1、,Employer-Sponsored Health Insurance,Chapter 6,McGraw-Hill/Irwin,Copyright 2011 The McGraw-Hill Companies, Inc. All rights reserved.,Noelle Baker, Contributing Editor,6-2,LEARNING OBJECTIVES,Health insurance concepts Origins of employer-sponsored health care plans Relevant federal and state laws Fee

2、-for-service vs. managed care plans Rationale for consumer-driven health care plans Retiree healthcare benefits disincentives,Noelle Baker, Contributing Editor,6-3,HEALTH INSURANCE PROGRAMS,The contractual arrangement between an employer and the insurance company is an “insurance policy” which clear

3、ly identifies what services are covered and how they will be reimbursed. The employer pays a “premium” for the policy; a % of that cost is typically shared by the employee. The three most common plans are: Fee - for - Services Plans (provides a cash benefit-reimbursement to provider) Managed Care Pl

4、ans (prepaid medical services for enrollment period) Point - of - Service Plans (employee co-pay, can choose provider but fees are different in and out of network as may be deductibles/co-pays) A universal health care system that ensures that all citizens receive care has the topic of debate/convers

5、ation under the Obama administration See Chapter 11.,Noelle Baker, Contributing Editor,6-4,Origin of Health Insurance Benefit,Private insurance companies “filled the gap” between federally mandated programs (Social Security Act of 1935, Medicare, Medicaid, et al.) until passage of ERISA in 1974 and

6、the Health Maintenance Organization Act of 1973 which facilitated growth and provided financial incentives and optimization of profits for private insurance companies. Health care costs have also risen substantially in the U.S. due to increased life expectancy, routine utilization of high cost testi

7、ng/treatment, and end of life decisions to prolong terminally ill patients.,Noelle Baker, Contributing Editor,6-5,INDIVIDUAL COVERAGE,Protection for employee Sometimes covers dependents Plan is based upon the experience of the group policy holder (employer) Based on Underwriting Process (cost of pla

8、n based upon experience ratings) Evidence of Health Status Mortality Tables (death) Morbidity Tables (health problems),Noelle Baker, Contributing Editor,6-6,GROUP PLANS (see Exhibit 6.2),Single Employer Arrangements Pooled Coverage Multiple Employer Welfare Arrangements Multiple Employee Trusts Volu

9、ntary Employee Beneficiary Assoc. Collective Bargaining Agreements,Noelle Baker, Contributing Editor,6-7,FEDERAL REGULATIONS ON HEALTH INSURANCE,Health Maintenance Organization Act of 1973 (HMO) to encourage inclusion of HMOs as employee option and to promote competition in the industry; Employee Re

10、tirement Income Security Act of 1974 (ERISA) governs retirement health benefits; Americans with Disabilities Act of 1990 (ADA) requires employer to provide same health insurance coverage to the disabled; however coverage distinctions can be made between mental and physical condition(s); IRS Tax Regu

11、lations allows companies to take tax deductions for health benefit.,Noelle Baker, Contributing Editor,6-8,State Regulation,A variety of state laws regulate health insurance company practices. State regulations of health benefits does not influence self-funded plans. State laws typically address four

12、 areas of responsibility: Extending services to particular services, treatments or health conditions (ie. substance abuse treatment); Reimbursing recognized health care providers for services rendered; Identifying who must be covered under a plan (ie. adopted children) Length of time coverage is ava

13、ilable to a terminated employee.,Noelle Baker, Contributing Editor,6-9,FEE - FOR - SERVICES PLANS,Cash Benefits to Employee or Provider, after Services Rendered Eligible Expenses Include: Hospital Surgical Physician Charges Supplemental comprehensive medical plans may also be offered Fee-for-service

14、 plans may be indemnified (based on a contract between the company and a service provider) or self-funded (company pays directly from their own assets).,Noelle Baker, Contributing Editor,6-10,FEE - FOR - SERVICES PLANS BENEFITS,Hospitalization Inpatient Outpatient Surgical Usual, Customary, Reasonab

15、le Charges Not for Elective Surgeries Physician Charges Hospital, Office, and Home Visits,Noelle Baker, Contributing Editor,6-11,FEE - FOR - SERVICES PLANS COST - CONTROL STIPULATIONS,Deductibles Coinsurance Out - of - Pocket Maximums Preadmission Certification Second Surgical Opinions Maximum Benef

