Private Payers Serving Individuals with Disabilities and Chronic Conditions. B. Features of the Plans Offered by the Two Employers

01/01/2000

Two employers contributed inpatient and outpatient data for this study. Employer A is a large firm specializing in various forms of electronic products, media and communications equipment. Although it has offices in more than 30 cities across the U.S., the structure of health insurance benefits is very similar across locations. Each location offered an indemnity plan and a POS plan. The benefits offered in these plans were the same, but the POS plan required lower co-payments and deductibles and offered a wider array of preventive services than does the indemnity plan. Over 403,000 people were covered by Employer A's health plans in 1995.

TABLE 2-2: Employer A's Medical Benefit Options, 19951
Feature Plan Type
Point of Service (POS) Indemnity
Deductible
   Individual $0 in network
$250-$850 out of network1
$125-300
   Family $0 in network
$500-$1,700 out of network1
$300-$600
Copayment/Coinsurance
   Individual $15 in network
20% out of network
20%
   Family $15 in network
20% out of network
20%
Prescription Drug Copayment/Coinsurance
   Retail Pharmacy   In network: $12 for generic,
$12 plus price difference between generic and brand name Out of network: 100%  
In network: 20% Lower prescription prices
Out of network: 20% Higher prescription prices  
   Mail order $4 for generic
$11 for brand name
$4 for generic
$11 for brand name
Annual Employee Out-of-Pocket Limit2
   Individual $1,250-$2,750 out of network1   $1,100-$2,3501
   Family $2,500-$5,500 out of network1 $1,100-$2,3501
Lifetime Maximum Benefit $1.2 million $1.2 million
Yearly employee contributions
   Individual $147.76-$461.76 employees1
$0-$312 COLA and retirees1
$174.20-$486.20 employees1  
$0-$312 COLA and retirees1
   Family $249.08-$548.08 employees1
$249.08 COLA and retirees
$299.08-$598.00 employees1
$249.08 COLA and retirees
  1. Deductibles, out-of-pocket maximums, and employee costs generally increase incrementally with salary amounts in both the POS and indemnity options. The one exception is the cost of family coverage for retirees or persons eligible for cost-of-living adjustments (COLAs).
  2. Does not apply to out-of-network mental health and substance abuse care.

Employer B is a large state government in the northern United States. It offered an indemnity plan, a PPO plan, and ten HMO plans. Seven of the ten HMOs were available to every employee. About 205,000 people were covered by this employer's health plans in 1995. Since relatively few potentially disabled persons were found in the PPO plan in 1995, most analyses reported in subsequent chapters excluded the PPO plan members.

TABLE 2-3: Employer B's Medical Benefit Options, 1995
Feature Plan Type
HMOs Indemnity
Deductible
   Individual $0 $75
$150 per admission
   Family $0 $150
$150 per admission
Copayment/Coinsurance
   Individual or Family   $10 $5 visits 1-15 ,
$0 visits 16+$0
Prescription Drug Copayment/Coinsurance
   Retail Pharmacy $3-$10 for generic,
$10-$15 brand name
In network
$5 generic
$10 brand name
Out of network
20% after $75 or $150 drug deductible is met for individual or family, respectively.
   Mail order   $6 for generic
$12 for brand name
Annual Employee Out-of-Pocket Limit
   Individual or Family $250 N.A.
Lifetime Maximum Benefit None Unknown
Yearly employee contributions
   Individual $289.92-$377.28 employees1
$193.20-$251.40 COLA and retirees1  
$495.12-$668.40 employees1
$329.28-$502.56 COLA and retirees1  
   Family $700.20-$885.36 employees1
$466.60-$590.28 COLA and retirees
$1115.64-$1516.80 employees1
$741.84-$1143.00 COLA and retirees
  1. Reported employee costs for the indemnity plan are at the highest if the enrollee opts for catastrophic illness coverage.

A few notable plan features do not appear in Table 3.2 and Table 3.3. Employer A used the same carve-out program for mental health services in 1995 for everyone, regardless of whether the indemnity or the POS plan was chosen. In contrast, Employer B offered two mental health plans, one for the indemnity and PPO plan members, and a second plan for all HMO members. Both employers used physician gatekeepers to monitor and approve service utilization in the managed care plans. However, pre-admission approval for hospital services was required in all plans. Finally, neither Employer A's nor Employer B's indemnity plans put providers at financial risk for the services they provide to plan members. Risk assumption by providers was minimal in Employer A's POS plan, but in some of the HMOs offered by Employer B providers assumed greater financial risk.

Medical benefit options for each employer's health plans are described in more detail in Table 2-2 and Table 2-3. The annual contributions (premiums) were quite similar for Employer A's two plans. Deductibles and coinsurance rates for Employer A's out-of-network POS plan were higher than the indemnity plan but the in-network rates were substantially less than those of the indemnity plan. Employer B's indemnity plan was more costly than its HMOs, charging higher deductibles, copayments, and premiums. The HMOs did not cover out-of-network care, however, so someone seeking care outside the HMO network would be responsible for the entire payment.

A few notable plan features do not appear in Table 2-2 and Table 2-3. Employer A used the same carve-out program for mental health services in 1995 for everyone, regardless of whether the indemnity or the POS plan was chosen. In contrast, Employer B offered two mental health plans, one for the indemnity and PPO plan members, and a second plan for all HMO members. Both employers used physician gatekeepers to monitor and approve service utilization in the managed care plans. However, pre-admission approval for hospital services was required in all plans. Finally, neither Employer A's nor Employer B's indemnity plans put providers at financial risk for the services they provide to plan members. Risk assumption by providers was minimal in Employer A's POS plan, but in some of the HMOs offered by Employer B providers assumed greater financial risk.

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