10/14 - Introduction to Health Insurance Cont.

Fully insured employer-sponsored insurance

employer pays premium to insurance company; insurer assumes full financial risk

Advantages of fully insured employer-sponsored insurance

simple for employer, predictable costs

Disadvantages of fully insured employer-sponsored insurance

less flexibility in design; subject to state insurance laws

Typical users of fully insured employer-based insurance

small employers

Self insured employer-sponsored insurance

Employer pays claims from own funds; contracts with insurer for admin tasks.

Self insured employer-sponsored insurance advantages

Flexible design; may save money long-term

Self insured employer-sponsored insurance limitations

Employer assumes financial risk; not regulated by state insurance laws.

Typical users of self insured employer-sponsored insurance

Large employers

Health maintenance organization (HMO)

Must choose a PCP; referrals needed for specialists; no out-of-network coverage.

HMO advantages

Lower premiums; coordinated care.

HMO limitations

Least flexibility; no out-of-network coverage.

HMO typical users

Those wanting low cost and coordinated care.

Exclusive provider organization (EPO)

No PCP required; must stay in network.

EPO advantages

Moderate premiums; no referral required.

EPO limitations

No coverage for out-of-network services.

EPO typical users

People okay with using network-only providers.

Preferred provider organization (PPO)

No PCP or referral needed; coverage for out-of-network (higher cost).

PPO advantages

Most flexibility in choosing providers.

PPO limitations

higher premiums

PPO typical user

People who see many specialists or travel often.

Point of service (POS)

PCP required; referrals for specialists; partial coverage for out-of-network.

POS advantages

Flexibility with some cost savings.

POS limitations

Requires PCP coordination; higher costs out-of-network.

POS typical user

Those who want flexibility but don’t mind referrals.

Flexible spending account (FSA)

Employer-based, tax-free savings account for medical costs; “use it or lose it” (up to $500 rollover).

FSA advantages

Reduces taxable income; can use for wide range of expenses

FSA limitations

Funds expire; not portable if you change jobs.

FSA typical user

Employees with predictable annual healthcare expenses

Flexible spending account vs. health savings account

FSA money can cover a wider range of medical expenses & medications and are a “use it or lose it” account

High deductible health plan (HDHP)

High deductible; preventive care exempt; allows HSA eligibility.

HDHP advantages

Lower premium; HSA benefits; good for healthy individuals.

HDHP limitations

High out-of-pocket costs before coverage.

HDHP typical user

Healthy people with low medical needs and good savings.

Health savings account (HSA)

Savings for medical expenses; tax-free for qualified use; must have HDHP.

HSA advantages

Tax advantages; funds roll over yearly; long-term savings.

HSA limitations

Must have HDHP; 20% penalty for non-medical use before age 65.

HSA typical user

People with HDHPs and ability to save.

When is a HDHP with HSA a bad option?

chronic condition, pregnant, surgery, small children, don’t have budget to pay full price of a medical bill or prescription

ACA and the Health Insurance Marketplace

individual and family plans are available to compare, premium subsidies are available to reduce premiums and out-of-pocket costs

How does each plan requiring the same set of essential health benefits impact premiums for the individual market?

• coverage is more comprehensive and expensive than employer-based because premiums are allowed to vary by age, family size, tobacco status, geographical area, or mental tier

• low and moderate income individuals and families are eligible for new premium tax credits to help pay premiums

What plans are included in employer-based plans?

fully insured, self-insured

Managed care plan types

HMO, EPO, PPO, POS

Consumer-driven plan types

HDHP, HSA, FSA

Individual/marketplace plan types

platinum, gold, silver, bronze, catastrophic

Platinum plan

Plan pays 90%, enrollee 10%.

Platinum advantage

Lowest out-of-pocket costs

Platinum limitations

Highest monthly premiums

Platinum plan typical users

People with frequent healthcare needs.

Gold plan

Plan pays 80%, enrollee 20%.

Gold plan advantages

Lower cost-sharing; solid coverage.

Gold plan limitations

Higher monthly premiums

Gold plan typical user

Moderate healthcare users

Silver plan

Plan pays 70%, enrollee 30%. Eligible for cost-sharing subsidies

Silver advantages

Balanced premium and coverage; subsidies available

Silver limitations

Moderate out-of-pocket costs.

Silver typical user

Most marketplace enrollees

Bronze plan

Plan pays 60%, enrollee 40%.

Bronze advantages

Lowest premium; protects against major events.

Bronze limitations

High deductible and cost-sharing.

Bronze typical users

Healthy people needing basic coverage.

Catastrophic plan

For people under 30; low premium, very high deductible.

Catastrophic advantages

Very low monthly cost.

Catastrophic limitation

Not eligible for subsidies; limited benefits.

Catastrophic typical user

Young, healthy individuals with minimal healthcare use.