PHR 915: Health Insurance & the Medical and Pharmacy Benefits

September 30, 2026

define premium

the amount paid (usually monthly) to keep coverage, whether or not care is used

define deductible

what the enrollee pays for covered services before the plan starts to pay

define copayment

a fixed dollar amount per service or prescription. eg. $10 per fill

define coinsurance

a percentage of the alllowed cost, eg. 25% of the drug’s price

define out of pocket maximum

the most an enrollee pays in a year for covered, in-network services subject to the limit. premiums, noncovered services and some out-of-network costs generally don’t count.

define formulary

the plan’s list of covered drugs, usually grouped into cost-sharing tiers

there are four parts of medicare, what is part A of medicare

hospital insurance.

like Inpatient hospital, skilled nursing, hospice, inpatient rehab, some home health.

what is medicare part B

Medical insurance

doctor and outpatient services, preventative care, equipment, and many clinician administered drugs

what is medicare part C

medicare advantage

private plans that provide part A and B benefits, most include D

What is part D

Outpatient drugs

voluntary; only through private plans

What determines whether a Medicare drug is covered under Part B or Part D?

It depends on how and where the drug is used—for example, whether it is given by a healthcare provider or taken at home.

Which Medicare part usually covers an injectable or infused drug given in a physician's office that is not usually self-administered?

Part B.

Which Medicare part covers a drug used at home with Medicare-covered equipment, such as a nebulizer or infusion pump?

Part B.

Exception: It is Part D when used in a long-term care facility.

Which Medicare part covers an immunosuppressant after a Medicare-covered transplant?

Part B.
Exception: Otherwise, it is covered by Part D.

Which Medicare part covers certain oral anticancer drugs?

Part B covers certain oral anticancer drugs. Otherwise, they are covered by Part D.

Which Medicare part covers some oral antiemetics used within 48 hours of chemotherapy?

Part B covers some oral antiemetics used within 48 hours of chemotherapy. Otherwise, they are covered by Part D.

Which Medicare part covers influenza, pneumococcal, COVID-19, and hepatitis B vaccines for eligible people?

Part B.

Which Medicare part covers other ACIP-recommended vaccines, such as shingles and Tdap?

Part D.

What is the cost sharing for Part D-covered ACIP-recommended vaccines, such as shingles and Tdap?

$0 cost sharing since 2023.

Which Medicare part covers most self-administered outpatient prescription drugs?

Part D

What are Medicaid and CHIP?

They are a federal–state partnership that provides health coverage to low-income people.

How is Medicaid financed?

The federal government and states jointly pay for Medicaid.

Does Medicaid eligibility and benefits vary between states?

Yes. Eligibility and benefits vary by state.

What is the ACA Medicaid expansion?

41 states, including Washington, D.C., cover nearly all adults with incomes up to 138% of the federal poverty level.

Do all states provide outpatient drug coverage through Medicaid?

Yes. All states cover outpatient drugs through the Medicaid drug rebate program.

What limits can states place on Medicaid outpatient drug coverage?

States may use preferred drug lists and prior authorization.

What are the Medicaid work requirements beginning January 1, 2027?

Certain Medicaid expansion adults ages 19–64 must show 80 hours per month of work, school, training, or service, unless exempt.

What is a fully insured employer health plan?

The employer buys a policy from an insurance company, and the insurer bears the risk.

What laws apply to fully insured employer health plans?

State insurance laws apply, along with federal requirements.

What is a self-funded employer health plan?

The employer pays the claims itself, usually with help from an administrator and a PBM (pharmacy benefit manager).

What law governs most self-funded employer health plans?

ERISA (Employee Retirement Income Security Act).

. Can ERISA preempt state laws for self-funded plans?

Yes. ERISA may preempt state laws involving the plan's benefits or administration.

Does ERISA always preempt state laws for self-funded plans?

No. The extent of ERISA preemption depends on the specific state law.

What law established these core protections for private health coverage?

The Affordable Care Act (ACA) of 2010.

Can private health plans exclude coverage because of a pre-existing condition?

No. The ACA prohibits pre-existing condition exclusions.

What does “guaranteed issue” mean under the ACA?

Insurers generally must offer coverage, regardless of a person's health status.

Can ACA-compliant premiums vary based on a person's health?

No. Premiums cannot vary based on health.

What are essential health benefits?

They are 10 categories of health care services that certain plans must cover, including prescription drugs.

