Module 8 Health Care Plans

1. CERTIFIED FINANCIAL PLANNER CERTIFICATION PROFESSIONAL EDUCATION PROGRAMFinancial Planning Process & Insurance Module 8Health Care Plans

2. Learning Objectives 8-1: Describe essential terms related to health care plans. 8-2: Specify how medical plan provisions limit recovery by the insured. 8-3: Compare characteristics of types of health care plans. 8-4: Calculate the amount paid on medical expenses under medical expense policies that include provisions limiting recovery by the insured. 8-5: Explain HIPAA provisions related to health insurance. 8-6: Explain COBRA provisions related to health insurance continuity. 8-7: Explain Medicaid provisions related to health care for the impoverished. 8-8: Explain Medical Savings Accounts and related structures and provisions. 8-9: Explain Medicare provisions related to health care for the elderly. 8-10: Describe the provisions of the Patient Protection and Affordable Care Act of 2010 (PPACA).

3. Questions to Get Us Warmed Up

4. Learning Objectives 8-1: Describe essential terms related to health care plans. 8-2: Specify how medical plan provisions limit recovery by the insured. 8-3: Compare characteristics of types of health care plans. 8-4: Calculate the amount paid on medical expenses under medical expense policies that include provisions limiting recovery by the insured. 8-5: Explain HIPAA provisions related to health insurance. 8-6: Explain COBRA provisions related to health insurance continuity. 8-7: Explain Medicaid provisions related to health care for the impoverished. 8-8: Explain Medical Savings Accounts and related structures and provisions. 8-9: Explain Medicare provisions related to health care for the elderly. 8-10: Describe the provisions of the Patient Protection and Affordable Care Act of 2010 (PPACA).

5. Medical Expense Terms

6. Major Medical Health Insurance

7. Health Insurance Plan Terminology

8. Family Deductible Notes It’s really more of a deductible cap • Each person in the family is responsible for meeting his or her own deductible and paying any related medical costs. • One person in the family can meet only one deductible. • Rather than requiring every family member to meet a deductible, the insurer allows for a family cap. • Once the cap has been met deductibles for any remaining family members are waived.

9. Family Deductible Examples

10. Question 1 - Comprehensive Major Medical Indemnity Policies Comprehensive major medical policies generally provide more coverage than other health care policies for which of the following reasons? • they generally have higher coverage limits • they provide more freedom of choice  • they have fewer exclusions • they generally cover fewer types of medical expenses • IV only • I and III only • II and IV only • I, II, and III only • I, II, and IV only

11. Managed Care Concepts

12. Managed Care Plans • Health Maintenance Organization:Three types of HMO plans • Staff model • Group practice model • Independent Practice Association model (IPA) • Preferred Provider Organization – • PPOs offer the greatest flexibility • Point of Service Plan • POS pays based on where service is received • Exclusive Provider Organization (EPO) • technically, an insurance company-run HMO, but run more like a small PPO

13. Medical Insurance and Managed Care Payments

14. Major Medical Coverage 100 80 60 40 20 0 $5,000 Stop-Loss Limit % of covered expenses paid Deductible $350 Insurer pays unlimited benefits from this point forward 80/20Coinsurance Amount payable for covered expenses Unlimited $5,350Total Expenses $350 Maximum Lifetime Benefit (PPACA 2010) Paid by insurer Paid by insured

15. Calculation of Medical Reimbursement (Above Stop-Loss Limit)

16. Calculation of Medical Reimbursement (Below Stop-Loss Limit)

17. Question 2 - Medical Reimbursement Calculation Richard Weiss is insured through his employer in a group indemnity health care plan. His annual deductible is $200, after which Richard must pay 20% of additional charges, to a stop-loss-limit of $5,000. In his first claim of the year, Richard has $500 of covered medical expenses. How much will his insurer pay? • $400 • $300 • $240 • $160

18. Question 3 - Managed Care Programs Which one of the following is not considered to be a managed care program? • Health Maintenance Organizations (HMOs) • Preferred Provider Organizations (PPOs) • Provider Service Networks (PSNs) • Medicaid (CMA)

19. Question 4 - Health Care Plan Costs Identify the health care plan costs (premiums) as they would generally would be listed, from lowest cost to highest cost. • HMO, PPO, major medical plan • PPO, major medical plan, HMO • HMO, major medical plan, PPO • major medical, HMO, PPO

20. Learning Objectives 8-1: Describe essential terms related to health care plans. 8-2: Specify how medical plan provisions limit recovery by the insured. 8-3: Compare characteristics of types of health care plans. 8-4: Calculate the amount paid on medical expenses under medical expense policies that include provisions limiting recovery by the insured. 8-5: Explain HIPAA provisions related to health insurance. 8-6: Explain COBRA provisions related to health insurance continuity. 8-7: Explain Medicaid provisions related to health care for the impoverished. 8-8: Explain Medical Savings Accounts and related structures and provisions. 8-9: Explain Medicare provisions related to health care for the elderly. 8-10: Describe the provisions of the Patient Protection and Affordable Care Act of 2010 (PPACA).

