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CEBS-GBA 2, Module 7 Questions & Answers(GRADED A+)

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ACA requirements for insurers - ANSWER(a) Insurers may no longer exclude members based on preexisting conditions. (b) Insurers may not place annual or lifetime caps on coverage. (c) All fully insured products must comply with a medical loss ratio (MLR) requirement. It mandates that health insura...

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  • October 9, 2024
  • 9
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
  • CEBS-GBA 2, Module 7
  • CEBS-GBA 2, Module 7
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CEBS-GBA 2, Module 7 Questions &
Answers(GRADED A+)


ACA requirements for insurers - ANSWER(a) Insurers may no longer exclude members based on
preexisting conditions.

(b) Insurers may not place annual or lifetime caps on coverage.

(c) All fully insured products must comply with a medical loss ratio (MLR)

requirement. It mandates that health insurance issuers in the individual and

small group markets and in the large group market spend at least 80% and 85%

of premiums, respectively, on health care activities (as opposed to administrative

functions).

(d) Coverage must be available to dependents until the age of 26.

(e) Benefits that discriminate in favor of highly compensated employees are

prohibited.



ACA requirements for self-funded plans - ANSWERACA treats self-funded health care plans just as it
does fully insured plans in many

respects. The bans on preexisting condition denials as well as annual and lifetime

caps apply to self-funded plans and fully insured plans. Both types of plans must

comply with nondiscrimination policies for highly compensated employees and offer

coverage extensions to dependents under the age of 26. All these requirements apply

regardless of employer size.



Affordable Care Act (ACA) requirements for employers - ANSWERACA requires companies with 50 or
more FTEs to offer health care policies that

meet specific criteria—or pay penalties. Although ACA does not impose this

requirement on firms below 50 FTEs, it does establish minimum conditions for

policies sold by health insurers to the firms under 50 FTEs. Also, employers under

50 FTEs are not required to contribute toward employee health care insurance costs.

, Attachment point - ANSWERSpecific stop-loss coverage limits the dollar amount on each employee's
health care

costs. Aggregate stop-loss coverage limits the dollar amount on the health care costs

of an entire employee population over a period of time.

As in traditional health insurance, employers are responsible for costs until a

deductible amount is met—beyond that point, they have no payment responsibility.

This point is known as the attachment point. Thus, the attachment point is the

deductible amount, and lower attachment points reduce the employer's financial

risk.



Benefits of self-funding - ANSWERThe three main advantages of self-funding for a small employer are
cost, flexibility

and freedom from potentially adverse effects of regulation. The first two existed

before ACA, whereas the final advantage resulted inadvertently from ACA and its

effects on the small group market.

A self-funded plan can offer financial advantages to an adopting employer. Total

costs are lower relative to fully insured product options in large part because

traditional insurance premiums include carrier marketing costs and profit margins—

factors that are not applicable to self-funded plans. In all, self-funded plans can save

10-25% in nonclaims costs relative to fully insured plans.

Self-funded plans allow greater flexibility in benefit package design and

reimbursement contracting with providers. A small employer can personalize a

benefits package to reflect the needs of its workers. For example, if an employer had

a workforce comprising a large number of smokers, it could include a rigorous

smoking cessation program in its benefit package that would otherwise not be

included in a fully insured health plan. Self-insured employers also have the freedom

to strike unique payment arrangements with providers that align incentives and

control costs

Perhaps most importantly, self-funding enables businesses to escape elements of

ACA that may adversely impact some small groups. In particular, small employer

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