AHM 250- Introduction To Health
Management (9-13) Questions And
Answers Latest Update
consumer-directed health plan (CDHP), - Answers a health plan
design that combines financial incentives with information about cost and
quality to help consumers make better-informed decisions about their
healthcare. CDHPs typically have two components:
• A high-deductible (or "catastrophic") health plan (HDHP). Such a plan
does not pay for the first few thousand dollars of healthcare expenses (the
deductible) but usually covers most if not all costs above this amount.
• A tax-advantaged personal healthcare account. Account funds can be
used to pay for healthcare expenses before the deductible is satisfied, and
such funds are generally exempt from taxation.
Flexible spending accounts (FSAs), - Answers a type of benefit
arrangement offered under a employer's cafeteria plan, were introduced in
the late 1970s and are the oldest type of personal healthcare account.
FSAs are established by employers, and employees may elect to
participate in them for reimbursement of certain expenses while saving
money on taxes. There are dependent care FSAs (used mostly for child
care expenses) and healthcare FSAs for uninsured (out-of-pocket) medical
expenses.
Archer medical savings accounts (MSAs) - Answers are tax-exempt
trust or custodial accounts authorized as a demonstration project by the
, Q&A
Health Insurance Portability and Accountability Act of 1996 (HIPAA). MSAs
were limited to helping self-employed individuals and employees of small
businesses obtain reimbursement of medical care costs. Participants had
to enroll in an MSA-qualified high-deductible health plan.
Health reimbursement arrangements (HRAs) - Answers were
introduced by employers in 2000 (although they were not officially
recognized as HRAs until 2002).
-don't earn interest
-HRA funds may (at the option of the employer) be rolled over from year to
year tax-free, increasing their appeal. There is some limited portability
The Medicare Modernization Act (MMA) of 2003 - Answers
amended the Internal Revenue Code to provide an income tax deduction to
individuals for amounts contributed to a health savings account (HSA),
accelerated the consumer-directed healthcare movement.
health savings account (HSA) - Answers -Funding by both
employees and employers
-direct employee ownership of the account
-true account portability
-year-to-year rollover,
- investment opportunities.
-accelerated by MMA 2003
-HSA-qualified HDHPs are subject to federal rules that specify minimum
deductibles and limit annual out-of-pocket expenses
, Q&A
-• be covered by a qualified high-deductible health plan (one that meets
federal requirements);
• not have other broad health coverage that is not an HDHP (Limited
coverage such as accident insurance, dental or vision benefits, workers'
compensation, disability income insurance, or long-term care insurance is
permitted.);
• not be enrolled in Medicare (Medicare beneficiaries cannot contribute to
an HSA, but they may spend money contributed to an HSA before they
enrolled in Medicare.); and
• not be claimed as a dependent on someone else's tax return.
High-Deductible Health Plans - Answers Most CDHPs are based on
a high-deductible health plan (HDHP), a plan with a considerably higher
deductible than traditional insurance products
-have lower premiums than traditional plans, and the money saved can be
placed in a personal healthcare account.
-Some HDHPs do not apply the high deductible to preventive care, which
has first-dollar coverage or a low copayment.
Flexible spending accounts (FSAs) - Answers were introduced in the
late 1970s and are the oldest type of CDHP account. FSAs are established
by employers to cover uninsured healthcare expenses or dependent care
expenses of their employees. FSAs may be funded by the employee with
pretax dollars, by the employer, or both.
• "Use-it-or-lose-it" provision. Balances in an FSA may not be rolled over
from year to year. Employers have the option of allowing funds for one year
to be used for expenses incurred in the first two and a half months of the
following year.
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