UGA RMIN 4000 test 4 QUESTIONS &
ANSWERS(RATED A+)
5 types of employee benefits - ANSWER 1. Medical expenses
2. Loss of income due to disability
3. Loss of income due to death
4. Loss of income due to retirement
5. Loss of income due to unemployment
Medical expenses - ANSWER -health insurance
-FSAS/HSAS (pre-tax health savings account)
-workers comp.
Loss of income due to disability - ANSWER -occupational disability: workers comp/lost
wages
-non-occupational disability: --sick leave/paid time off (PTO)- 1-2 weeks
--short term disability (STD): about 1 week to 3 months: about 60% wages
--long term disability (LTD): > 3 months: about 60% wages
Disadvantages of Group Insurance - ANSWER 1. inflexible of individuals
2. must be employed to get it (lose job, lose ins.)
3. not always available
4. may get ins. you wouldn't otherwise get
health insurance - ANSWER protection against financial losses that result from medical
bills due to injury and/or illness
incentives for the patient - ANSWER -health insurance lowers "user price" of HC- MH
(Rand)
-less incentive to act as a traditional consumer
incentives for providers - ANSWER -payment system traditionally based on fee-for-
service (FFS) reimbursement
-for every service, separate fee paid
-financial incentive: max. # services
(patients with insurance) + (providers paid FFS) = increased utilization of HC -
ANSWER ** over-utilization borne primarily by insurers, who pass costs on to ERs and
EEs
Global issues that contribute to these high HC costs - ANSWER 1. advances in
technology- imaging, robotics, organ transplants
2. aging population
, 3. behavioral-related factors- smoking, high cholesterol, obesity, diabetes
4. 3rd party financing- no incentive to control cost, over-utilization
Issues in the US that contribute to high HC costs - ANSWER 5. ER-sponsered health
insurance- individual coverage expensive, difficult for individuals to obtain, -favorable
tax treatment: premiums "feel" lower than they are
6. FFS provider- financial incentive to increase utilization, -few incentives to reduce
costs or increase efficiency
7. high admin costs- complex billing systems, -lots of paperwork, different for each
insurer
8. lack of transparency in cost and quantity -no centralized prices, -limited resources for
providers to evaluate costs
9. "cost shifting" by Medicare/Medicaid- low payments to providers, -providers must
charge private insurers more to make up for it
10. Legal system- medical malpractice lawsuits- "defensive medicine"
Types of cost-sharing - ANSWER 1. coinsurance and deductibles- deductibles are
aggregate (annual), -coinsurance applies after annual deductible is met (when ded.
balance = $0)
2. copay: fixed single payment at time of visit- EX. $30 each visit, does NOT reduce
remaining deductible
3. out-of-pocket mad (Max OOP): the most an insured will have to pay OOP in a single
year: EX. 80/20 coins., $1,000 deductible, $5,000 OOP max. 1 visit @ $30,000, insured
pays $1,000 ded. + 20%($30k-$1k)= $5,000. insurer pays $25,000
3 types of HC plans - ANSWER 1. Health Maintenance Organization (HMO)
2. Preferred Provider Organization (PPO)
3. Consumer Driven Health Plans (CDHD)
HMO (Health Maintenance Organization) - ANSWER -system that provides HC to their
members on a prepaid basis in a particular area: finances HC like all others, provides
HC
-process within HMO: EE enrolls in HMO, EE select a "primary care physician" (PCP)
from HMO's network of docs
-PCP acts as "gatekeeper": must receive a referral from PCP to see a specialist
Loss of income due to death - ANSWER -life insurance (UGA pays 25k for life ins.)
-survivor benefits under retirement plans: 401(k)- inheritance: continue pensions
payments for surviving spouse
-workers comp. death benefit
-social security death benefits
Loss of income due to retirement - ANSWER -defined benefit (DB) plan : pension
-defined contribution (DC) plan: 401(k) for-profit firm: 403(b) non-profit firm
-social security retirement benefits
Loss of income due to unemployment - ANSWER -unemployment insurance
ANSWERS(RATED A+)
5 types of employee benefits - ANSWER 1. Medical expenses
2. Loss of income due to disability
3. Loss of income due to death
4. Loss of income due to retirement
5. Loss of income due to unemployment
Medical expenses - ANSWER -health insurance
-FSAS/HSAS (pre-tax health savings account)
-workers comp.
