Today, health insurance is generally used to describe a form of insurance that pays for medical expenses. It is sometimes used more broadly to include insurance covering disability or long-term nursing or custodial care needs. It may be provided through a government-sponsored social insurance program, or from private insurance companies. It may be purchased on a group basis (e.g., by a firm to cover its employees) or purchased by individual consumers. In each case, the covered groups or individuals pay premiums or taxes to help protect themselves from high or unexpected healthcare expenses. Similar benefits paying for medical expenses may also be provided through social welfare programs funded by the government.
There are many types of health insurance plans available, including:
Health Maintenance Organizations (HMOs) — A health care system that assumes both the financial risks associated with providing comprehensive medical services (insurance and service risk) and the responsibility for health care delivery in a particular geographic area to HMO members, usually in return for a fixed, prepaid fee. Financial risk may be shared with the providers participating in the HMO.
• Indemnity plan — A type of medical plan that reimburses the patient and / or provider as expenses are incurred.
• Point of Service (POS) — An “HMO / PPO hybrid;” sometimes preferred to as an “open-ended” HMO when offered by an HMO. POS plans resemble HMOs for in-network services, services received outside of the network are usually reimbursed in a manner similar to conventional indemnity plans (EPGP, provider reimbursement based on a fee schedule or usual, customary, and reasonable charges).
• Preferred Provider Organizations (PPO) — An indemnity plan where coverage is provided to participants through a network of selected health care providers (such as hospitals and physicians). The enrollees may go outside the network, but would incur costs in the form of higher deductibles, higher co-insurance rates, or non-discounted charges from the providers.
• Self-Insured Plans: A plan offered by employers who directly assume the major cost of health insurance for their employees. Some self-insured plans bear the entire risk. Other self-insured employers ensure against large claims by purchases stop loss coverage. Some self-insured employers contract with insurance carriers or third party administrators for claims processing and other administrative services; other self-insured plans are self-administered. Minimum premium plans are included in the self-insured health plan category. All types of plans (conventional indemnity, PPO, EPO, HMO, POS, and PHOs) can be financed on a self-insured basis. Employers may offer both self-insured and fully-insured plans to their employees.
Consumer-Directed Health Plans (CDHP) is a type of health care financing designed to reduce health care insurance spending by providing a financial incentive for consumers to choose the best health care value.
One example of a CDHP is:
• Health Savings Accounts (HSA) — The Medicare Prescription Drug, Improvement and Modernization Act of 2003 authorized the establishment of health savings accounts (HSAs), effective January 1, 2004. In addition to tremendous tax benefits, these accounts provide a means to finance healthcare costs with dollars you are already spending.
How they work — Health Savings Accounts are composed of two parts, a “qualified” High-Deductible Health Plan (QHDHP) and a Health Savings Account (HSA). The QHDHP is provided by the insurance carrier, and meets the Federal guidelines for qualification (i.e. a deductible of no less than $1,150 for individuals and $2,300 for families). As a result of the higher deductibles, the monthly premiums are drastically reduced (as compared to fully-insured, low or no-deductible plans). The HSA is a tax-exempt trust or custodial account (bank checking account) that you set up with a qualified HSA trustee. It’s an account that you own, and it’s used to deposit tax-preferred contributions by you, and to pay qualified medical expenses you and your family members incur. The accounts are portable, and the contributions remain in the account FROM YEAR TO YEAR UNTIL YOU USE THEM!! This is in stark contrast to traditional insurance plans that start over from scratch each year, WHETHER YOU USE THE INSURANCE OR NOT!!
Tax benefits:
Contributions to the HSA (limited to $3,000 for an individual or $5,950 for a family for 2009) are fully deductible from gross income, EVEN IF you do not itemize deductions. If you are 55 years of age or older, you are allowed an additional $1,000 in catch-up contributions. In addition, the contributions are not subject to the 7.5% AGI floor for medical expense deduction. Earnings in the account are completely tax-free, provided that distributions from the account are used for qualified medical expenses (i.e. allowed by Section 213 (d) of the Internal Revenue Code if the right conditions are met).
Eligibility — Anyone can set up an HSA, but there are a few restrictions:
•You must not be eligible for or enrolled in Medicare
•You cannot be claimed as a dependent on someone else’s Federal income tax return
•You cannot have other general health insurance coverage
•You cannot make contributions after attaining age 65
Recordkeeping — You need to keep receipts, EOBs (summary of claims provided by the insurance carrier), etc. for all covered medical expenses you incur. These do not need to be filed with your annual income tax return, but should be kept with your tax records. In addition, you will receive FORM 1099-SA from your trustee, which details distributions made from your account during the year. The amounts shown on FORM 1099-SA need to be reported on FORM 8889 (filed with your FORM 1040). It is important that good records are maintained, because distributions used for other than qualified medical expenses are subject to income tax and a 10% penalty. In addition, excess contributions to your account are subject to a 6% excise tax.
