Transcript Nobody plans to fail....

9
Health and Disability Income
Insurance
• Eases the financial burden people may experience as a result of
illness or injury (pay a premium to transfer risk of loss)
– Medical expense insurance- pays actual medical costs
– Disability income insurance- provides replacement income
• Group and individual health insurance coverage available
• COBRA
– Requires many employers to offer employees and dependents the option
to continue their group coverage for a set period of time following a layoff
• The Health Insurance Portability and Accountability Act
– Established federal portability standards
– If you change jobs, you need not lose your health insurance
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Sources of Health Care Plans
• Health Care Plan- generic name for any
program that pays or provides reimbursement
for health care expenses
• Group Health Care Plan – health coverage
sold collectively to an entire group of persons
rather than to individuals
• Open Enrollment Period – during this time,
you can begin or make changes in coverage or
switch among alternative plans
– Requirements are generally waived for family
changes (e.g., birth of a child, adoption, marriage)
Health Insurance Sources
• Employers
• Private Market (Individual/Family Policy)
• Government-Facilitated Exchanges
• Government Programs
Group Health Insurance
• Group Plans:
– Covers most individuals
– Usually employer sponsored (also unions, trade groups)
– Employer pays part or most of cost
• Coordination of Benefits: combine benefits from >1
plan
– Benefits received from all sources limited to 100% of
allowable medical expenses
– Married couples/partners need to consider
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Types of Health Insurance Coverage
• Hospital Indemnity
– Pays you a fixed amount for each day you are hospitalized
– Does not cover medical costs
– Supplement to the other plans
• Dental Expense Insurance
– Covers exams, cleaning, x-rays, fillings, root canals, and oral surgery
• Vision Care
– Exams, contact lenses, and glasses
• Dread Disease Policies
– Pays out for very specific conditions (e.g., cancer)
– Illegal in many states
• Long-Term Care Insurance
– Virtually unknown 25-30 years ago
– Covers daily help if seriously ill or disabled
– Nursing home or in-home care
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Health Literacy Quiz
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Do You Understand Health Insurance?
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Which of the following describes an (in-network) Out-of-Pocket Maximum? Assume that all the responses refer to in-network
expenses.
After meeting the out-of-pocket maximum, all medical expenses are covered 100%
After meeting the in-network out-of-pocket maximum, copays must still be paid, but all other medical expenses are covered 100%
After meeting the out-of-pocket maximum, you must pay 100% of your medical expenses
I’m not sure
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Which of the following best describes Coinsurance?
A specified dollar amount you pay for a specific service
The total amount you are required to pay until you reach your deductible
The percent of the cost of medical services that the insurer pays
The amount the employer contributes to paying for your health premium
I’m not sure
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Which of the following best describes a Copayment (Copay)?
A specific dollar amount you pay for a specific service
A specific dollar amount your insurer pays for a specific service
A fixed percent of the cost of a procedure that you have to pay (insurer pays the remainder)
The amount your employer contributes to paying for your health premium
I’m not sure
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Which best describes a Deductible?
