Employer Provided Health Insurance

1. Mr. Woodington’s Money Management II Employer Provided Health Insurance

2. What We’re Covering Today • Review of Basic Insurance Concepts • Employer Provided Health Insurance Overview • How HMOs Work • How PPOs Work

3. Basic Insurance Concepts • What is Risk? • Risk = The chance of loss or injury • What is insurance? • A Risk Management strategy : Shifting Risk • Transfers your risk to a larger group (sharing the risk) • Bases off of statistical information • As we remember: RISK IS EVERYWHERE!!! • Why is it important? • Provides Peace of Mind (Before) & Financial Security (After)

4. Basic Insurance Concepts • How do we pay for insurance? • Premium – The monthly/yearly cost of insurance – The bill • Deductible – The out of pocket expense once peril occurs • Must be paid before insurance coverage begins • Not a part of all insurance programs! • Co-Insurance – Not in every insurance plan! Expressed as a percentage of total cost. • Co-Pays – NEW CONCEPT! Not in every insurance plan. Set dollar limits policyholder must pay out of pocket for select services

5. Basic Insurance Concepts • How do I get me some of that there insurance? • Three providers • Individual • Government • Employers

6. Employer Provided Health Insurance • Insurance is a group venture in nature. Employer provided health insurance can be viewed as a group-group venture! • Different Forms • Managed Care • HMOs vs. PPOs • Cafeteria Plans • Health Savings Accounts

7. Managed Care • Provides comprehensive coverage for employees • Typically the cheapest way for employers to provide this coverage for employees • Two main forms: • HMO (Health Maintenance Organizations) • PPO (Preferred Provider Organizations)

8. How HMOs Work • An HMO administrator (insurance company) puts together a network of: • Doctors • Hospitals • Other healthcare providers • The HMO negotiates lower prices for the healthcare. • In return, the providers receive more business

9. How HMOs Work • HMOs regularly review the care being provided to ensure the that healthcare is being used appropriately • When an employee enrolls in an HMO they choose a Primary Care Physician. • This doctor is their main contact with the healthcare system, and refers them to other professionals when they need specialist care.

10. HMO Advantages • No deductibles. Most HMO plans have no deductible — Employees aren't stuck with huge — and annoying — out-of-pocket costs. • Large provider networks. Most HMO plans have statewide networks that include several thousand doctors — so finding a conveniently located provider is easy. • Monitored care. The HMO “pre-approval” process makes sure that care is being used properly… and that helps make sure premiums don't skyrocket.

11. How PPOs Work • Similar to HMOs • PPOs establish a network of doctors, hospitals, and other healthcare providers • Employees enrolled in PPOs are encouraged to use providers within their network, but are not required to • Using providers outside of the network will result in higher out-of-pocket costs for the employee

12. Advantages of PPOs • Employees have limited out-of-pocket costs • Employees have flexibility to get care outside the plan’s network • Low co-pays for employees to get care within the plan’s network

13. Disadvantages of PPOs • Some plans have high deductibles that have to be met before coverage starts • Employees pay more for care you receive outside the network • Employees’ co-pays won’t be as low as other managed care plan

14. Wrap-Up & Review • Employer provided insurance has different forms • HMOs and PPOs are the two most popular forms of Managed Care Plans • HMOs provide employees a smaller set of options but are effectively cheaper on out of pocket expenses • PPOs provide employees more options but may cost the employee more out of pocket