are used interchangeably.

Third Party Administrator (TPA) An organization that has the expertise and capability to administer and processes claims on behalf of another party. An organization that has the expertise and capability to administer and processes claims on behalf of another party. Insurance companies are often also TPA’s. Insurance companies are often also TPA’s.

Preferred Provider Organization (PPO) An arrangement between health care providers and health plans that provide plan members an incentive to use Network health care providers. In exchange for the health plan directing patients to them, the provider agrees to accept a discounted fee. An arrangement between health care providers and health plans that provide plan members an incentive to use Network health care providers. In exchange for the health plan directing patients to them, the provider agrees to accept a discounted fee. On PPO arrangements, separate Deductibles and Coinsurance apply to Network and Non Network providers. Member costs are higher with Non Network providers. On PPO arrangements, separate Deductibles and Coinsurance apply to Network and Non Network providers. Member costs are higher with Non Network providers.

Billed Charges The amount that a provider actually bills the health plan or member for a service. The amount that a provider actually bills the health plan or member for a service.

Allowed Charge The maximum dollar amount that a TPA or insurance company will reimburse a provider for a specific service. The maximum dollar amount that a TPA or insurance company will reimburse a provider for a specific service. Network providers agree to accept the allowed charge as payment in full. Network providers agree to accept the allowed charge as payment in full.

Deductible The set amount of eligible expenses a covered person must pay from their own pocket before the health plan will begin paying on their claims. The set amount of eligible expenses a covered person must pay from their own pocket before the health plan will begin paying on their claims. Network and Non Network Deductibles accumulate separately. Network and Non Network Deductibles accumulate separately.

Deductible Example Claim Information Plan A Deductible -$300 Network Dr. billed $500 for a covered service. Health Plan allowance is $300. Member has met $0 of their deductible this year. Claim Processing $300 Allowed Charge -$300 deductible $0 paid by health plan Your responsibility = $300 Plan Pays $0 Member Pays $300 Dr writes off $200

Coinsurance A cost sharing formula for health care services. A cost sharing formula for health care services. Coinsurance is expressed as a percentage of the allowed charge that will be paid by the member and the balance paid by the Plan. Coinsurance is expressed as a percentage of the allowed charge that will be paid by the member and the balance paid by the Plan. You must meet the deductible before coinsurance is applied. You must meet the deductible before coinsurance is applied.

Coinsurance Example Claim Information Member has met their $300 deductible Member Coinsurance is 20% Plan pays 80% Coinsurance Network Dr. billed $125 for service Plan allowed $100 Claim Processing $100 allowed by Plan 20% Coinsurance $20 Paid by Member Plan Pays $80 Member Pays $20 $100 Dr writes off $25

Coinsurance Maximum The annual dollar limit on the amount of Coinsurance paid by the member. The annual dollar limit on the amount of Coinsurance paid by the member. Once the Coinsurance Maximum is met, any additional covered services subject to coinsurance are paid at100% of the allowable charge for the remainder of the plan year. Once the Coinsurance Maximum is met, any additional covered services subject to coinsurance are paid at100% of the allowable charge for the remainder of the plan year. On a PPO plan, Network and Non Network Coinsurance accumulate separately. On a PPO plan, Network and Non Network Coinsurance accumulate separately. Applies to SEHP Plans A and B. Applies to SEHP Plans A and B.

Out of Pocket Maximum The annual limit on the amount of Deductible, and Coinsurance paid by the member each year. Once the out of pocket maximum is met, any additional covered services are paid at 100% of the allowable charge for the rest of the year. The annual limit on the amount of Deductible, and Coinsurance paid by the member each year. Once the out of pocket maximum is met, any additional covered services are paid at 100% of the allowable charge for the rest of the year. On a PPO plan, Network and Non Network accumulate separately. On a PPO plan, Network and Non Network accumulate separately. Available only on SEHP Plan C. Available only on SEHP Plan C.

Copayment or Copay A set dollar amount that you are required to pay each and every time a specific service is provided. A set dollar amount that you are required to pay each and every time a specific service is provided. Example: Office Visit Copay Example: Office Visit Copay

Copay Example Claim Information Plan A office visit PCP copay is $25 Office visits with a family practice dr. Network Dr. charged $80 for office visit Health Plan allowed $75 Claim Processing $75 Allowed Charge -$25 Copay $50 Plan pays Plan Pays $50 Member pays $25 $75 Dr writes off $ 5

Network Provider A provider who has contracted with a TPA or insurance company to provide medical services to members and who has agreed to accept the health plan Allowed Charge for covered services as payment in full. A provider who has contracted with a TPA or insurance company to provide medical services to members and who has agreed to accept the health plan Allowed Charge for covered services as payment in full.

Non Network Provider A provider that has not contracted with the TPA or insurance company and does not agree to accept the Allowed Charge as payment in full for covered members. A provider that has not contracted with the TPA or insurance company and does not agree to accept the Allowed Charge as payment in full for covered members. Any amount determined to be above the allowed charge would be the member’s responsibility to pay along with any applicable Deductible, Coinsurance or Copays. Any amount determined to be above the allowed charge would be the member’s responsibility to pay along with any applicable Deductible, Coinsurance or Copays.

