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Health Care 101: Commonly Asked Questions
Why does an ASO health plan mean the employer decides coverage issues?
Medicare Advantage is a plan offered by a private insurer that contracts with Medicare to provide Medicare Part A and Part B benefits. These plans are regulated by Medicare. Medicare Advantage Plans can be either HMOs, PPOs, or Private Fee-for-Service (PFFS) Plans. For enrollees in a Medicare Advantage Plan, Medicare services are covered through the private insurers, and often offer more benefits than Original Medicare. Medicare Advantage Private Fee For Service is a type of Medicare Advantage Plan in which you may go to any Medicare-approved doctor or hospital that accepts the plan’s payment. The insurance plan, rather than the Medicare Program, decides how much it will pay and what you pay for the services you get. Depending on the plan you choose, you may pay more or less for Medicare-covered benefits and may have extra benefits the Original Medicare Plan doesn’t cover. In addition, unlike Original Medicare, there is a maximum out-of-pocket expense a person will have to pay each year. Medicare Advantage PPOs are network-based plans in which a Medicare Advantage PPO must provide a network of providers that offer reduced out-of-pocket costs than the health care professionals not in the company’s network of providers.
Health Reimbursement Accounts or Health Reimbursement Arrangements (HRAs) are Internal Revenue Service (IRS)-sanctioned programs that allow an employer to set up an account for an employee to pay for medical expenses paid directly by participating employees, thus yielding tax advantages to offset health care costs. HRA’s are not portable, in other words, you may not take the funds with you when you change employers.
A flexible spending arrangement (FSA), or Flexible Spending Account, as they are commonly called, is one of a number of tax-advantaged financial accounts that can be set up through a cafeteria plan of an employer in the United States. An FSA allows an employee to set aside a portion of his or her earnings pre-tax to pay for qualified expenses as established in the cafeteria plan, most commonly for medical expenses but often for dependent care or other expenses. Money deducted from an employee's pay into an FSA is not subject to payroll taxes, and can therefore result in payroll tax savings.
The most common FSA, the medical expense FSA (also medical FSA or health FSA), is similar to a health savings account (HSA) or a health reimbursement account (HRA). However, while HSAs and HRAs are almost exclusively used as components of a consumer driven health care plan, medical FSAs are commonly offered with more traditional health plans as well. Any money set aside in an FSA that is not spent in a given year by the employee is forfeited.
Some insurers have in-house PBMs because they can integrate pharmacy, medical and behavioral data to allow the company to see the individual as a whole. This model tends to use pharmaceuticals to improve the health and well-being of the individual and therefore lower overall medical costs.