What does the ACA require for certain preventive services?

Certain preventive services must be covered with no cost sharing

Which private plans generally must provide the ACA's preventive services with no cost sharing?

Most non-grandfathered private plans.

Until what age can children stay on a parent's health insurance plan?

Until age 26.

What is the 2026 out-of-pocket maximum for self-only coverage?

$10,600.

What is the 2026 out-of-pocket maximum for family coverage?

$21,200.

What are ACA marketplaces?

They are health insurance marketplaces where people can shop for private health coverage and may qualify for premium tax credits.

What does the ACA's Medicaid expansion allow states to do?

States can expand Medicaid eligibility to people with incomes up to 138% of the federal poverty level. The expansion is optional for states.

What can happen to an insurance pool without rules to prevent adverse selection?

The insurance pool can “unravel” because of adverse selection.

What is the first step in the adverse-selection cycle?

Mostly sicker people buy insurance, while healthier people wait.

What happens to the insurance pool when mostly sicker people enroll?

The pool becomes more expensive/costlier.

What happens to premiums when the insurance pool becomes more costly

Premiums rise.

What happens when premiums rise?

More healthy people drop out of the insurance pool.

What happens after healthy people drop out of the insurance pool?

The cycle repeats: the pool becomes even sicker and more expensive, causing premiums to rise further.

What is the ACA's approach to preventing this adverse-selection cycle?

The ACA uses three rules that work together:

1. Everyone can buy coverage at the same price.

2. Everyone is expected to be covered.

3. Subsidies help keep coverage affordable.

What does the ACA's guaranteed-issue rule mean for risk sharing?

Everyone can buy coverage, and premiums can vary only based on age, tobacco use, geographic area, and family size.

Why is everyone being expected to have coverage important for the insurance pool?

It helps keep healthy people in the pool, which helps balance the costs of covering sicker people.

Is there currently a federal penalty for not having health coverage?

The federal penalty is $0 since 2019.

Do any states or jurisdictions have their own individual coverage penalties?

Yes. Massachusetts, New Jersey, California, Rhode Island, and Washington, D.C. have their own requirements/penalties.

How do subsidies help the ACA insurance pool?

Subsidies keep coverage affordable, helping people remain enrolled.

What did insurers say about the possible expiration of enhanced ACA premium tax credits?

Insurers expected that the enhanced credits would expire and added about 4 percentage points to proposed 2026 rates, citing the possibility that healthier people would leave the insurance pool.

What are the four main sources of health insurance coverage being compared?

• Medicare

• Medicaid / CHIP

• Employer-sponsored coverage

• ACA Marketplace coverage

Who is eligible for Medicare?

People 65 and older, plus some younger people with disabilities, ESRD (end-stage renal disease), or ALS.

Who is eligible for Medicaid/CHIP?

Low-income people, with eligibility varying by state.

Who gets employer-sponsored health insurance?

Workers and their dependents.

Who gets ACA Marketplace coverage?

People who are buying their own health coverage.

How is Medicare primarily paid for?

By the federal and state governments.

How is employer-sponsored insurance paid for?

By employers and employees.

How is ACA Marketplace coverage paid for?

Through premiums and federal tax credits.

How is the drug benefit provided under Medicare?

Part D uses private plans for prescription drug coverage, while Part B covers some drugs.

How is the drug benefit provided under Medicaid/CHIP?

Through state or managed care plans and the Medicaid drug rebate program.

How are drugs covered under employer-sponsored insurance?

The plan sponsor provides the drug benefit, usually through a PBM (pharmacy benefit manager).

What is the drug benefit requirement for ACA Marketplace plans?

Prescription drugs are a required essential health benefit.

Who is the principal federal/state oversight agency for Medicare?

CMS (Centers for Medicare & Medicaid Services).

Who provides principal oversight of Medicaid/CHIP?

CMS and the state agency.

Who oversees employer-sponsored health plans?

• Self-funded plans: DOL (Department of Labor), under ERISA

• Fully insured plans: State insurance department

Who provides principal oversight of ACA Marketplace coverage?

HHS/CMS and the states.

do you know your chart

what’s a good way to know the difference b/t medicare and medicaid

medicare- care for the elderly

medicaid-aid the underserve

Does traditional Medicare (Parts A & B) have an annual out-of-pocket spending cap?

No. Traditional Medicare does not have an annual out-of-pocket cap.