1. 5-1

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

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

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

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

6. 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

7. 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

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

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

10. 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

11. 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

12. 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

13. 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

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

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

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

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

18. 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

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

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

21. 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 +)

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