16、it Limits Major Medical Insurance Plans or Comprehensive Plans may be used to supplement fee-for-service plan. Pre-existing condition clauses are now restricted by HIPPA.,Noelle Baker, Contributing Editor,6-12,Exhibit 6.5: General Deductibles,Professional and physician co-insurance (20%) Same visit

17、within network (10%) PPO inpatient coinsurance (10%) Transplants ($100); Transplant Inpatient (20%) Standard hospital co-insurance (20%) Standard hospital admission deductible ($200) Emergency Room services ($200 per visit) Emergency Room co-insurance (20%) General Deductibles: $1,250 per individual

18、; $2,500 per family per plan year,Noelle Baker, Contributing Editor,6-13,MANAGED CARE PLANS,Health Maintenance Organizations (HMOs) Preferred Provider Organizations (PPOs) Point - of - Service Plans (POSs) Managed care plans emphasize cost control by limiting employees choice of doctors and hospital

19、s.,Noelle Baker, Contributing Editor,6-14,Medically Necessary Services (ONLY!),HMOs,Provide Prepaid Medical Services for a fixed enrollment period (all services must be medically necessary and pre-approved) Most Services are fully covered or carry small copayments ($15 - $25); prescriptions drugs ty

20、pically $10 - $50 Types of Providers/Practices Prepaid Group Practices Staff Model HMOs Group Model HMOs Network Model HMOs Individual Practice Associations (IPAs),Noelle Baker, Contributing Editor,6-15,Features of HMOs,HMOs differ from fee-for-service plans in three important ways.,HMOs offer prepa

21、id services while fee-for-service plans operate on a reimbursement basis. HMOs include the use of primary care physicians as a cost-control measure. Co-insurance rates are generally lower in HMO plans than in fee-for-service plans. Exhibit 6.6 illustrates the features of an HMO,Noelle Baker, Contrib

22、uting Editor,6-16,Role of Primary Physician in HMOs Exhibit 6.7,Make initial diagnosis/evaluate patients condition Identify appropriate treatment protocols and practice guidelines Decide what treatment is warranted and specify the same Approve referrals to specialists Evaluate patients health follow

23、ing treatment,Noelle Baker, Contributing Editor,6-17,PPOs and Plan Coverage (Exhibit 6.8),Select group of providers get a higher reimbursement rate than fixed fee plans Employers, providers, or third-party administrators guarantee patient load Exclusive provider organization Similar stipulations for

24、 second opinions, preadmission certification, and maximum benefits; also have similar deductibles and co-insurance Deductibles are distinguished by whether they are in or out of network; with higher deductibles for out of network services PPOs calculate coinsurance as a percentage of fees for covere

25、d services.,Noelle Baker, Contributing Editor,6-18,Point of Service Plans (POS),Features Similar to HMOs and Fee-for-Service Plans Nominal Copayments Employees can seek care outside of network which differentiates this plan for HMOs where outside treatment is not covered See Exhibit 6.9,Noelle Baker

26、, Contributing Editor,6-19,SPECIALIZED INSURANCE BENEFITS,Also Called Carve - Out Plans Part of Specialty HMOs in addition, employers must treat pregnancy and childbirth the same way they treat other causes of disability,The Family and Medical Leave Act of 1993 entitles most male and female employee

27、s to 12 unpaid work weeks of leave during any 12 month period because of the birth of a child. The Newborns and Mothers Health Protection Act of 1996 sets minimum standards for the length of hospital stays and prohibits insurers from using financial incentives to shorten hospital stays.,Noelle Baker

28、, Contributing Editor,6-23,Consumer-Driven Health Care,The employee, as a consumer, expects a certain degree of autonomy in managing their health care costs. Flexible spending accounts and health reimbursement accounts are popular with consumers (employees). These accounts provide employees with pre

29、-tax dollars to pay for medical expenses not covered by their plans. FSA balances cannot be carried over to the next fiscal year. Typically an account maximum is set by the employer on such accounts to protect the employer from major losses under the risk of loss rules or uniform coverage requiremen

30、t. Under the rules the employer must make the full amount available to the employee for that fiscal year even though the employee has not contributed the full amount at that time. HRAs are funded by the employer only and balances may be carried over from year to year. The text reviews the four main advantages of HSAs over FSAs including their portability and inflation adjustment features.,Noelle Baker, Contributing Editor,6-24,RETIREE HEALTH CARE BENEFITS,Since the 1980s companies have encountered a strong financial disincentive to provide healt