Another example of a CDHP is:
• Health Reimbursement Accounts (HRA) — An HRA allows your employer to set aside a specific pool of money to reimburse each employee’s out-of-pocket medical expenses. These health care expenses may include deductibles, copayments, prescription medications, dental services and other health related expenses that may not be covered under the healthcare plan. And, the money contributed by your employer is tax-free to you.
High deductible plans are combined with an employer-funded “Health Reimbursement Arrangement” (HRA) to cover health care expenses. A medical spending account is set up with a predetermined amount of funds, which can be used to pay for out-of-pocket member expenses. Unspent funds are rolled over to the next year, thus increasing employees’ total account fund.
Employees make the decision on where and how to spend their health care
funds, while still benefiting from the provider discounts. Typically, Online tools help employees keep track of their fund balance and manage their benefits. Typically, there is Freedom to select any doctor and in most cases, no referrals are necessary. 100% coverage or a small copay coverage for routine preventive care is required when using in-network providers. No claim forms to fill out for in-network and out-of-network services when rendered by participating providers.
Large national network of preferred and participating providers through
the providers. The CDH product manages health care costs better than other traditional plans through its cost-sharing design that gives employees increased financial responsibility while empowering them with the information and tools required to manage their own health. It promotes improved health outcomes by: financially encouraging investment in healthy behavior; providing health and wellness information; offering first dollar coverage (no deductible) for preventive care services; assisting employees most at risk of disease and chronic illness through care management services; and making innovative technologies available for total benefit management by employees. The flexible product design, based on the popular health care, offers employees more choices in the selection of their
providers and the freedom to see providers outside the health care network. Health care network providers are contracted to offer the insurance plans greater
discounts on their services and are reimbursed according to a negotiated fee schedule.
These discounted savings are passed on to employees each time they use a health care provider and in so doing employees reduce their out-of-pocket costs.
Defined Benefit Plans: Employers selects a set amount of money aside for
each person based on a category, level of service, years of service,
ect. The employees select their own individual plans; thus taking the
administrative requirements away from the employer.
OTHER OPTIONS:
Mini Med Health Insurance Plans — Mini med health insurance plans are among the fastest-growing avenues of medical coverage for part-time, temporary, and hourly wage employees. Many employees who do not qualify for group coverage are taking advantage of the opportunity to obtain the minimal benefits afforded in mini med policies. It is critical that employees understand that this is not a major medical plan, and as such, the coverage is limited.
As companies are dropping comprehensive group health insurance plans, more employers are turning to the option of the low-cost mini med plans. The major hurdle in providing quality, affordable insurance plans is in the communication of plan details to the employee. There must be an understanding of the limitations of the policy so the employee knows fully what he or she is purchasing. Click here for more details
Short-Term Medical Plan Options:
International Plans — Direct Marketed Life, Accident and Supplemental Health to individuals outside the U.S. Products include personal accident, disability and supplemental health products – such as cash for hospital stay and critical illness diagnosis, term and variable life insurance and credit protection. We also maintain in-house expertise in alternative distribution, such as telemarketing, bancassurance and other direct marketing techniques.
Global healthcare plans tailored for Expatriate Benefits programs. — Products include medical, dental, behavioral, disability vision, business travel and life insurance and wellness programs for employees of multinational companies working on short- and long-term assignments outside their home country. We are the world’s largest provider of employer sponsored health care benefits and services for globally mobile employees.
Private medical insurance (PMI) plans for local employers in key countries. — Plans include healthcare and medical care management services, including medical, dental and vision insurance, along with wellness programs and local cash plans. We customize programs to accommodate government regulations and business requirements.
Following are some of the providers we recommend:
o Aetna
o American General Life Insurance
o Assurant
o Aflac. com
o Amerihealth
o Ameritus
o Anthem
o Brokerage Concepts
o Carefirst
o Ceridian Benefits
o Cigna
o Clientfirst
o Coventry
o Harvard Pilgrim
o Healthnet
o Horizon BCBS
o Humana
o Kaiser Permanente
o Jefferson Pilot
o Lumenos
o Mamsi
o Meritan Health
o Mutual of Omaha
o Oxford Health
o Principal
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