Human Resources Chapter 5 Employersponsored Health Insurance Programs Also Known Uniform Coverage Requirement Employers Are

Chapter 05 – Employer-Sponsored Health Insurance Programs

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a. Also known as uniform coverage requirement

b. Employers are obligated to make the full amount of benefits and coverage elected

C. Health Reimbursement Accounts

1. Different to FSAs in 2 ways

D. Medicare Prescription Drug, Improvement and Modernization Act of 2003

2. Permits eligible individuals to establish health savings accounts (HSAs) to pay for

medical expenses

3. In 2012, an employer, an employee, or both, may contribute as much as $3,100

5. Employers offer HSAs along with a high-deductible insurance policy, established for

employees

6. For individual coverage, the minimum annual deductible was $1,200 with maximum

7. HSAs advantages over FSAs & HRAs (use PP 5.25)

a. HSAs are portable

b. HSAs are subject to inflation-adjusted funding limits

c. Employees may receive medical services of their choice

VII. Specialized Insurance Benefits (use PP 5.26)

A. Overview

2. Specialty HMOs or PPOs managed carve-out plans based on the expectation that

B. Dental Insurance

1. Generally covers

5.9)

i. Diagnostics

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2. Three types

3. Dental fee-for-service plans

a. Use a usual, customary, and reasonable charge basis

4. Dental service corporations

a. Non-profit, owned & administered by state dental associations

5. Dental maintenance organizations

a. Also called dental HMOs

C. Vision Insurance

1. Generally covers

a. Eye exams

2. Delivered through

3. Limits to frequency and type of services

4. Exclude coverage of specialty prescription eyeglass lenses

5. Most exclude contact lenses NOT prescribed as a medical necessity

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D. Prescription Drugs Benefits

1. Apply exclusively to drugs that state and federal laws require be dispensed by a

licensed pharmacist

3. Insurers specify

a. Which prescription drugs are covered

4. Three programs to choose from

5. Medical reimbursement plans

a. Reimburse employees totally or partially

6. Prescription card plans

a. Offer prepaid benefits with nominal copayments

7. Mail-order prescription drug plans

a. Covers expensive drugs to treat chronic health conditions, like

8. Costs of plans

a. Reimbursement plans tend to be most expensive because

i. Pharmacies charge full retail price

9. Two cost control features (use PP 5.27)

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manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

a. Formularies

b. Multiple tiers

10. Formularies

a. Are lists of drugs proved to be

11. Multiple-tiers

a. Specify copayment amounts

b. Generally 3 tiers (copayment amounts per prescription)

E. Mental Health and Substance Abuse Plans (use PP 5.28)

2. Mental disorder defined as “a behavioral or psychological syndrome or pattern . . .

3. Nearly 20% of Americans develop a substance abuse problem

5. Features

a. Cover the costs of a variety of treatments, including

6. Coinsurance & maximum benefits amounts generally less from 3 perspectives

a. In both indemnity and managed care plans amounts range from 40% to 50%

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7. Regulations

a. The Mental Health Parity and Addiction Equity Act of 2008 plays a prominent

role in establishing parity requirements for mental health plans being offered in

F. Maternity Care (use PP 5.29)

1. Covers all or part of all costs during pregnancy and a short period after the birth

3. Federal law does influence how companies design and implement benefits

4. Federal Pregnancy Discrimination Act of 1978 (Chapter 3)

5. FMLA (Family and Medical Leave Act of 1993) entitles male and female employees

6. Newborns’ and Mothers’ Health Protection Act of 1996

a. Sets minimum standards for the length of hospital stays for mothers and newborn

7. Some states require all but self-funded plans to include maternity benefits to their

existing medical plans

G. Retiree Health Care Benefits (use PP 5.30 & 5.31)

1. Since the early 1980s, costs have been a disincentive for companies

a. Substantial increase in health care costs and cost of medical insurance have

2. The Financial Accounting Standards Board (FASB),

a. Is a non profit company responsibility for

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ii. Reduces the amount of net profit companies list on balance sheets by

listing the costs of these benefits as an expense

iii. Benefits such as health care coverage establish an exchange between the

Summary

Discussion Questions

1. Discuss the basic concept of insurance. How does this concept apply to health care?

2. Compare the main objectives of federal and state regulation of employer-sponsored health

insurance practices.

Main Points

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3. What is the most influential event in the history of employer-sponsored health care benefits?

4. Describe the principles of fee-for-service plans and managed care plans. What are the

similarities and differences?

Main Points

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manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

o Physician expenses

• Two types of plans

o Indemnity plans: Based on a contract between the employers and insurance

company. The contract specifies the expenses covered and the rate

o Self-funded plans: Companies pay benefits from own assets

Managed care plans

Similarities and differences

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5. Discuss some of the choices that an employer may make to help control health care costs.

Main Points

• Managed care plans became popular alternatives to fee-for-service plans mainly to help

employers and insurance companies more effectively manage the costs of health care.

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Cases

Understanding Your Benefits

Heath Insurance Options

1. What are some advantages and disadvantages of the HMO to you?

2. What should you do? What are factors that will influence your decision?

Instructor Notes

Many employers offer employees a choice to participate in more than one insurance program. A

preferred provider organization (PPO) offers some of the same features as a fee-for-service

insurance program such as a deductible, coinsurance and out-of-pocket maximums. However,

Student Responses

1. What are some advantages and disadvantages of the HMO to you?

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2. What should you do? What are factors that will influence your decision?

1. What are some overall advantages and disadvantages for pursuing consumer-driven

health care options?

2. Should Classics select a flexible spending account or a health savings account?

1. What are some overall advantages and disadvantages for pursuing consumer-driven

health care options?

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manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

2. Should Classics select a flexible spending account or a health savings account?