An amount deducted from your paycheck to pay for your insurance premium
The amount deducted (covered) out of your total yearly medical expenses
The amount you pay before your insurance company pays benefits
The amount you pay before your health expenses are covered in full
I’m not sure
Policy Features That
Limit Coverage
• Benefit coordination clauses
• Deductible
• Elimination period
• Co-payment
• Co-insurance
• Policy limit
Private Health Care Plans
• Health Maintenance Organization
(HMO)
– Contracts with selected care providers
– Requires a PCP and referrals
– Does not pay for out of network care
– Focus is on prevention and wellness
– Usually pay small copayment to see doctor
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Private Health Care Plans
• Preferred Provider Organization (PPO)
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Network of providers to choose from
Costs more than an HMO
More choices, fewer restrictions than an HMO
If you go to a non-PPO provider, you pay more
Example: NJ Direct for state of NJ employees
• Point-of-Service (POS)
– Combines features of HMOs and PPOs (referrals, out of network claims)
• Exclusive Provider Organization (EPO)
– Exclusive network of providers; does not require PCP and referrals
• Employer Self-Funded Health Plans
– Company runs self-insured insurance program
– Collects premiums from employees; pays medical benefits as needed
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ACA Goal: Decreasing the
Number of Uninsured Americans
• Consumers are mandated to purchase insurance
• Creates Marketplaces (Exchanges) where consumers
can choose among affordable plans, offering tax credits
to some who qualify by income
• Builds on current employer-employee fringe benefit
insurance arrangement and mandates large employers
to offer adequate and affordable plans
• Intended to expand states’ Medicaid programs to
include all individuals and families under 138% of FPL
($15,856 for individual, $32,499 for family of four (2013)
ACA Goal: Decreasing the Number of
Uninsured Americans
The Consumer Protections
Requiring insurance companies to take all seeking
insurance
• No more exclusions for consumers who have preexisting conditions
• No more cancellation of policies for someone being too
sick
• No more lifetime maximums on the amount paid for
care for essential benefits
• No more annual maximums on the amount paid for care
for essential benefits
Essential Health Benefits
Qualified Health Plans in the Marketplace must cover:
Ambulatory patient services
Maternity and newborn care
Emergency services
Prescription drugs
Mental health and substance
use disorder services
Laboratory services
Rehabilitative and habilitative
services and devices
Chronic disease management
Preventive and wellness
services
Pediatric services, including oral
and vision care
Different Levels of Plans
• 4 Levels of Coverage – “The Metals”: Bronze,
Silver, Gold, and Platinum
• Each has a different value for level of coverage
• Bronze: 60%. Silver: 70%. Gold: 80%. Platinum: 90% (Refers
to adequacy values: how much plan vs. insured pays)
• Any costs not covered by the plan are paid by individuals
through deductibles, co-pays, co-insurance (not including
monthly premium)
• Each plan level must cover the same set of
minimum essential health benefits
• What differs is amount of cost-sharing required
• Example: The bronze plan will have the least generous
coverage (60%) with more out-of-pocket costs
http://www.healthcare.gov for more information
Insurance Affordability
Employer- based insurance is deemed
affordable if the annual premium for a self-only
plan (not a family plan) costs less than 9.5% of a
person’s annual household gross income.
Example: < $3,325 with a $35,000 gross income
Insurance Adequacy
Insurance is deemed adequate if it is a 60/40
plan. No more than 40% of total health care
costs in a year would be expected to be paid by
the average person insured in this type of plan.
Example: No > $4,000 paid by an insured person
with $10,000 of total health care expenses
ACA Provisions for Consumers:
Individual Mandate
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By March 31, 2014, Americans must be enrolled in a health insurance plan
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With few exceptions, if you are not insured, and income is >138% of the
FPL, you will be required to pay a penalty (tax).