Loss of income due to disability - ANSWER -occupational disability: workers comp/lost
wages
-non-occupational disability: --sick leave/paid time off (PTO)- 1-2 weeks
--short term disability (STD): about 1 week to 3 months: about 60% wages
--long term disability (LTD): > 3 months: about 60% wages
Disadvantages of Group Insurance - ANSWER 1. inflexible of individuals
2. must be employed to get it (lose job, lose ins.)
3. not always available
4. may get ins. you wouldn't otherwise get
health insurance - ANSWER protection against financial losses that result from medical
bills due to injury and/or illness
incentives for the patient - ANSWER -health insurance lowers "user price" of HC- MH
(Rand)
-less incentive to act as a traditional consumer
incentives for providers - ANSWER -payment system traditionally based on fee-for-
service (FFS) reimbursement
-for every service, separate fee paid
-financial incentive: max. # services
(patients with insurance) + (providers paid FFS) = increased utilization of HC -
ANSWER ** over-utilization borne primarily by insurers, who pass costs on to ERs and
EEs
Global issues that contribute to these high HC costs - ANSWER 1. advances in
technology- imaging, robotics, organ transplants
2. aging population
, 3. behavioral-related factors- smoking, high cholesterol, obesity, diabetes
4. 3rd party financing- no incentive to control cost, over-utilization
Issues in the US that contribute to high HC costs - ANSWER 5. ER-sponsered health
insurance- individual coverage expensive, difficult for individuals to obtain, -favorable
tax treatment: premiums "feel" lower than they are
6. FFS provider- financial incentive to increase utilization, -few incentives to reduce
costs or increase efficiency
7. high admin costs- complex billing systems, -lots of paperwork, different for each
insurer
8. lack of transparency in cost and quantity -no centralized prices, -limited resources for
providers to evaluate costs
9. "cost shifting" by Medicare/Medicaid- low payments to providers, -providers must
charge private insurers more to make up for it
10. Legal system- medical malpractice lawsuits- "defensive medicine"
Types of cost-sharing - ANSWER 1. coinsurance and deductibles- deductibles are
aggregate (annual), -coinsurance applies after annual deductible is met (when ded.
balance = $0)
2. copay: fixed single payment at time of visit- EX. $30 each visit, does NOT reduce
remaining deductible
3. out-of-pocket mad (Max OOP): the most an insured will have to pay OOP in a single
year: EX. 80/20 coins., $1,000 deductible, $5,000 OOP max. 1 visit @ $30,000, insured
pays $1,000 ded. + 20%($30k-$1k)= $5,000. insurer pays $25,000
3 types of HC plans - ANSWER 1. Health Maintenance Organization (HMO)
2. Preferred Provider Organization (PPO)
3. Consumer Driven Health Plans (CDHD)
HMO (Health Maintenance Organization) - ANSWER -system that provides HC to their
members on a prepaid basis in a particular area: finances HC like all others, provides
HC
-process within HMO: EE enrolls in HMO, EE select a "primary care physician" (PCP)
from HMO's network of docs
-PCP acts as "gatekeeper": must receive a referral from PCP to see a specialist
Loss of income due to death - ANSWER -life insurance (UGA pays 25k for life ins.)
-survivor benefits under retirement plans: 401(k)- inheritance: continue pensions
payments for surviving spouse
-workers comp. death benefit
-social security death benefits
Loss of income due to retirement - ANSWER -defined benefit (DB) plan : pension
-defined contribution (DC) plan: 401(k) for-profit firm: 403(b) non-profit firm
-social security retirement benefits
Loss of income due to unemployment - ANSWER -unemployment insurance
