The BasicsThe BasicsUnderstanding Health Insurance Understanding Health Insurance

TermsTerms

Jennifer Flory, HIA, CPIW, Jennifer Flory, HIA, CPIW, CGBACGBA

MedicareMedicare

• The U.S. government's health insurance The U.S. government's health insurance program for: program for: – people 65 years of age or older, people 65 years of age or older, – certain younger people with specific disabilities, certain younger people with specific disabilities,

and and – people with end-stage renal disease (ESRD)people with end-stage renal disease (ESRD)

• Medicare has four parts:Medicare has four parts:– Part A – Hospital insurance (earned by working)Part A – Hospital insurance (earned by working)– Part B – Medical insurance (monthly premium)Part B – Medical insurance (monthly premium)– Part C – Medicare Advantage plans (premium Part C – Medicare Advantage plans (premium

usually) usually) – Part D – Prescription drug coverage (monthly Part D – Prescription drug coverage (monthly

premium)premium)

MedicaidMedicaid

• Medicaid is a state administered program Medicaid is a state administered program that pays for medical assistance for the that pays for medical assistance for the elderly , blind or disabled as well as elderly , blind or disabled as well as pregnant women and children. pregnant women and children.

• Funding a combination of Federal & State Funding a combination of Federal & State moneymoney

• To receive Medicaid, you must apply and To receive Medicaid, you must apply and meet certain eligibility requirements. meet certain eligibility requirements. Each state sets its own eligibility and Each state sets its own eligibility and services guidelines.services guidelines.

InsuranceInsurance

• The transfer of the risk of a defined loss, The transfer of the risk of a defined loss, from one entity to another, in exchange from one entity to another, in exchange for payment of a premium.for payment of a premium.

• Insurance involves pooling funds from Insurance involves pooling funds from many insureds in order to pay for many insureds in order to pay for unexpected loss. unexpected loss.

• A contract/policy defines the conditions A contract/policy defines the conditions and circumstances under which the and circumstances under which the insured will be compensated. insured will be compensated.

Self Funded/ Self InsuredSelf Funded/ Self Insured

• A risk management approach in which A risk management approach in which an entity sets aside funds to pay an entity sets aside funds to pay claims instead of transferring the risk claims instead of transferring the risk of loss to another party by purchasing of loss to another party by purchasing an insurance policy. an insurance policy.

• This term self insured is a misnomer This term self insured is a misnomer because no insurance is involved. because no insurance is involved.

• Self funded and self insured are used Self funded and self insured are used interchangeably.interchangeably.

Third Party Administrator Third Party Administrator (TPA)(TPA)

• An organization that has the expertise An organization that has the expertise and capability to administer and and capability to administer and processes claims on behalf of another processes claims on behalf of another party.party.

• Insurance companies are often also Insurance companies are often also TPA’s.TPA’s.

Preferred Provider Organization Preferred Provider Organization (PPO)(PPO)

• An arrangement between health care An arrangement between health care providers and health plans that provide plan providers and health plans that provide plan members an incentive to use Network members an incentive to use Network health care providers. In exchange for the health care providers. In exchange for the health plan directing patients to them, the health plan directing patients to them, the provider agrees to accept a discounted fee.provider agrees to accept a discounted fee.

• On PPO arrangements, separate Deductibles On PPO arrangements, separate Deductibles and Coinsurance apply to Network and Non and Coinsurance apply to Network and Non Network providers. Member costs are higher Network providers. Member costs are higher with Non Network providers.with Non Network providers.

Billed ChargesBilled Charges

• The amount that a provider actually The amount that a provider actually bills the health plan or member for a bills the health plan or member for a service. service.

Allowed ChargeAllowed Charge

• The maximum dollar amount that a The maximum dollar amount that a TPA or insurance company will TPA or insurance company will reimburse a provider for a specific reimburse a provider for a specific service.service.

• Network providers agree to accept the Network providers agree to accept the allowed charge as payment in full.allowed charge as payment in full.

DeductibleDeductible

• The set amount of eligible expenses a The set amount of eligible expenses a covered person must pay from their covered person must pay from their own pocket before the health plan will own pocket before the health plan will begin paying on their claims. begin paying on their claims.

• Network and Non Network Deductibles Network and Non Network Deductibles accumulate separately. accumulate separately.

Deductible ExampleDeductible Example

Claim InformationClaim Information• Plan A Deductible -Plan A Deductible -

$300$300• Network Dr. billed Network Dr. billed

$500 for a covered $500 for a covered service.service.

• Health Plan Health Plan allowance is $300 .allowance is $300 .

• Member has met $0 Member has met $0 of their deductible of their deductible this year.this year.

Claim ProcessingClaim Processing• $300 Allowed Charge$300 Allowed Charge

--$300 deductibledeductible

$0 paid by health $0 paid by health planplan

• Your responsibility = Your responsibility = $300$300

• Plan Pays $0Plan Pays $0• Member Pays $300Member Pays $300

• Dr writes off $200Dr writes off $200

CoinsuranceCoinsurance

• A cost sharing formula for health care A cost sharing formula for health care services.services.

