Topic 2: The Governmental Environment for Group Benefits

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  1. Social Insurance Role
    Designed to solve social problems that affect a large portion of society
  2. What are the five major Social Insurance programs?
    • Social Security
    • Medicare
    • Unemployment Insurance
    • Temporary Disability Insurance
    • Workers' Compensation Insurance
  3. Employee Retirement Income Security Act 1974 (ERISA)
    created to protect the interests of participants in employee benefit plans as well as the interests of participants beneficiaries, and apply to most traditional group insurance plans (employee welfare benefit plans)
  4. To comply with ERISA Employers have to:
    Provide employee benefits in the employees interest

    Minimize risk through diversification

    Report through summary plan descriptions (SPDs)
  5. What needs to be included in a Summary Plan Descriptions?
    • name of plan
    • name, address, and telephone number of the plan administrator
    • name & address of the plan's sponsor (Er)
    • name & address of the agent for service legal process
    • name & address of any trustee
    • employer identification number
    • type of employee welfare benefit
    • type of administration (self, tpa, aso)
    • sources of contribution
  6. Health Insurance Portability and Accountability Act (HIPPA)
    Imposes additional requirements for info that must be described or identified in SPDs for group health plans
  7. HIPPA requirements
    • Identify if a plan is self-funded or insurer is responsible for the administration or FINANCING of the plan
    • name and address of any insurer responsible for administration of a plan
  8. How are the five major types of Social Insurance distinguished
    • Compulsory-related coverage
    • partial or total Er financing
    • benefits prescribed by law
    • benefits as a matter of right
    • emphasis on social adequacy
  9. Basics of Social Security
    Universally known as OASDI- federal old-age, survivors, and disability insurance

    • provides retirement income
    • provides income to dependents
    • provides income benefits to disabled workers (usually after 6 months)
  10. Types of Group Insurance under Social Security (OASDI)
    • OA= retirement programs: 401(k)
    • S= Survivor
    • D= Disability Programs (wc, AD&D, STD, LTD etc)
  11. How is Social Security funded?
    Through payroll taxes (FICA): 7.65% (6.2% OASDI, 1.45% HI medicare part A)
  12. What is the maximum taxable wage base in 2014?
  13. Who is the risk bearer in Social Insurance?
    The Federal Government
  14. Who is eligible for Medicare (medical expense benefits)
    Americans aged 65+, and certain younger disabled workers
  15. Medicare Part A
    Provides benefits for hospital expenses at NO charge to medicare beneficiaries
  16. Medicare Part B
    • Includes benefits for many other types of medical expenses
    • Beneficiaries MUST pay a monthly premium
  17. What is the "Original" Medicare comprised of?
    • Medicare Parts A and B
    • Government run programs
  18. What is Medicare Part C (a.k.a) Medicare Advantage
    • Voluntary private insurance (subject to federal requirements)
    • Provides alternative plans to "original" medicare
  19. Medicare Part D
    • Provides prescription drug coverage
    • Voluntary benefit as well
  20. Important note on employer-provided medical expenses
    These programs usually exclude coverage when Medicare provides benefits (avoids overlap)
  21. Unemployment Insurance
    • Covers most workers in the US
    • Covers a portion of former income
    • Administered by the states under federal guidelines
  22. Who FINANCES Unemployment Insurance?
    Federal Gov't provides a large portion of the benefits paid
  23. What is the Primary Insurance Amount (PIA)
    Is the benefit a person would receive if he/she elects to begin receiving retirement benefits at his/her Normal Retirement Age (NRA)
  24. How is the PIA calculated
    Sum of the three seperate percentages of portion of Average Indexed Monthly Earnings (AIME)
  25. Replacement Ratio
    The % of a workers pre-retirement income that is paid out by a pension program upon retirement

    ex: Average replacement rate 45%: Income $100,000: expected pension= $45,000 (100,000*.45)
  26. Temporary Disability Laws
    Requires employers provide short-term (non-occupational) disability income coverage to their employees up to 6 months coverage must provide benefit levels of at least a specified amount
  27. Who is the risk bearer for TDI?
    • Private Insurers
    • State funds
  28. Sources of FUNDS for TDI
    • Premiums paid by the employers
    • Employee PAYROLL TAXES
  29. Workers' Compensation Insurance
    • Compulsory requirement
    • Provides specified levels of medical expense and disability income benefits to employees who suffer injury due to:
  30. McCarran-Ferguson Act
    • The act exempts insurance from certain federal regulations
    • Most federal laws are not applicable to insurance
  31. National Association of Insurance Commisioners (NAIC)
    • Promotes uniformity across states in legislation and administrative rules affecting insurance through Model Laws and Model Acts
    • NO regulatory authority
Card Set:
Topic 2: The Governmental Environment for Group Benefits
2014-10-18 23:12:09
Social Insurance Group Benefits
Employee Benefits
Basics of Social Insurance
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