21. HIPAA: Health Insurance Portability & Accountability Act of 1996 Major health insurance-related provisions (to reduce job lock) • pre-existing conditions: cannot apply coverage exclusion for more than 12 months • when moving to a new job: cannot apply coverage exclusion if there is no break in previous coverage of 63 days or less • pregnancy not a pre-existing condition Only applies to comprehensive health care • i.e., not ancillary benefits such as disability, dental, etc. • not to managed care plans

22. COBRA (Consolidated Omnibus Budget Reconciliation Act)

23. Medicaid • Medicaid focuses on those lacking financial wherewithal to pay for health care. • Medicaid is a federally initiated program. • Administered, and partially funded, at the state level. • Each state sets its own criteria to qualify for benefits. • Some who qualify include: • Recipients of Aid to Families with Dependent Children (AFDC) • Children under age 6 with family income at or below 133% of the federal poverty level (FPL). • Supplemental Security Income (SSI) recipients in most states.

24. Learning Objectives 8-1: Describe essential terms related to health care plans. 8-2: Specify how medical plan provisions limit recovery by the insured. 8-3: Compare characteristics of types of health care plans. 8-4: Calculate the amount paid on medical expenses under medical expense policies that include provisions limiting recovery by the insured. 8-5: Explain HIPAA provisions related to health insurance. 8-6: Explain COBRA provisions related to health insurance continuity. 8-7: Explain Medicaid provisions related to health care for the impoverished. 8-8: Explain Medical Savings Accounts and related structures and provisions. 8-9: Explain Medicare provisions related to health care for the elderly. 8-10: Describe the provisions of the Patient Protection and Affordable Care Act of 2010 (PPACA).

25. Medical Savings Accounts

26. Health Savings Account (HSA) • Allows individuals to pay for health care expenses on a tax-free basis by using money deposited in the HSA. Requires a high-deductible health plan (HDHP). • HDHP Minimum Deductible (2012) • $1,200/$2,400 (single/family) • HDHP Maximum Out-Of-Pocket • $6,050/$12,100 (single/family) • Maximum Annual Contribution • $3,100/$6,250 (single/family)

27. Medicare Coverage: Part A Covers inpatient hospital expenses • some home health services • hospice care • skilled nursing care • very limited long-term care Medicare Part A premium • 40 quarters contribution to OASDHI - $0 • 30 to 39 quarters - $248/mo. • less than 30 quarters - $451/mo. Medicare Part A deductible/coverage • $1,156 per spell of illness (60 day period between hospitalization—new spell of illness) • after deductible; $0 for days 1–60 • days 61–90; $289 coinsurance per day • after 90 days; 60 lifetime reserve days, $512 coinsurance per day

28. Medicare Coverage: Part B Covers physician’s and outpatient expenses • ambulance • supplies (e.g., diabetic, glasses, medical equipment) • lab services and screenings • physical therapy • blood Medicare Part B premium • income $85,000 ($170,000-MFJ); $99.90/mo. • indexed to $213,000; $319.10/mo. Medicare Part B deductible/coinsurance • $140 per year • 20% of all subsequent covered charges

29. Medicare Coverage: Part C Medicare Advantage • Combine coverage for Parts A, B, and D • Provide additional benefits not included in original Medicare program • MAY provide better coverage at lower cost than a combination of traditional Parts A, B, D plus a supplement • Problem: programs not always available in a given geographic area

30. Medicare Coverage: Part D • Prescription Drug Benefit • Usually pay a monthly premium • Late enrollees may pay a penalty • Coverage example • pay $320 deductible • then 25% copayment of next$2,610 covered expenses • Doughnut Hole: next $3,727.50 out-of-pocket(no insurance benefit) • then pay a (5%) coinsurance amount for remaining expenses • Total out-of-pocket: $4,700 (deductible + copayment + doughnut hole)

31. Part C: Medicare Advantage Plans Available • Medicare HMOs • Medicare PPOs • Private Fee-for-Service plans (PFFS) • Special Needs Plans • Medicare Medical Savings Account (MMSA)

32. Medicare Supplement Insurance • Medigap plans • A–J, plus K–N • no new Plans E, H, I, J • coordinate with Medicare to fill-in the deductible and co-pay gaps • do not generally add substantially to Medicare benefits • do not provide any appreciable LTC benefit

33. Patient Protection and Affordable Care Act (PPACA 2010)

34. Question 5 - Patient Protection and Affordable Care Act Under the new Patient Protection and Affordable Care Act of 2010 (PPACA 10), which of the following have been eliminated for comprehensive major medical indemnity plans? • copayments • maximum policy limits • coinsurance amounts below 80/20 • deductible amounts above $1,000

35. Question 6 - State Child Health Insurance Program Which of the following is not true regarding the State Child Health Insurance Program (SCHIP)? • It was implemented to provide health care for poor children who qualify for Medicaid. • Each state’s plan for coverage must meet a “benchmark plan.” • States may not alter Medicaid rules to lighten their burdens in meeting the program’s stipulations. • The initial intent of the program was to spend nearly $50 billion over a 10-year period for health care for poor children.

36. Question 7 - HIPAA The portability/preexisting conditions provisions of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) apply to • disability income insurance. • comprehensive health care plans. • workers’ compensation insurance. • long-term care insurance.

37. CERTIFIED FINANCIAL PLANNER CERTIFICATION PROFESSIONAL EDUCATION PROGRAMFinancial Planning Process & Insurance Module 8End of Slides