Employee Benefit and Planning

Employee Benefit and Planning

Chapter 12

What is the term PPO stands for? Preferred Provider Organization

What is the Characteristics of PPO? Tends to be used in two ways. One way to apply to health care providers that contract with employers, insurance companies, union trust fund, third-party administrators, or others to provide medical care services at a reduced fee. PPO may be organized by the Providers themselves or by other organizations, such as insurance companies the Blues. Like HMO they may take the form of group practices or separate individual practices, they provide a broad array of medical services such as PhysicianÐŽ¦s services, hospital care, laboratory costsÐŽK or they may be limited to hospitalization or physicianÐŽ¦s services. The benefit plans that contract with PPO to obtain lower cost care for plan members.

How PPO+HMO differ? First the preferred providers are paid on a fee for a service basis as their services are used. Second employees and their dependants are not required to use the practitioners or facilities that contract with PPO; rather choice can be made each time medical care is needed, and benefits are also paid by nonnetwork providers, but employees are offered incentives to use network providers; they include lower or reduced deductibles and co-payments as well as increased benefits. Most PPOÐŽ¦s do not use primary care physician as a gatekeeper; employees do not need referrals to see specialists third PPO do not monitor their preferred Providers as closely as HMOÐŽ¦s. However those that operate as traditional HMO generally provide medical expense coverage at slightly lower cost than traditional PPOÐŽ¦s.

Chapter 13

Know what HSA are? Improvement and modernization act established (HSA)= are savings account for use with high deductible medical expense plans and from which certain unreimbursed medical expense can be paid it is a personnel savings account fully owned by the account holder. Participation can be limited to individual or include dependents and the account can be used to pay unreimbursed medical expenses. It must be funded and a qualified trustee or custodian under the same rules as MSA holds the funds

Know eligibility rules? (HSA) can be established by employees and self-employed and anyone else who meet the following rules for qualification:

„X The individual must be covered by a high deductible health plan.

„X The individual must not be covered by another health insurance plan

„X The individual is not eligible to be claimed as a dependent on another personÐŽ¦s federal income tax return.

„X The individual is not entitled to Medicare benefits because of attaining age 65 or disability

„X The purpose of (HSA): in the case of individual coverage, the deductible must be at least $1000 and annual out of pocket cannot exceed $5000

„X In the case of family coverage, the deductible must be at least $2000, and annual out of pocket can not exceed $ 10,000

Know contributions limits? Contributions to (HAS) for a self-employed or unemployed are made directly by that person. The employer, the employee or both can make contributions. Family members can also make contributions on behalf of other family members. No contributions can be made if a person is eligible for Medicare. The maximum annual to an HS in 2004 is $2600 for an individual and $5,150 for families.

Know Tax rules? *Contributions by individual are deductible for federal income tax purpose even if the individual does not itemize deductions. Employer contributions are deductible by the employer and do not represent taxable income to the employee. If the employer makes contributions the same nondiscrimination rules apply.

Unused amounts in HS accumulate on a tax-free basis and carry over to subsequent years and it has no effect on the current years. Distributions from AH are tax free as long as they are used to pay for qualified medical expenses. Distributions for other reasons are subject to penalty tax 10%. Upon death if a spouse is a beneficiary or if the beneficiary is anyone else the beneficiary must include the fair market value of the account in his or her gross income for tax purposes.

Chapter 14

Know what is no loss no gain means or Group discontinuance replacement laws? A state law that prohibits a new insurance company denying(by using a preexisting-condition clause) the continuing claims of persons who were covered under a previous group insurance plan if these claims would otherwise be covered under the new contract