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Premium
The amount charged by the insurer to insure against specified risks, usually paid on a
monthly basis.
Risk Assessnent
The process of modeling and calculating the expected expenses of one group of people
relative to others
Underwriting
A systematic technique for evaluating, selecting (or rejecting), classifying, and rating
risks.
Experience Rating
Risk rating based on historically documented patterns of claims
Community Rating
No underwriting involved, individuals pay the same premium regardless of age, gender,
or health status
cost sharing
Portion of the actual cost of medical services paid by the insured, in addition to the
premium
Deductible
the amount the insured must first pay before any benefits are payable by the plan
Co-payment
The amount the insured must pay each time health services are received
Co-insurance
A type of co-payment which is a percentage of the total health bill the insured must pay
each time health services are received
Stop-loss or catastrophic cap
The maximum out of pocket liability an insured person would incur in a given year
Group Insurance
* Obtained through employer, union, or professional organization
* Risk assumed by insurance plan, spread out among insured individuals
* Claims paid out of insurance plan premiums (paid by insured)
* tax advantages when it is gained through an employer
Self-Insurance
* Large employers assume risk and directly pay medical claims for their employees
* claims paid out of employer health plan trust (funded by employee and employer
contributions)
* employers exempt from federal premium tax
individual private insurance
* price and eligibility previously based on the risk indicated by each individuals health
status and demographics
* premiums higher than in group plans
* changes under new health reform law include modified community rating, elimination
of pre-existing conditions exclusions, and creation of Exchanges
, Managed care plans
* plan manages insurance, delivery, and payment functions
* a variety of mechanisms are used to monitor utilization and to reimburse providers
* examples: HMO and PPO plans
High-Deductible Health Plans (Consumer-Driven Health Plans)
* combine a savings option with a health plan carrying a high deductible
* lower premiums
* 2 main types: Health Reimbursement Arrangement & Health Savings Account
Medigap (Medicare Supplemental Insurance)
* Private health insurance
* Cover all or portion of Medicare cost sharing
Average out-of-pocket spending in 2021
$7000
Premium costs for single coverage (2022)
$7911/year
Premium cost for family coverage (2022)
$22463/yr old
How much have premiums for family coverage increased in the past 5 years?
20%
How much have premiums for family coverage increased in the past 10 years?
43%
How much have employee deductible plans increased?
55% in 2006 to 82% in 2019. Since 2022 deductibles have increased by 61%
Third party payers
Insurance companies, managed care organizations, and the government; two other
parties are patient and provider
2 Main Facets of the Payment Function
1) The determination of the methods and amounts of reimbursement for the delivery of
services
2)The actual payment after services have been rendered
Costs
The actual expenses associated with health care goods and services
Charge
Price for a service set by the provider
Fee Schedule
Index of charges listing individual charges for each service
Claim
Filed by provider to the insured to receive payment
Who is paying?
Government (CMS), Private Insurer, Out-of-pocket
Who is being paid?
Physician (Professional Services), Hospital (Facility), Combination of both, Outpatient
and Inpatient
Fee-for-service
Payment for each service
Fee-for-service: Cost-based
Premium
The amount charged by the insurer to insure against specified risks, usually paid on a
monthly basis.
Risk Assessnent
The process of modeling and calculating the expected expenses of one group of people
relative to others
Underwriting
A systematic technique for evaluating, selecting (or rejecting), classifying, and rating
risks.
Experience Rating
Risk rating based on historically documented patterns of claims
Community Rating
No underwriting involved, individuals pay the same premium regardless of age, gender,
or health status
cost sharing
Portion of the actual cost of medical services paid by the insured, in addition to the
premium
Deductible
the amount the insured must first pay before any benefits are payable by the plan
Co-payment
The amount the insured must pay each time health services are received
Co-insurance
A type of co-payment which is a percentage of the total health bill the insured must pay
each time health services are received
Stop-loss or catastrophic cap
The maximum out of pocket liability an insured person would incur in a given year
Group Insurance
* Obtained through employer, union, or professional organization
* Risk assumed by insurance plan, spread out among insured individuals
* Claims paid out of insurance plan premiums (paid by insured)
* tax advantages when it is gained through an employer
Self-Insurance
* Large employers assume risk and directly pay medical claims for their employees
* claims paid out of employer health plan trust (funded by employee and employer
contributions)
* employers exempt from federal premium tax
individual private insurance
* price and eligibility previously based on the risk indicated by each individuals health
status and demographics
* premiums higher than in group plans
* changes under new health reform law include modified community rating, elimination
of pre-existing conditions exclusions, and creation of Exchanges
, Managed care plans
* plan manages insurance, delivery, and payment functions
* a variety of mechanisms are used to monitor utilization and to reimburse providers
* examples: HMO and PPO plans
High-Deductible Health Plans (Consumer-Driven Health Plans)
* combine a savings option with a health plan carrying a high deductible
* lower premiums
* 2 main types: Health Reimbursement Arrangement & Health Savings Account
Medigap (Medicare Supplemental Insurance)
* Private health insurance
* Cover all or portion of Medicare cost sharing
Average out-of-pocket spending in 2021
$7000
Premium costs for single coverage (2022)
$7911/year
Premium cost for family coverage (2022)
$22463/yr old
How much have premiums for family coverage increased in the past 5 years?
20%
How much have premiums for family coverage increased in the past 10 years?
43%
How much have employee deductible plans increased?
55% in 2006 to 82% in 2019. Since 2022 deductibles have increased by 61%
Third party payers
Insurance companies, managed care organizations, and the government; two other
parties are patient and provider
2 Main Facets of the Payment Function
1) The determination of the methods and amounts of reimbursement for the delivery of
services
2)The actual payment after services have been rendered
Costs
The actual expenses associated with health care goods and services
Charge
Price for a service set by the provider
Fee Schedule
Index of charges listing individual charges for each service
Claim
Filed by provider to the insured to receive payment
Who is paying?
Government (CMS), Private Insurer, Out-of-pocket
Who is being paid?
Physician (Professional Services), Hospital (Facility), Combination of both, Outpatient
and Inpatient
Fee-for-service
Payment for each service
Fee-for-service: Cost-based
