Chapter 45
HEALTH INSURANCE
LEARNING OBJECTIVES:
A. Have a general understanding of group health care plans
B. Know key aspects of continuation of health care coverage under
COBRA
C. Understand issues related to continuing health coverage for retirees
REVIEW:
This chapter introduces group health insurance benefits. HMOs and HSAs will be
discussed more completely in other chapters. Basic plan design is covered by
identifying the core plan types. The section on benefit structure identifies
attempts at cost limitation: deductibles, coinsurance, and maximum coverage
limits. Plan funding methods are covered next. The material on eligibility and
coverage looks at three areas: internal revenue code eligibility and coverage
requirements, COBRA continuation of coverage, and continuing health coverage
for retirees. Tax implications are discussed, along with a referral back to Chapter
12 to see ERISA requirements for welfare benefit plans. After a section on where
to learn more, the chapter closes with a question and answer section, with
special emphasis on COBRA and retiree benefits.
CHAPTER OUTLINE:
A.
B.
C.
D.
E.
What Is It?
Plan Design
Benefit Structure
Plan Funding
Eligibility And Coverage
1. Internal Revenue Code Eligibility and Coverage Requirements
2. COBRA Continuation of Coverage
3. Continuing Health Coverage for Retirees
1
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F.
G.
H.
I.
J.
Tax Implications
ERISA And Other Requirements
Where Can I Find Out More About It?
Questions An Answers
Chapter Endnotes
FEATURED TOPICS:
Group medical insurance (health care plans)
FIGURES:
Figure 45.1 ABC Corporation Employee’s Medical Benefit Plan Continuation of
Coverage
Figure 45.2 Financing of Retiree Medical Benefits
CFP® CERTIFICATION EXAMINATION TOPIC:
Topic 29: Group medical insurance
A. Types and basic provisions
1)Traditional indemnity
COMPETENCY:
Upon completion of this chapter, the student should be able to:
1. Have a general understanding of group health care plans
2. Know key aspects of continuation of health care coverage under
COBRA
3. Understand issues related to continuing health coverage for retirees
KEY WORDS:
health insurance, basic plan, major medical plan, comprehensive plan,
deductible, all-causes deductible, per-family deductible, per-cause deductible,
coinsurance, maximum coverage limit, commercial insurance company, Blue
Cross/Clue Shield, self insurance, Consolidated Omnibus Budget Reconciliation
Act (COBRA), pay as you go, earmarked corporate assets, incidental qualified
plan benefit (401(h))
Chapter 45
DISCUSSION:
1. Discuss the various methods of funding a health care benefits plan.
2. Discuss implications of coverage continuation under COBRA and for
retirees.
QUESTIONS:
1. Which of the following are the major categories of postpaid health care plans?
(1) health maintenance organization
(2) basic plan
(3) major medical plan
(4) comprehensive plan
a.
b.
c.
d.
(1) only
(1) and (2) only
(1) (2) and (3) only
(2) (3) and (4) only
Chapter 45, p. 344
2. Which of the following are elements of commercial health insurance
premiums?
(1) return on insurer’s capital
(2) state premium taxed
(3) risk charges
(4) mortality charges
a.
b.
c.
d.
(1) and (3) only
(1) (2) and (3) only
(2) (3) and (4) only
(1) (2) (3) and (4)
Chapter 45, p. 344
3. What is the maximum number of months allowed for exclusion of a participant
due to a preexisting condition?
a.
b.
c.
d.
3
6
12
18
Chapter 45
Chapter 45, p. 345
4. Under which of the following situations must an employer generally provide
the option to continue an employee’s health coverage under COBRA?
(1) legal separation of the covered employee
(2) the employer terminates the health plan for all employees
(3) a child ceasing to be a dependent for plan purposes
(4) leave under FMLA where the employee returns to work
a.
b.
c.
d.
(1) and (3) only
(1) (2) and (3) only
(2) (3) and (4) only
(1) (2) (3) and (4)
Chapter 45, p. 346
ANSWERS:
1. d
2. b
3. c
4. a