| Consumer Driven Health Plan
Also known as consumer-directed care (CDC). These plans redirect health
plan incentives by requiring a greater role for employees in choosing medical
caregivers and health coverage and/or in designing their own benefit
package while assuming greater financial risk. CDCs typically involve the
combination of a high deductible group health policy with a Health
Reimbursement Arrangement to cover small routine medical expenses. Web-
based medical information tools are typically a key element of consumer-
driven plans and are viewed as essential for creating more-knowledgeable
consumers of health care.
Dependent Care Flexible Spending Account (a Section 125
option)
Employer-sponsored flexible benefit plans permit employees to use pretax
(tax free) dollars from their paychecks to pay the cost of care for children or
elderly dependents up to legislated limits and within specific guidelines.
Employee Retirement Income Security Act of 1974 (ERISA)
ERISA is a federal law that sets minimum standards for most voluntarily
established pension and health plans in private industry to provide protection
for individuals in these plans.
Federally Eligible Individuals (FEI’S)
These are individuals that are losing coverage under a group insurance plan
insuring between two and 50 employees and are uninsurable in the
individual commercial market due to pre-existing medical conditions.
Individuals meeting the qualifications as set forth by The Health Insurance
Portability and Accountability Act of 1996 are able to purchase a “guaranteed
issue” plan that does not require medical underwriting. The benefits of these
plans are regulated by HIPAA but are offered through commercial carriers.
Flexible Spending Account (FSA) (a Section 125 option)
Flexible spending accounts give employees the opportunity to set aside
money on a pretax basis for the reimbursement of eligible employee welfare
benefits. FSAs can be funded through salary reduction, employer
contributions or a combination of the two. For example, employees can
purchase additional benefits, pay health insurance deductibles and co-
payments, or pay for child care benefits with the money in their FSAs (SEE
Dependent Care Flexible Spending Account).
Health Insuring Corporation (HIC) (formerly known as
HMO’s)
A health insurance corporation is a prepaid medical group practice plan that
provides a comprehensive predetermined medical care benefit package. The
HIC can be sponsored by the government, medical schools, hospitals,
employers, labor unions, consumer groups, insurance companies, and
hospital medical plans. HIC’s can be both insurers and providers of health
care.
Health Purchasing Group (HPG) (Proposed in Ohio)
A Health purchasing group is an organization that is created by an
association for the purpose of purchasing health insurance for member
employers. HPGs may be fully insured or elect to self-insure the medical
plans offered to member employers. If enacted, Health purchasing groups
would be able to offer mandate free insurance plans.
Health Underwriter
The phrase health underwriter has three meanings: (1) the company that
receives the premiums and accepts responsibility for fulfilling the policy
contract, (2) the company employee who decides whether or not the company
should assume a particular risk and/or what the appropriate premium should
be or (3) the agent who sells the policy to the consumer.
High Risk Pools
High risk pools are state-created non-profit insurance programs that offer
health insurance to people with chronic health conditions who can not
purchase health insurance from other sources. They are funded by insured’s
premiums in addition to assessments. Rates are higher than rates for similar
individual market coverage but are capped by law.
The Health Insurance Portability and Accountability Act of
1996 (HIPAA)
HIPAA includes provisions for offering portability and guarantee issue of
employer sponsored health insurance for employers that have at least two but
less than 51 employees. HIPAA also requires standardized electronic
transactions of health information and provides new safeguards to protect the
security and confidentiality of health information. The final privacy regulations
covers health plans, health care clearinghouses and those health care
providers who conduct certain financial and administrative transactions (e.g.,
enrollment, billing and eligibility verification) electronically. Most health
insurers, pharmacies, doctors and other health care providers are required to
comply with these federal standards, which became effective April 14, 2003.
As provided by Congress, certain small health plans have an additional year
to comply.
Health Reimbursement Account (HRA)
These are accounts from which consumers draw to make health care
purchases – typically on a pre-tax basis. HRAs are funded by employers (plan
sponsors) on a per employee allocation basis and remain the collective
property (asset) of the employer. Qualified employees are granted access to
their individual HRA allocations for bona-fide medical products and services.
HRAs offer far greater flexibility than medical savings accounts (MSA) with
regard to underlying health plan design but typically require more
administrative and legal expense to establish.
Managed Care
The term managed care refers to health care systems that integrate the
financing and delivery of appropriate health care services to covered
individuals. Managed care systems arrange with selected providers to furnish
a comprehensive set of health care services, explicit standards for selection of
health care providers, formal programs for ongoing quality assurance and
utilization review, and significant financial incentives for members to use
providers and procedures associated with the plan. Managed care
organizations offer medical providers the promise of a steady flow of patients
in exchange for a contract guaranteeing fees for each service to be provided.
Medical Payments Insurance
Medical payments insurance is coverage, available in various liability
insurance policies, in which the insurer agrees to reimburse the insured and
others without regard for the insured's liability for medical or funeral expenses
incurred as the result of bodily injury or death by accident under specified
conditions.
Medicare
Medicare is the nation's largest health insurance program, is designed for
people 65 years of age and older, some disabled people under 65 years of
age, and people with end-stage renal disease (permanent kidney failure
treated with dialysis or a transplant). Medicare covers nearly 40 million
Americans.
Mandate
A mandatory order or requirement for an insurance policy to provide a stated
benefit under a state law.
Medical Savings Account (MSA)
A medical savings account is a savings account that can be used to pay
medical expenses not covered by insurance for employees of small
businesses or self-employed individuals who are covered under health plans
with high deductibles. Employers with small group MSAs may make
contributions to the savings account on behalf of employees, or employees
may make the entire contribution. Employee contributions to the plan are tax-
deductible. MSAs were established by HIPAA in 1996 and took effect January
1, 1997 on a four-year trial basis. MSA’s differ from HRA’s because they can
be funded by either the employer or the employee, but not both.
Trade Adjustment Act (TAA)
The Trade Adjustment Assistance program is a federal program established
under the Trade Act of 1974, as amended. The TAA Program provides aid to
workers who lose their jobs or whose hours of work and wages are reduced
as a result of increased imports. TAA offers a variety of benefits and
reemployment services to assist unemployed workers prepare for and obtain
suitable employment. Workers may be eligible for training, job search and
relocation allowances, income support and other reemployment services. The
TAA program is administered by the Employment and Training Administration
of the U.S. Department of Labor. States serve as agents to the Labor
Department in administering the TAA program.
Effective December 2002 TAA eligible individuals became eligible for a 65%
tax credit on the purchase of certain health insurance plans. Effective August
2003, the tax credit is refundable which means that it can be used
immediately to offset the cost of the health insurance. Final rules and
regulations are to be announced.
Tort Reform
A tort is a civil wrong or wrongful act, whether intentional or accidental, from
which injury occurs to another. Torts include all negligence cases as well as
intentional wrongs, which result in harm. Tort lawsuits result in more civil
litigation than any other category.
Medical malpractice awards and product liability awards have been blamed
in recent years for skyrocketing insurance costs and have been targeted for
reform by both state and federal legislators. The attempt of the reform is to
limit the dollar amount of the awards.
Uninsured Tax Credits
Uninsured tax credits allow for a one dollar federal tax credit that can be
applied to (i.e. subtracted from) a dollar of premium toward the purchase of a
health insurance policy (to a predetermined maximum, e.g., $1,000) for
qualified uninsured individuals who presently lack medical coverage.
Universal Health Care (or single payer system)
Is a single source/single payer system (typically overseen by one or more
government entities) for the provision and distribution of all health care
services over a given population regardless of employment or social status.
Such systems exist currently in Canada and Great Britain.
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