Types of Plans - Covered Services and Cost-Sharing

Plan A – is a limited standard health benefits plan, primarily covering facility charges and other health care provider charges related to services rendered while a person is hospitalized.  Plan A covers 30 days of inpatient hospitalization per calendar year.  Inpatient days may be exchanged on a 2:1 basis for services provided in an extended care/rehabilitation facility, through home health care, or hospice.  Plan A provides some benefits for preventive services, including childhood immunizations.  A covered person must satisfy a specified deductible, coinsurance and maximum out-of-pocket (MOOP) amount before the carrier begins paying 100% of the allowed charges.

Plans B, C, D and E – provide comprehensive inpatient and outpatient hospital and medical coverage, including the following health care services:

• office visits
• hospital care
• prenatal and maternity care
• immunizations and well-child care
• screenings, including mammograms, pap smears and prostate examinations
• x-ray and laboratory services
• biologically based mental illness services
• certain non-biologically based mental illness and substance abuse services
• therapy services
• prescription drugs

Plans B through E differ from one another because of the amount of allowed charges for which the carrier and covered person each agrees to be responsible (level of benefits). 

The HMO Plan – covers the same services as Plans B through E cover, but generally restricts covered individuals to use of a specified network of health care providers.  The carrier may offer the HMO plan with a variety of copayment options among which the employer may choose, with a $15 copayment or 50% coinsurance requirement for prescription drugs.  In addition, the carrier may offer the HMO plan with deductibles ranging from $250 to $2,500 per person, and coinsurance ranging from 50% to 90%, plus some copayments.  Coinsurance and copayments cannot apply to the same health care services.  If a deductible and coinsurance apply to service generally, then the HMO plan will also have a MOOP of no more than $5,000.

Additional Features to Consider

Networks and Cost-sharing variations
Plans A through E may be offered as traditional indemnity plans, meaning that the covered person may go to any health care provider he chooses, and there is no incentive for the covered person to go to any health care provider under contract with any carrier.  Under an indemnity plan, the covered person often pays bills for covered services directly and then is reimbursed by the carrier. 

Carriers usually offer Plans A through E with a network feature, either as a preferred provider organization (PPO) or Point-of-Service (POS) product.  Both products allow an individual to obtain services in the carrier’s network of health care providers (often without requiring a referral), or outside of the network.  The individual receives greater benefits using in-network health care providers, and is not responsible for charges in excess of the contracted fees between the carrier and health care provider.  SEH PPO products apply a deductible and coinsurance to both in- and out-of-network services, but the covered person’s coinsurance is less when he or she uses in-network services; plus, what is owed is based on the contractual fee, and there’s no responsibility for any excess charges.  SEH POS products often apply copayments for in-network services and deductible and coinsurance for out-of-network services. 

The HMO plan must be offered as a closed-network product, requiring covered persons to obtain services through a network of health care providers under contract with the carrier.  The covered person selects a primary care provider who generally coordinates the health care services the covered person needs, or refers the covered person to an in-network specialist when necessary.  HMOs permit specialists to be primary care providers for individuals with chronic conditions, if appropriate.  Carriers may also offer the HMO Plan as a POS product, allowing an individual to obtain services outside of the HMO’s network while still receiving benefits.  The individual will have to pay more in out-of-pocket costs, and may incur charges in excess of allowed charges when he goes out-of-network.

Carriers may design PPO and POS products for the standard plans many ways.  There may be a common deductible for the in- and out-of-network benefits or separate deductibles; there may be a common MOOP for the in- and out-of-network benefits or two separate MOOPs.  The family deductible can require satisfaction by two separate family members, or by the family in the aggregate.  The out-of-network MOOP can be up to 3 times that of the in-network MOOP.  There may be two sets of coinsurance, or the carrier may require the payment of copayments in-network and coinsurance out-of-network.  The carrier may require the payment of both copayments and coinsurance in-network, but not for the same health care services.

Riders
Riders add to the number of coverage options available to employers by offering a benefit not otherwise covered, or revising the way a service is covered.  The standard health benefits plans have several standard riders providing options for the delivery of prescription drug benefits using a prescription drug card program or a mail order program and copayment options.  Carriers MUST offer a standard prescription drug rider.

Carriers are permitted to offer other riders to the standard health benefits plans, and most do.  Carriers MUST offer the standard health benefits plans without the rider(s), but carriers must also offer ALL riders to all interested groups. The choice to purchase a rider rests with the employer; a carrier can not require an employer to purchase a standard health benefits plan with a rider.