4426 notes

4426 notes - Financial Security Systems (FSS) FSS: an...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Financial Security Systems (FSS) FSS: an arrangement for risk financing in which one person or institute assumes an obligation to provide benefits to offset undesirable economic consequences that may be experienced by a second person, in return for payment, by or on behalf of a second person of amount called considerations. Purpose: -decrease or eliminate financial insecurity -provide benefits to offset undesirable economic consequences Insecurity consists of one or more of: -income loss -insufficient income -additional expenses -income uncertainty Causes of insecurity: -loss of income to due death, disability, sickness -increased expenses due to illness/accident -other causes such as property damage Layers of Protection: social insurance -> group insurance & retirement plans -> individual insurance -> manufacturer’s warranty Who Provides Benefit Distribution What are Benefits Who receives Who pays What’s paid Social Insurance -Government (may contract admin services out ie prov health plans) Not required (mandatory) -retirement -disability -death -medical -rehab Plan Participants and dependents Varies by program -taxes, ers, ees Varies by program -taxes, er and/or ee contributions Group Insurance Varies -risk transfer vs risk management Varies by size -small(2-50) -pooled (51-200 -experience rated (201-1000) -large (>1000) Disability death * medical* dental, vision* drugs* *includes post retirement Employees -can include: -retirees -dependents Varies by group sponsor -single er most common -usually er/ee premiums Premiums -can be er only -or er and ee admin fees Group Insurance Providers: 1) Insurance companies: -risk transfer to provider -wide range of life and medial coverage or a specified cost (premium) 2) Health Care Service Corporation: -risk transfer to provider -medical and dental coverage (cannot offer life or disability) -local service area coverage -not for profit entities 3) Heath Maintenance Organizations (HMOs) -def: prepaid medical group plan that provides a predetermined medical care benefit package -risk transfer to provider -medical coverage primarily (can’t offer life or disability) -specified health care providers co-coordinated by primary care physician 4) Preferred provider Organization (PPOs) -def: health care system where employer or insurer enters into contracts with health care providers to provide health care services at a discount
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
-key difference vs HMO -> patients can choose health care providers but there’s a financial incentive to choose one from PPO (discount rates) -risk not transferred to provider 5) Self-Insured -large employers may use to avoid mandated benefits (flexibility, customization) and/or reduce costs -may outsource claims processing -risk not transferred Group Sponsors: 1) Single Employer: by far most common ( >90% of all plans) 2) Labor Unions: many examples (teachers) 3) Multiple Employer Trusts (MET): group of single employers usually in same or related industries (can help small employers) 4) Trade Associations: single employers bond together by membership in a trade association
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 22

4426 notes - Financial Security Systems (FSS) FSS: an...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online