Network vs. Non Network Plan A - Non Network Provider Service on 1/2/2011 Plan Pays Member Pays Provider Write Off Billed Charge $1,500 Allowed Charge $1,400 $100$0 $500 Deductible ($500) $500 50% Coinsurance $900$ 450 Total $450$1050$0 Plan A - Network Provider Service on 1/2/2011 Plan Pays Member Pays Provider Write Off Billed Charge $1,500 Allowed Charge $1,400 $100 $300 Deductible ($300) $300 20% Coinsurance $1,100$880$220 Total $880$520$100

Non Covered A health care service that is not an eligible service for coverage as defined by the health insurance contract or benefit description. A health care service that is not an eligible service for coverage as defined by the health insurance contract or benefit description. Non covered services are not eligible for reimbursement and are the member’s responsibility to pay. Non covered services are not eligible for reimbursement and are the member’s responsibility to pay.

Qualified High Deductible Health Plan (QHDHP) A health plan with a network deductible of at least $1,200 for single and $2,400 for member and dependent coverage and which meets the IRS standards to be used with a health savings account. A health plan with a network deductible of at least $1,200 for single and $2,400 for member and dependent coverage and which meets the IRS standards to be used with a health savings account. Guidelines outlined in IRS Publication 969 Guidelines outlined in IRS Publication

Health Savings Account (HSA) A health savings account (HSA) is a tax-exempt trust or custodial account that is set up with a qualified HSA trustee to pay or reimburse certain medical expenses you incur. A health savings account (HSA) is a tax-exempt trust or custodial account that is set up with a qualified HSA trustee to pay or reimburse certain medical expenses you incur. To be an eligible individual and qualify for an HSA, you must meet the following requirements. To be an eligible individual and qualify for an HSA, you must meet the following requirements. – You must be covered under a QHDHP. – You have no other health coverage that isn’t a QHDHP. – You are not enrolled in Medicare. – You cannot be claimed as a dependent on someone else's tax return

24 Consolidated Omnibus Budget Reconcilation Act (COBRA) COBRA: A federal law that requires employers to offer continued health insurance coverage to certain employees and their dependents who lose coverage for set period. COBRA: A federal law that requires employers to offer continued health insurance coverage to certain employees and their dependents who lose coverage for set period. The Employee and/or their dependents are responsible for paying 100% of the required plan cost plus up to a 2% administrative charge. The Employee and/or their dependents are responsible for paying 100% of the required plan cost plus up to a 2% administrative charge

Coordination of Benefits Provides the order of benefit determination when the member is covered under more than one group health plan. Provides the order of benefit determination when the member is covered under more than one group health plan. Primary Plan – is the plan that pays first and without regard to any other insurance covering the member. Primary Plan – is the plan that pays first and without regard to any other insurance covering the member. Secondary Plan – Pays after the primary plan and may take into consideration amounts paid by the primary plan in determining amount eligible for payment. Secondary Plan – Pays after the primary plan and may take into consideration amounts paid by the primary plan in determining amount eligible for payment.

Other Party Liability A health plan provision that deals with claims that should be paid by another party such as workers compensation or the Personal Injury Protection (PIP) portion of the member’s auto policy. A health plan provision that deals with claims that should be paid by another party such as workers compensation or the Personal Injury Protection (PIP) portion of the member’s auto policy.

2012 SEHP Programs

Programs and Services Offered by SEHP Active and Non Medicare Programs for 2012 Active and Non Medicare Programs for 2012 – Medical Plans A, B,C administered by BCBS, Coventry/PHS and United Health Care – Pharmacy administered by Caremark – Vision insured by Superior Vision – Flexible spending administered by ASI – Preferred Lab Services through Quest Diagnostics & Stormont Vail Healthcare

Programs (cont’d) Direct Bill (retiree) Medicare Members only Direct Bill (retiree) Medicare Members only – Insured Medical Plan Senior Plan C insured by BCBS Senior Plan C insured by BCBS Coventry Advantra Plan Coventry Advantra Plan Humana Group Medicare PPO Humana Group Medicare PPO – Insured Pharmacy Program SilverScript Medicare Part D Plan SilverScript Medicare Part D Plan

Network Benefit*Plan APlan BPlan C Deductible $300 Single $600 Family $150 Single $300 Family $1500 Single $3000 Family Coinsurance20%35%20% Coinsurance Maximum $1400 Single $2800 Family $3000 Single $6000 Family None Out of Pocket MaximumNone $3000 Single $6000 Family Office Visit – Primary Care Providers $25 Copay $20 Copay - adult $10 Copay - children < age 19 Deductible & Coinsurance Office Visit - Specialist$45 Copay $40 Copay– Adult $25 Copay - Children < age 19 Deductible & Coinsurance Preferred Lab BenefitYes No *Use of Non Network providers will increase your out of pocket cost.

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