Medicaid

MR. WATSON: Now, Medicaid . This is state and federally funded, but administered by the state.

MR. WATSON: It's purpose is to provide matching federal funds to states for their medical public assistance plans to help needy people, regardless of age. Does that make sense? Family income must below a certain level to qualify. Each state has its own requirements. But, most of the time if one is blind, disabled or under the age of 21 they will qualify. These benefits can be applied to Medicare as well.

STUDENTS: Yes.

MR. WATSON: So the federal government allocates money to the states, the amount is different for each state. For instance, if the state budgeted a dollar, then the Feds would give them 65 cents, this is only an example.

MR. WATSON: If family income is below a certain level, Medicaid benefits generally are available. Although each state has its own way of establishing its own eligibility requirements, Medicaid benefits are generally payable to those who are low-income individuals, who are blind, disabled, or under age 21.

State Worker's Compensation

MR. WATSON: State Worker's Compensation. All states have workers' compensation laws. It provides mandatory benefits to employees for work-related injuries, illness, or death. Sometimes this is also called an occupational illness or injury.

MR. WATSON: "It may reduce or eliminate income payment from most health plans." Here's why. Look. I have group disability. Y'all work for me. I have group disability for you, and I have workers' comp. You are injured on the job. What's going to pay?

ALL: Workers' comp.

MR. WATSON: It may preclude or exclude any benefits payable from a group disability policy. Got it? So why would I have a group disability policy for you?

WOMAN: In case you don't get hurt on the job. Isn't workers' comp only for when you get hurt on the job?

MR. WATSON: Very good. So in case you get hurt-

WOMAN: Somewhere else.

MR. WATSON: Off the job. Very good. Then, workers' comp. would not pay but the group disability plan would.

Alternative Methods of Providing Health Insurance

Self Insurance

MR. WATSON: Now, self-insurance. That's an example of handling risk in what way?

MAN: Retained.

MR. WATSON: Very good. Retained. Some large businesses will self-insure. It may be cheaper for them to self-insure instead of buying insurance. Do they know how to pay the claims? No. So they hire Aetna, an insurance company to process the paperwork. Aetna is paid simply to processes the paperwork. Handles the administration. Whose money does Aetna use? The company that is self insuring. So, a self-insured plan, will hire an outside organization.

MR. WATSON: That outside organization would be referred to as an administrative services only (ASO) plan, or as a third-party administrator (TPA). So what does an ASO or TPA do? They process the paperwork for a self-insured plan. Does that make sense?

ALL: Um-hmm.

MR. WATSON: To protect themselves against large unpredictable losses, some self-insured plans will adopt a Minimum Premium Plan for a fraction of what the normal premium would be. For instance, any losses above $2,000,000 would be paid by the insurance company. It is like a very large deductible.

Multiple Employer Trusts

MR. WATSON: There is also multiple employer trusts (MET)s. MEWAs or Multiple Employer Welfare Arrangements are a type of MET for small employers and most of the time are self-insured. They provide various insurance benefits for their employees. Usually found in states where the states have a minimum number of employees as a requirement.