Insurance Planning | VI. Employee Benefits

Taft-Hartley Act 1947
Tax favored compensation -15% to 30% or more
Employer - Insurer contract
Low cost protection, Evidence of Insurability
Marketing Factors: Size, # of employees, Census
Experience- Loss ratio (premium Vs. claims)

  1. of COBRA, Pregnancy, Large Claims, FMLA, Deaths, Disability (duration/diagnosis).

Plan Design, Contribution basis, Participation
Employee/Employer retention
Legislation, mandated benefits

Indemnity Plan = Fee for Service reimbursement for injury or illness plan
Deductible, 80% benefit to Out of Pocket max/year Lifetime maximum = $1,000,000
HMO = Prepaid contracted (capitation) Managed Care plan
PPO = Indemnity with some Managed Care
POS= HMO Plus a PPO plan
EPO = HMO with little out of network (self funded)
CDHP = Consumerism

Drug Costs are increasing nation-wide at an alarming rate
Normative Trend (20%) has shown a doubling of costs every 5 years
Formulary- Mandatory, Voluntary, Buy-up, Rebates
Specialty Drugs - injectables
Retail, AWP, MAC, Mail Order, dispensing fees
Rationale: new drugs, aging population, ads direct to consumer, larger Rx mfg. sales force, generic industrial consolidation, reformulated generics to brand, emphasis on outpatient treatment
Medical Costs
Member Interventions

Indemnity, PPO, Discount Card
Deductible/Copayment $10 or $10/$20(exam/materials)
Exam/Lenses/ Frames (12/24/24)
Contacts $110/24 months
Lasik discount as specific centers
In network/Out of Network versus flat dollar reimbursement
Wholesale vs retail
Order of Payment when two or more group health plans exist
Benefits under all plans limited to 100% of covered expenses
Prevent over-insurance and duplication of benefits
Based on rules by Nat’l Assoc. of Insurance Commissioners (NAIC)
Employee coverage primary over dependent coverage
Dependent children – married parents based on birthday rule
Parents not married, separated, divorced and no court decree:

  • parent’s plan with custody pays first
  • step-parent’s plan pays second
  • parent’s plan without custody pays third
  • step-parent’s plan without custody pays last

Domestic Partners –new legislation (State, County, City)


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