Health & Welfare Benefit Design Flashcards

Which of the following is a key advantage of a Consumer-Directed Health Plan (CDHP) paired with an HSA from the employer's perspective?

Answer: Encourages employees to become more price-conscious healthcare consumers

CDHPs shift more initial cost-sharing to employees, which research shows reduces unnecessary utilization and encourages cost-conscious healthcare decision-making.

Under HIPAA portability rules, a group health plan may impose a pre-existing condition exclusion of no longer than:

Answer: 12 months (18 for late enrollees) for conditions diagnosed in the prior 6 months

Prior to the ACA ban on PCEs, HIPAA limited exclusions to 12 months (18 for late enrollees) for conditions treated in the prior 6-month look-back window.

An employer is considering adding a telemedicine benefit. Which cost driver does telemedicine MOST directly address?

Answer: Avoidable emergency room and urgent care utilization

Telemedicine channels routine and acute care needs away from higher-cost ER and urgent care settings, directly reducing facility-based utilization costs.

The 'actuarial value' of a health plan is defined as:

Answer: The percentage of total allowed costs the plan pays for a standard population

Actuarial value (AV) measures the average percentage of covered medical expenses a plan pays across a standard population, used to classify ACA metal tiers (Bronze=60%, Silver=70%, etc.).

Which ERISA fiduciary duty requires plan administrators to act solely in the interest of plan participants and beneficiaries?

Answer: Duty of loyalty

The ERISA duty of loyalty (exclusive benefit rule) prohibits fiduciaries from acting in their own interest or the employer's interest to the detriment of plan participants.

A benefits manager wants to reduce pharmacy costs by requiring members to try a lower-cost drug before a higher-cost brand is covered. This approach is called:

Answer: Step therapy

Step therapy protocols require patients to try preferred (usually generic or lower-tier) medications before coverage is extended to more expensive alternatives.

When a plan uses 'reference-based pricing' for hospital services, what is the employer setting?

Answer: A fixed payment limit the plan will pay for a specific service

Reference-based pricing establishes a set dollar ceiling the plan pays for specific procedures, leaving employees responsible for amounts charged above that reference price.