• Coinsurance is expressed as a Coinsurance is expressed as a percentage of the allowed charge that percentage of the allowed charge that will be paid by the member and the will be paid by the member and the balance paid by the Plan. balance paid by the Plan.

• You must meet the deductible before You must meet the deductible before coinsurance is applied.coinsurance is applied.

Coinsurance ExampleCoinsurance Example

Claim InformationClaim Information• Member has met Member has met

their $300 their $300 deductibledeductible

• Member Member Coinsurance is 20%Coinsurance is 20%

• Plan pays 80% Plan pays 80% CoinsuranceCoinsurance

• Network Dr. billed Network Dr. billed $125 for service$125 for service

• Plan allowed $100Plan allowed $100

Claim ProcessingClaim Processing• $100 allowed by Plan$100 allowed by Plan

20% 20% Coinsurance Coinsurance $20 $20 Paid by MemberPaid by Member

• Plan Pays $80Plan Pays $80• Member Pays Member Pays $20$20

$100$100

• Dr writes off $25Dr writes off $25

Coinsurance MaximumCoinsurance Maximum

• The annual dollar limit on the amount of The annual dollar limit on the amount of Coinsurance paid by the member. Coinsurance paid by the member.

• Once the Coinsurance Maximum is met, Once the Coinsurance Maximum is met, any additional covered services subject to any additional covered services subject to coinsurance are paid at100% of the coinsurance are paid at100% of the allowable charge for the remainder of the allowable charge for the remainder of the plan year.plan year.

• On a PPO plan, Network and Non Network On a PPO plan, Network and Non Network Coinsurance accumulate separately.Coinsurance accumulate separately.

• Applies to SEHP Plans A and B.Applies to SEHP Plans A and B.

Out of Pocket MaximumOut of Pocket Maximum

• The annual limit on the amount of The annual limit on the amount of Deductible, and Coinsurance paid by Deductible, and Coinsurance paid by the member each year. Once the out of the member each year. Once the out of pocket maximum is met, any additional pocket maximum is met, any additional covered services are paid at 100% of covered services are paid at 100% of the allowable charge for the rest of the the allowable charge for the rest of the year.year.

• On a PPO plan, Network and Non On a PPO plan, Network and Non Network accumulate separately.Network accumulate separately.

• Available only on SEHP Plan C.Available only on SEHP Plan C.

Copayment or CopayCopayment or Copay

• A set dollar amount that you are A set dollar amount that you are required to pay each and every time a required to pay each and every time a specific service is provided. specific service is provided.

• Example: Office Visit CopayExample: Office Visit Copay

Copay ExampleCopay Example

Claim InformationClaim Information

• Plan A office visit Plan A office visit PCP copay is $25PCP copay is $25

• Office visits with a Office visits with a family practice dr. family practice dr.

• Network Dr. Network Dr. charged $80 for charged $80 for office visitoffice visit

• Health Plan allowed Health Plan allowed $75$75

Claim ProcessingClaim Processing• $75 Allowed Charge$75 Allowed Charge• -$25 Copay-$25 Copay• $50 Plan pays$50 Plan pays

• Plan Pays $50Plan Pays $50• Member pays Member pays $25$25• $75$75

• Dr writes off $ 5Dr writes off $ 5

Network ProviderNetwork Provider

• A provider who has contracted with a A provider who has contracted with a TPA or insurance company to provide TPA or insurance company to provide medical services to members and who medical services to members and who has agreed to accept the health plan has agreed to accept the health plan Allowed Charge for covered services Allowed Charge for covered services as payment in full. as payment in full.

Non Network ProviderNon Network Provider

• A provider that has A provider that has notnot contracted contracted with the TPA or insurance company with the TPA or insurance company and does and does notnot agree to accept the agree to accept the Allowed Charge as payment in full for Allowed Charge as payment in full for covered members. covered members.

• Any amount determined to be above Any amount determined to be above the allowed charge would be the the allowed charge would be the member’s responsibility to pay along member’s responsibility to pay along with any applicable Deductible, with any applicable Deductible, Coinsurance or Copays. Coinsurance or Copays.

Network vs. Non NetworkNetwork vs. Non NetworkPlan A - Non Network Provider

Service on 1/2/2011Plan Pays

Member Pays

Provider Write Off

Billed Charge $1,500

Allowed Charge $1,400 $100 $0

$500Deductible ($500) $500

50% Coinsurance $900 $ 450 $450

Total $450 $1050 $0

Plan A - Network Provider

Service on 1/2/2011Plan Pays

Member Pays

Provider Write Off

Billed Charge $1,500

Allowed Charge $1,400 $100

$300 Deductible ($300) $300

20% Coinsurance $1,100 $880 $220

Total $880 $520 $100

Non CoveredNon Covered

• A health care service that is not an A health care service that is not an eligible service for coverage as eligible service for coverage as defined by the health insurance defined by the health insurance contract or benefit description. contract or benefit description.

