HACE 2100: Test 3
58 Cards in this Set
| Front | Back |
|---|---|
|
how is healthcare different from other services?
|
-need v. luxury
-unpredictability
-asymmetry of info
|
|
modes of paying for healthcare
|
-out of pocket payments
-individual private insurance
-employment-based private insurance
-government financing
|
|
out of pocket payment
|
o Most common in 1st half of 20th century
o Pay physicians and other healthcare professionals in cash or through barter
|
|
individual private insurance
|
o Third party (insurer) is added to the picture
o Requires two transactions:
|
|
individual private insurance: 2 transactions
|
1. a premium payment from individual to insurance plan
2. a reimbursement payment from insurance plan to provider
|
|
employment based private insurance
|
o During WWII companies began to offer health insurance as a fringe benefit; after the war, unions picked up the trend
o Government viewed as a tax deductible business expense and employer portion is not taxable income to the employee
|
|
factors possibly related to rise in healthcare
|
• Increasing use of costly high-tech medicine
• High cost of treating illnesses
• Aging of population
• Fraudulent practices by some providers
• Administrative cost of complying with government regulations
• Large number and high cost of malpractice suits
• Practice of defensive med…
|
|
physicians generally base their fees on
|
• The nature, extent, and complexity of service
• The time involved
• The office overhead
• The experience and expertise of practitioner
• The area in which the physician practices
• The fees customarily charged by others in the community
• The circumstances and economic status of t…
|
|
cost control methods: insurance co.
|
- They can raise deductibles and copayment amounts
- Limit what they pay for each service
- Limit or exclude certain services
- Limit maximum total benefits
Excludes people with preexisting conditions
|
|
cost control methods: provider strategies
|
- Escalating cost and the prospect of greater government intervention
-Hospitals are merging and hiring large numbers of physicians, and developing integrated managed-care
|
|
cost control methods: employer strategies
|
- Most heath insurance is obtained through employers.
- As a result of rising health care cost many business are offering much less benefits
|
|
benefit changes
|
o Switch to managed-care plans
o Cut retiree benefits
o Requiring employees and retirees to pay part of the premium cost.
o Many employers are now becoming self-insured.
|
|
premium
|
- the periodic payment made on an insurance policy
- the amount you and/or your employer pay
- this is in addition to co-payments, coinsurance and deductibles, in exchange for insurance coverage.
|
|
deductible
|
- the initial amount NOT covered by an insurance policy and thus the insured’s responsibility
- usually determined on a calendar year; few plans on a per-illness or per-accident basis
- you must meet your deductible before your plan begins to pay benefits
|
|
Participation (Coinsurance)
|
- A provision stipulating that the insurer will pay some portion of the amount of the loss in excess of the deductible rather than the entire amount
- Stop-loss provision: Places a cap on the amount of participation required
- Differs from copayment
|
|
co-payment
|
a fixed dollar amount that you pay each time for certain services
|
|
styles of health insurance
|
-indemnity plan
-HMO
-PPO
-POS
-HDHP
|
|
Indemnity Plan
|
- Fee-for-service plan
- Healthcare provider is separate from the insurer
- Amount paid based on “usual, customary, and reasonable”
- Most flexible plan type of health plan
- A “plan of the past”
|
|
HMO (health maintenance organization)
|
- No annual deductible
- Low copayments
- Low premium
|
|
group HMO
|
o From a central location (larger cities)
o Cannot always choose physician and other medical personnel
|
|
individual practice association
|
o Physicians practice from their own offices and with hospitals that are affiliated with the IPA
o Have some choose over physician and hospitals
|
|
Preferred Provider Option (PPO)
|
- Specific, set schedule of fees
- Deductible
- Co-payments / Co-insurance
- Network for physicians/facilities/ancillary providers
- In-network vs Out-of-network payments
- Follow the rules to get most for your money – avoid balance billing
|
|
Point of service (POS)
|
Has some of the qualities of HMO and PPO plans with benefit levels varying depending on whether you receive your care in or out of the health insurance company's network of providers.
|
|
high-deductible health plan (HDHP)
|
- High Deductible (must satisfy entire deductible before payments)
- Low Premiums
- Typically pair with a health savings account
|
|
Things to DO when choosing healthcare
|
- Understand your choices
- Read written materials first
- Make a list of questions
- Ask questions
- Make an “educated” choice
|
|
Thing NOT to do when choosing healthcare
|
- Choose a plan based only on the premium cost
- Choose a plan without doing anything from the “Do List”
- Be afraid to ask questions
- Treat this decision lightly
|
|
Goals of Affordable Healthcare Act
|
- Cover >94% of all Americans
- Bars insurance companies from discriminating
- Creation of health insurance exchanges
- Tax credits and cost sharing for insured lower & middle income households
|
|
2010 implementation of affordable healthcare act
|
o Immediate access to insurance for the uninsured
o Eliminates life time limits on health insurance plans
o Dependent coverage extended to age 26
|
|
2011 implementation of affordable healthcare act
|
Employers need to disclose healthcare coverage costs in the W-2 form
|
|
2012-13 implementation of affordable healthcare act
|
o Health Flexible savings account contributions limited to $2500
o 2013 - $3,250 individual; 6,450 family
|
|
2014 implementation of affordable healthcare act
|
o Elimination of health insurance annual limits
o Establishment of health insurance exchanges
o Standardized health insurance packages
o Tax credits for individual purchase
o Choice through multi-state plan & nation wide health plans
o Penalty for being uninsured $95
|
|
Affordable Healthcare Act- Mandatory?