– Penalty for no coverage will rise from $95 for adults or 1% of family
income, whichever is greater (2014) to $695 or 2.5% of income,
whichever is greater (2016) http://kff.org/infographic/the-requirement-tobuy-coverage-under-the-affordable-care-act/
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Children are required to be insured through
– Public insurance (e.g. state’s Children’s Health Insurance Program) or
parents’ obligations (employer or private purchase)
– Fines for uninsured children are half that of adults up to a family
maximum of $285 for 2014.and $2,085 in 2016
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Tax will be assessed on federal income tax return
– May need to adjust estimated payments and/or W-4
Compare Available Options
Benefits
Premier Plan
Standard Plan
In Network Deductible
$500 / $1,000
$1,000 / $2,000
Out of Network Deductible
$1,000 / $2,000
$1,500 / $3,000
In – Network Co-Pay per
Office Visit
Co-insurance
$20 PCP/ $40 Specialist
90% after deductible
$30 PCP /$50 Specialist
80% after deductible
Out of Network Co-insurance
70% after deductible
60% after deductible
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Compare Available
Options
RETAIL
MAIL
ORDER
Tier 1
$10 Co-pay
30 Day Supply
$20 Co-pay
90 Day Supply
Tier 2
$30 Co-pay
30 Day Supply
$60 Co-pay
90 Day Supply
Tier 3
$50 Co-pay
30 Day Supply
$100 Co-pay
90 Day Supply
University of MaryLand
Extension Smart Choice
Health Insurance Workbook
• https://www.extension.umd.edu/sites/defaul
t/files/_images/programs/insure/My%20Sm
art%20Choice%20Health%20Insurance%2
0Guide%204-3-13.pdf
• Uses “Rule of Three” approach (3 options)
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Health Care Savings Accounts
• Health Spending Accounts (HSAs)
– Money contributed to pre-tax dollar account
– Must have a high-deductible policy
• Health Reimbursement Accounts (HRAs)
– Also tied to high-deductible policies
– Funded solely by employer
– Unused funds carried over to next year
• Flexible Spending Accounts (FSAs)
– Workers contribute pre-tax dollars
– Funds managed by employer
– Unused funds forfeited at year-end
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Government Health Care Programs
• Medicare
– Federally funded health insurance program
– Covers those age 65+ and certain disabled persons
– Does not cover everything
– Patient liable for the difference in costs
– Program in financial trouble; needs changes
– 4 parts: A, B, C, D
• Medicaid- health care program for the poor that is
jointly administered and funded by the federal and
state governments
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MEDICARE
• Part A:
– Hospital insurance helps pay for inpatient care in a hospital or skilled
nursing facility (following a hospital stay), some home health care, and
hospice care (paid for by workers’ payroll deductions)
• Part B:
– Medical insurance helps pay for doctors’ services and many other
medical services and supplies not covered by hospital insurance
– Beneficiaries pay a monthly premium (varies according to income)
• Part C:
– Medicare Advantage plans available in many areas
– Those with Parts A and B can choose to receive all of their health care
services through one of these provider organizations under Part C
• Part D:
– Prescription drug coverage helps pay for medications doctors prescribe
for treatment
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Disability Income Insurance
• Designed to protect against loss of income;
protects your “earning power”
• Most overlooked type of insurance
• Young, healthy people don’t consider the risks
related to their future earning potential
• Provides regular cash income lost by
employees as the result of an accident or illness
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Sources of Disability Income
• Workman’s Compensation
– Disability from on-the-job accident or illness
• Employer Plans
– Short or long-term group disability policy
• Social Security
– Covers total disability lasting > 12 months
– Starts in the 6th month
– Strict definition of disability to qualify
• Private Income Insurance Programs
– Supplements other disability income sources
– Normally provides 40-60% of income (up to 75%)
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Disability Income Insurance
Trade-Offs
• Policy’s definition of disability
– Own Occupation- can no longer perform previous job
– Any Occupation- can’t work at any job
• Waiting or elimination Period
• Duration of benefits
• Amount of benefits
• Accident and sickness coverage (want payment for both; accidents are
not the only cause of disability!)
• Guaranteed renewable (guarantees coverage as long as you pay your
premium, but premiums can change for you within a class of insureds)
• Noncancellable- Better but more expensive; no future change in premium
• Cost-of-Living Adjustments (adjusts benefit for inflation)
• Partial benefits (pays benefit if person can only work part-time)
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What Can You Do to Reduce
Personal Health Care Costs ?
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Eat a balanced diet
Keep weight under control
Avoid smoking
Don’t drink excessively
Get sufficient rest, relaxation, and exercise
Drive carefully
Protect yourself from medical ID theft
Carefully review health care fees
Community health education programs
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Wrap Up
• Chapter Quiz
• Concept Check 9-1- True or False?
• Concept Check 9-2- Health Insurance
Terminology
• Concept Check 9-3- What Trade-offs
Would You Consider?
• Concept Check 9-5- Disability Insurance
Terminology