Fully-insured verse self-funded plans - ANSWERSfully insured plans: contractual relationship with one or
more insurance companies to provide services for employees and qualified dependents
self-funded plans: the employer chooses benefits to offer, pays for claims, and assumes risk
Fully insured plans (individual vs. group coverage) - ANSWERSinsurance companies assume the risk for
paying medical claims, and insurers administer the plan
individual coverage: a person purchases health insurance outside the employment setting for themselves
and their dependents
group coverage: an employer-sponsored health-care plan extends coverage to most or all employees
Types of group plans: - ANSWERSsingle-employer arrangement: an employer arranges for group
coverage of all employees under one policy
pooled coverage: an employer pools money with other employers to provide coverage for its employees
under one policy. Oftentimes, employers in the same industry with similar workforces use pooled
arrangements. Employer contributions are based on a percent of payroll, cents per hour, or dollar
amount per worker, per week or per month
Multiple employer trust: this arrangement is made for employers with relatively small workforces. A
singe master trust holds each employer's contributions, and premiums are paid from the trust
,Voluntary employee beneficiary association: this arrangement permits tax-deductible contributions to a
trust to fund health-care benefits or other types of employee benefits. The return on investment of
contributions is also tax-free
Multi employer (taft-Hartley) plans: multiple employers sponsored by small companies within certain
industries such as construction
Fully insured plans -Premiums - ANSWERSThe insurance policy specified the amount the insurer pays for
medical claims
Employers pay a premium to establish and maintain health-care plans
How do insurers determine premiums?
- plan provides use mortality tables and morbidity tables as well as experience ratings to determine
terms and premium amounts - known as underwriting
- mortality tables: indicate yearly probabilities of death on such factors as age and sex
- morbidity tables: express annual probabilities of the occurrence of health problems
- experience ratings: specific the incident, type, and finical cost of insurance claims for groups. Premiums
will increase for employers whose employees experience greater incidences of hospitalization and
surgical procedures
Self-funded plans - ANSWERSunder self-funded plans, the employer offers benefits, pays claims, and
assume all the risk
- employers pay claims directly from their assets to medical services
- self-funding makes sense when covering employee medical expenses is less than insurance coverage
, Companies can offer health-care coverage by: - ANSWERSfree-for-serine plans
alternative managed care plans (HMOs, PPTs, etc.)
Consumer-driven health care
Any of these can be fully insured or self-funded by the employers
Multiple-payer system verse single-payer system - ANSWERSU.S. health care is a multiple-payer system
- more than one party (government, employers, employees, individuals not currently employed) is
responsible for coverage
Single-Payer system, also called universal health-care systems are
- administered and regulated by the government
- the government ensures that all of its citizens have access to quality health care regardless of their
ability to pay
Origins of Health Care Benefits - ANSWERSPredecessors appeared in the late 1800s for mining and
railroad workers
- companies hired doctors to provide medical services to employees
The great depression in the 1930s gave us:
- social security act of 1935
- widespread unemployment
- non-profit blue cross was established
- for-profit companies began fee-for-service-plans
World War II gave us wage freezes
- benefits expanded to promote productivity
- welfare practices were established --> among those were health-care plans
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