0
9 Health and Disability Income
Insurance
• Eases the financial burden people may experience as a result of
illness or inju...
Sources of Health Care Plans
• Health Care Plan- generic name for any
program that pays or provides reimbursement
for heal...
• Group Plans:
– Covers most individuals
– Usually employer sponsored (also unions, trade groups)
– Employer pays part or ...
Objective 2
Analyze the Costs and Benefits of
Various Types of Health Insurance as
well as Major Provisions in Health
Insu...
Types of Health Insurance
Coverage
• Major Medical Expense Insurance
– Covers expenses for serious injury or long-term ill...
Types of Health Insurance
Coverage
• Hospital Indemnity
– Pays you a fixed amount for each day you are hospitalized
– Does...
Major Provisions in a Health
Insurance Policy
• Eligibility
– Varies with age, marital status, and dependency
• Assigned B...
Major Provisions in a Health
Insurance Policy
• Service Benefits
– Entitlement to specific services
• Benefit Limits
– Max...
Objective 3
Assess the Trade-offs of
Different Health Insurance
Plans
Trade-Offs in Choosing a Policy
• Reimbursement vers...
Health Insurance Must-Haves
9-10
Objective 4
Evaluate the Differences Among
Health Care Plans Offered by
Private Companies and by the
Government
Private He...
Private Health Care Plans
• Health Maintenance Organization
(HMO)
– Managed care
• Prepaid health plan
• Primary care phys...
Private Health Care Plans
• Preferred Provider Organization (PPO)
– Several providers to choose from
– Costs more than an ...
New Health Care Accounts
• Health Spending Accounts (HSA)
– Money contributed to pre-tax dollar account
– Must have a high...
Government Health Care
Programs
• Medicare
– Federally funded health insurance program
– Covers those age 65+ and certain ...
MEDICARE
• Part A:
– Hospital insurance helps pay for inpatient care in a hospital or skilled
nursing facility (following ...
Government Consumer
Health Information
Websites
• Healthfinder: www.hhs.gov
• Medline Plus:
www.nlm.nih.gov/medlineplus
• ...
Objective 5
Explain the Importance of
Disability Income Insurance in
Financial Planning and Identify its
Sources
Disabilit...
Sources of Disability Income
• Workman’s Compensation
– Disability from on-the-job accident or illness
• Employer Plans
– ...
Disability Income Insurance
Trade-Offs
• Policy’s definition of disability
– Own Occupation- can no longer perform previou...
• 2009 Health care costs ≈ $2.56 trillion
• U.S. has highest per capita health care
cost of any country in the world.
• Ra...
Reasons for High Health Care
Costs
• Sophisticated technologies
• Duplicate tests
• Variety and frequency of treatments
• ...
What Can You Do to Reduce
Personal Health Care Costs ?
• Eat a balanced diet
• Keep weight under control
• Avoid smoking
•...
Wrap Up
• Chapter Quiz
• Concept Check 9-1- True or False?
• Concept Check 9-2- Health Insurance
Terminology
• Concept Che...
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Chapter 9

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Chapter 9

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Transcript of "Chapter 9"