• Non covered services are not eligible Non covered services are not eligible for reimbursement and are the for reimbursement and are the member’s responsibility to pay.member’s responsibility to pay.

Qualified High Deductible Health Qualified High Deductible Health Plan (QHDHP) Plan (QHDHP)

• A health plan with a network deductible A health plan with a network deductible of at least $1,200 for single and $2,400 of at least $1,200 for single and $2,400 for member and dependent coverage for member and dependent coverage and which meets the IRS standards to and which meets the IRS standards to be used with a health savings account. be used with a health savings account.

• Guidelines outlined in Guidelines outlined in IRSIRS Publication Publication 969969

• http://www.irs.gov/pub/irs-pdf/http://www.irs.gov/pub/irs-pdf/p969.pdfp969.pdf

Health Savings Account Health Savings Account (HSA)(HSA)

• A health savings account (HSA) is a tax-exempt A health savings account (HSA) is a tax-exempt trust or custodial account that is set up with a trust or custodial account that is set up with a qualified HSA trustee to pay or reimburse qualified HSA trustee to pay or reimburse certain medical expenses you incur.certain medical expenses you incur.

• To be an eligible individual and qualify for an To be an eligible individual and qualify for an HSA, you must meet the following requirements.HSA, you must meet the following requirements.– You must be covered under a QHDHP.You must be covered under a QHDHP.– You have no other health coverage that isn’t a You have no other health coverage that isn’t a

QHDHP. QHDHP. – You are not enrolled in Medicare.You are not enrolled in Medicare.– You cannot be claimed as a dependent on someone You cannot be claimed as a dependent on someone

else's tax return.else's tax return.• http://www.kdheks.gov/hcf/sehp/HSA.htm

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Consolidated Omnibus Budget Consolidated Omnibus Budget Reconcilation Act (COBRA)Reconcilation Act (COBRA)

• COBRA:COBRA: A federal law that requires employers to A federal law that requires employers to offer continued health insurance coverage to offer continued health insurance coverage to certain employees and their dependents who lose certain employees and their dependents who lose coverage for set period. coverage for set period.

• The Employee and/or their dependents are The Employee and/or their dependents are responsible for paying 100% of the required plan responsible for paying 100% of the required plan cost plus up to a 2% administrative charge. cost plus up to a 2% administrative charge.

• http://www.dol.gov/ebsa/faqs/faq-consumer-cobra.html

Coordination of BenefitsCoordination of Benefits

• Provides the order of benefit Provides the order of benefit determination when the member is determination when the member is covered under more than one group covered under more than one group health plan. health plan.

• Primary Plan Primary Plan – is the plan that pays first – is the plan that pays first and without regard to any other insurance and without regard to any other insurance covering the member.covering the member.

• Secondary Plan Secondary Plan – Pays after the primary – Pays after the primary plan and may take into consideration plan and may take into consideration amounts paid by the primary plan in amounts paid by the primary plan in determining amount eligible for payment.determining amount eligible for payment.

Other Party LiabilityOther Party Liability

• A health plan provision that deals with A health plan provision that deals with claims that should be paid by another claims that should be paid by another party such as workers compensation party such as workers compensation or the Personal Injury Protection (PIP) or the Personal Injury Protection (PIP) portion of the member’s auto policy. portion of the member’s auto policy.

2012 SEHP Programs2012 SEHP Programs

Programs and Services Offered Programs and Services Offered by SEHPby SEHP

• Active and Non Medicare Programs for Active and Non Medicare Programs for 20122012– Medical Plans A, B,C administered by Medical Plans A, B,C administered by

BCBS, Coventry/PHS and United Health BCBS, Coventry/PHS and United Health CareCare

– Pharmacy administered by CaremarkPharmacy administered by Caremark– Vision insured by Superior VisionVision insured by Superior Vision– Flexible spending administered by ASIFlexible spending administered by ASI– Preferred Lab Services through Quest Preferred Lab Services through Quest

Diagnostics & Stormont Vail HealthcareDiagnostics & Stormont Vail Healthcare

Network Benefit* Plan A Plan B Plan C

Deductible$300 Single$600 Family

$150 Single$300 Family

$1500 Single$3000 Family

Coinsurance 20% 35% 20%

Coinsurance Maximum$1400 Single$2800 Family

$3000 Single $6000 Family

None

Out of Pocket Maximum None None $3000 Single$6000 Family

Office Visit – Primary Care Providers

$25 Copay $20 Copay - adult$10 Copay - children < age 19

Deductible & Coinsurance

Office Visit - Specialist $45 Copay $40 Copay– Adult $25 Copay - Children < age 19

Deductible & Coinsurance

Preferred Lab Benefit Yes Yes No

*Use of Non Network providers will increase your out of pocket cost.

Questions?Questions?