|
- Certain religious groups can opt out
- Many states filed lawsuits claiming mandatory coverage to be unconstitutional –Supreme Court decision
- No provision for reduction of insurance premiums or healthcare costs
|
|
3 dwellings of a typical family
|
- Starter home – low cost, small
- Full-nest home – high cost, more space
- Empty-nest – smaller, low upkeep
|
|
Macroeconomic factors
|
- Wide range of financing options
- Economic conditions
|
|
3 characteristics to consider when financing a home
|
• Mortgage loan principal
• Maturity or term of the loan
• Interest rate
|
|
Types of Mortgages
|
- Fixed Rate Mortgages
- Graduated Payment Mortgages
- Adjustable Rate Mortgages (ARM)
- Balloon Mortgages
- Growing Equity Mortgages
|
|
Advantages of fixed rate mortgages
|
• Stable payment
• Long-term tax advantages
• Shield from future interest rate increases
|
|
Disadvantages of fixed rate mortgage
|
• Interest rate higher
• Monthly payment higher
• No benefits if market interest rates decrease
|
|
Advantages of GPM
|
• Lower initial monthly payment
• Families may qualify for this when not others
• Known, moderate increases in monthly payments
Disadvantages of GPM
|
|
Disadvantages of GPM
|
• Higher total interest costs over life of loan
• No benefits if interest rates decrease
• Negative amortization
|
|
Negative amortization
|
- occurs when the mortgage interest rate rises but the mortgage payment remains the same.
- the mortgage payment does not cover the interest that is being charged for that month.
|
|
ARM
|
• Interest rates on ARM is made up of two parts: index and margin
• Index: measure of interest rates generally
• Margin: extra amount that lenders add
• Index+margin= ARM interest rate
• Frequency of rate change or adjustment interval
- Rate cap (x/y)
|
|
ARM Advantages
|
• Initial interest rate lower
• Initial monthly payment lower
• Some long-term tax advantages
• More available during certain periods
• Caps reduce uncertainty
• ARMs avoid the cost of refinancing to get lower rate
|
|
ARM Disadvantage
|
• Uncertainty about future interest rate and monthly payments
• Negative amortization
• May be higher total cost than fixed if rates increase
|
|
Hybrid ARMs
|
- A mix of a fixed-rate period and an adjustable-rate period.
- The interest rate is fixed for the first several years of the loan; after that, the rate could adjust annually.
|
|
Hybrid ARMs advantage
|
benefit from lower rate if borrower doesn’t expect to be in the home much longer than the fixed –rate period
|
|
Hybrid ARMs disadvantage
|
after fixed rate period the borrower assumes the interest rate risk; beware of prepayment penalty if you plan to refinance after fixed rate period
|
|
Interest only payment ARM
|
- Allows you to pay only the interest for a specific number of years.
- After that, you must repay both the principal and the interest over the remaining term of the loan.
|
|
Interest only payment ARMs advantages
|
benefit from lower payment if borrower doesn’t expect to be in the home much longer than the interest-only period
|
|
Interest only payment ARMs disadvantage
|
- after interest-only period the borrower assumes the principal and interest payments—much higher payment
- not accumulating any equity during the interest-only period (does not change the amount you owe on your mortgage
|
|
Payment option ARM
|
ARM that allows you to choose among several payment options each month.
|
|
Payment option ARM advantages
|
Flexible to deal with economic circumstances
|
|
Payment option ARM disadvantages
|
Potentially lose much of tax advantages (determined by which method used predominantly)
|
|
Balloon Mortgage advantages
|
• Initial interest rate lower
• Initial monthly payment lower
• Stable payment for several years
• For some families, may be easier to qualify for
|
|
Balloon Mortgages disadvantages
|
• Must refinance at Balloon time
• Uncertainty about getting a new loan at Balloon time
• May include no equity build-up
|
|
Growing Equity Mortgage
|
• Pre-payment is automatically planned
• Applies to conventional or fixed rate mortgage
|
|
Growing Equity Mortgage: advantages
|
allows homeowner to pay mortgage down more quickly (equity grows faster)
|
|
Growing Equity Mortgages: disadvantages
|
less flexible than just prepaying your fixed rate mortgage
|
HACE 2100: Exam # 3