Donna Lively Director, Insurance Marketing GuideStone Financial Resources

Today’s Agenda:

1. The basics of medical insurance

Basic terminology

Concepts

2. Selecting the right plan for your employees

Comparing plans

Premiums & coverage

Employee costs

Employee needs

5 pitfalls to avoid

3. Questions?

THE BASICS OF

MEDICAL INSURANCE

The Rising Cost of

Healthcare

Did You Know?

•2009 was the 10th consecutive year of double-

digit healthcare cost increases

•2010 first year in a decade without a double-digit

increase; this is due to economy meltdown

•Healthcare-related expenditures:

• Represent 17.8% of U.S. economy

• Equal three times defense spending

• Are greater than the amount Americans spend on food,

housing and transportation combined

> + +

What is insurance?

•Purchasing “Peace of Mind”

•Pay a premium for protection for everyday and

catastrophic events

•Fixed monthly premium regardless of claims and

utilization

•Number one reason for personal bankruptcy is

catastrophic healthcare costs

•Insurance benefits are as important as salary in

influencing employee loyalty

Source: MetLife’s Study of Employee Benefits Trends,2009

Relationship between

premium and claims

•20% of the population is responsible for 80% of

healthcare claims

•Pools “spread risk” among many rather than just a few

•Premium dollars are pooled to help pay large claims

•Every group may not have a large claim every year, but

every year groups have large claims

•Healthier population = lower healthcare costs = lower

premiums over time

Types of plans

•Indemnity plans (aka “Major Medical” or “Hospitalization

Coverage”)

•HMOs

•POS

•PPOs

Network Coverage

Out-of-network

You Share More of the Cost

No Provider Discounts

You File Claims

Greater Out-of-Pocket Costs

In-network

Receive Highest Level of

Benefits

Access Provider Discounts

Provider Files Claims

Lowest Out-of-Pocket Costs

How are claims paid?

•You seek service

•Providers bill insurance companies

•Billed amount adjusted for discounts, allowable charges

•Participant may be responsible for part or all of balance

•Largely automated – no human hands

What happens if the

claim is paid incorrectly?

•Doctors code incorrectly

•Claims are resubmitted for reimbursement

•Claim appeal process

Explanation of Benefits

(EOBs)

•Shows how your claims have been paid

•Includes:

Amount charged by doctor

Allowable charges

How much was applied to deductible

Coinsurance

Service details

How much you may be responsible for

Online

Download EOB guide now!

Copay Bucket Doctor and

RX

You never fill the

copay bucket –

copays continue

throughout the plan

year.

Deductible Bucket Inpatient, Outpatient

Surgery, Advanced

Diagnostic

After annual

deductible is paid, the

deductible bucket is

full.

Coinsurance Max Bucket Inpatient, Outpatient Surgery,

Advanced Diagnostic

After deductible is paid, the

insurance company begins

cost sharing with employees at

the coinsurance level until the

maximum is met. When the

coinsurance max is met, the

bucket is full.

Copays, deductibles &

coinsurance maximums

SELECTING THE RIGHT PLAN

FOR YOUR EMPLOYEES

How do I compare plans?

Balance of cost & coverage – Two choices

Pay

Lower

Premium

Pay

Higher Out of

Pocket

Pay

Higher

Premium Pay

Lower Out of

Pocket

Your population’s unique

needs

•Life stage: what are their likely current and future

healthcare needs?

•Health

Chronic conditions

Prescription drugs

Wellness

Employee costs

•Deductibles

•Out-of-pocket expenses

•Cost-sharing (contributions)

•Benefit pay packages

Pay package approach

Pay + benefits approach

Knowing what’s covered:

Doctor visits

•Doctor visit copays

•Primary care doctors

•Specialists

•Preventive care/wellness

•Services that may not be covered by copays

Knowing what’s covered:

Lab and x-ray services

•Coverage depends on how/where services are received

Preventive care services

In-office services

Free-standing lab or x-ray facilities

Knowing what’s covered:

Surgeries & hospital visits

•Pre-authorization

• Inpatient Admit

• ER services

• Penalty

•Deductible

•Coinsurance

•Out-of-pocket coinsurance maximum

Knowing what’s covered:

Prescription drugs

•Tiered copays

• Generic

• Preferred

• Non-Preferred

•What is a formulary?

•Who creates formularies?

•Why are they important?

•Specialty drugs

•Online pricing tool

Five pitfalls to avoid

Pitfall #1: Shopping on

price

•Danger: comparing exclusively on price

•Not all plans are created equal

•Must consider both cost and how your employees are

likely to use the plan

The solution:

Shopping priorities

and price

Pitfall #2: The rating

game

•“Base” rates vs. actual rates

•Medical underwriting

•Getting a fair renewal

The solution:

Finding the right

– not the lowest –

price

Pitfall #3: Getting the

whole package

•Price vs. quality

•Customer service

•Advocacy

•Broker relationships and commissions

The solution:

Don’t just buy a

product, look for a

relationship

Pitfall #4: Uncovering

coverage

•Not all plans are created equal

•Loopholes and limits

•Gaps and exposures

The solution:

Review coverage

documents

thoroughly

Pitfall #5: “Thank you &

goodbye”

•After the sale support

•Administration

•Enrollment

•Issue resolution

•Customer service

The solution:

Get referrals, and

look for a provider

dedicated to service

Final Thoughts

•Do your homework

•Seek a trusted resource

•Consider your employees needs

•Consider your ministries resource

Questions?