  1. 1. 9 Health and Disability Income Insurance • Eases the financial burden people may experience as a result of illness or injury (pay a premium to transfer risk of loss) – Medical expense insurance- pays actual medical costs – Disability income insurance- provides replacement income • Group and individual health insurance coverage available • COBRA – Requires many employers to offer employees and dependents the option to continue their group coverage for a set period of time following a layoff • The Health Insurance Portability and Accountability Act – Established federal portability standards – If you change jobs, you need not lose your health insurance 9-1
  2. 2. Sources of Health Care Plans • Health Care Plan- generic name for any program that pays or provides reimbursement for health care expenses • Group Health Care Plan – health coverage sold collectively to an entire group of persons rather than to individuals • Open Enrollment Period – during this time, you can begin or make changes in coverage or switch among alternative plans – Requirements are generally waived for family changes (e.g., birth of a child, adoption, marriage)
  3. 3. • Group Plans: – Covers most individuals – Usually employer sponsored (also unions, trade groups) – Employer pays part or most of cost • Coordination of Benefits: combine benefits from >1 plan – Benefits received from all sources limited to 100% of allowable medical expenses – Married couples/partners need to consider Objective 1 Recognize the Importance of Health Insurance in Financial Planning 9-3
  4. 4. Objective 2 Analyze the Costs and Benefits of Various Types of Health Insurance as well as Major Provisions in Health Insurance Policies Types of Health Insurance Coverage Basic Major medical Both • Basic Health Insurance – Hospital Expense Insurance • Hospital room, board, and other charges (usually with a cap) – Surgical Expense Insurance • Surgeon's fee for an operation (often specify amount per service) – Physician Expense (Medical Expense) Insurance • Pays for physician’s care that does not include surgery, such as office visits, lab tests, X-rays (often specify amount per service) 9-4
  5. 5. Types of Health Insurance Coverage • Major Medical Expense Insurance – Covers expenses for serious injury or long-term illness – Goes beyond what basic health insurance pays – May include a deductible (initial amount paid before insurance co. pays), coinsurance (e.g., 20% to 25% of expenses after deductible), and a stop-loss provision – Policy limits of $1 million are common – Stop-loss: policyholder pays coinsurance up to a certain amount, after which insurance company pays 100% (typically $3,000 and $5,000) – Comprehensive Health Insurance- combines basic health insurance and major medical into a single policy 9-5
  6. 6. Types of Health Insurance Coverage • Hospital Indemnity – Pays you a fixed amount for each day you are hospitalized – Does not cover medical costs – Supplement to the other plans • Dental Expense Insurance – Covers exams, cleaning, x-rays, fillings, root canals, and oral surgery • Vision Care – Exams, contact lenses, and glasses • Dread Disease Policies – Pays out for very specific conditions (e.g., cancer) – Illegal in many states • Long-Term Care Insurance – Virtually unknown 25 years ago – Covers daily help if seriously ill or disabled – Nursing home or in-home care 9-6
  7. 7. Major Provisions in a Health Insurance Policy • Eligibility – Varies with age, marital status, and dependency • Assigned Benefits – Insurance pays your doctor or hospital directly • Internal Limits – Fixed amount per day for a hospital room • Copayment – Cost sharing in the form of a flat dollar amount you pay, such as $15 per office visit or $10 per prescription – NOT the same as co-insurance, which is a percentage of expenses 9-7
  8. 8. Major Provisions in a Health Insurance Policy • Service Benefits – Entitlement to specific services • Benefit Limits – Maximum dollar amount or maximum number of days in the hospital • Exclusions and Limitations – Pre-existing conditions – Cosmetic surgery • Guaranteed Renewable (can’t cancel policy unless fail to pay premiums; insurer can’t raise premiums for one person unless raised for an entire group) • Cancellation and Termination – Explains the circumstances under which policy can be canceled and/ or converted 9-8
  9. 9. Objective 3 Assess the Trade-offs of Different Health Insurance Plans Trade-Offs in Choosing a Policy • Reimbursement versus indemnity – Reimbursement pays actual costs – Indemnity pays specific amounts (regardless of expenses) • Internal (fixed amount per expense) vs. aggregate limits • Deductibles and coinsurance • Out-of-pocket limits (after reach limit, get 100% coverage) • Benefits based on reasonable and customary charges (policy won’t pay more than that amount) 9-9
  10. 10. Health Insurance Must-Haves 9-10
  11. 11. Objective 4 Evaluate the Differences Among Health Care Plans Offered by Private Companies and by the Government Private Health Care Plans • Private Insurance Companies – Individual policy – Group policy sold to an employer • Hospital and Medical Service Plans – Blue Cross = hospital care – Blue Shield = surgical and medical services 9-11
  12. 12. Private Health Care Plans • Health Maintenance Organization (HMO) – Managed care • Prepaid health plan • Primary care physician – Contracts with selected care providers – Fixed pre-paid monthly premium – Focus is on prevention and wellness – Usually pay small copayment to see doctor 9-12
  13. 13. Private Health Care Plans • Preferred Provider Organization (PPO) – Several providers to choose from – Costs more than an HMO – More choices, fewer restrictions than an HMO – If you go to a non-PPO provider, you pay more – Example: NJ Direct for state of NJ employees • Point-of-Service (POS) – Combines features of HMOs and PPOs • Home Health Care Agencies – Medical care in a home setting for a fraction of the cost of hospitals • Employer Self-Funded Health Plans – Company runs self-insured insurance program – Collects premiums from employees – Pays medical benefits as needed 9-13
  14. 14. New Health Care Accounts • Health Spending Accounts (HSA) – Money contributed to pre-tax dollar account – Must have a high-deductible policy • Health Reimbursement Accounts (HRA) – Also tied to high-deductible policies – Funded solely by employer – Unused funds carried over to next year • Flexible Spending Accounts (FSA) – Workers contribute pre-tax dollars – Funds managed by employer – Unused funds forfeited at year end 9-14
  15. 15. Government Health Care Programs • Medicare – Federally funded health insurance program – Covers those age 65+ and certain disabled persons – Does not cover everything – Patient liable for the difference in costs – Program in financial trouble; needs changes – 4 parts: A, B, C, D • Medicaid- health care program for the poor that is jointly administered and funded by the federal and state governments 9-15
  16. 16. MEDICARE • Part A: – Hospital insurance helps pay for inpatient care in a hospital or skilled nursing facility (following a hospital stay), some home health care, and hospice care (paid for by workers’ payroll deductions) • Part B: – Medical insurance helps pay for doctors’ services and many other medical services and supplies not covered by hospital insurance – Beneficiaries pay a monthly premium (varies according to income) • Part C: – Medicare Advantage plans available in many areas – Those with Parts A and B can choose to receive all of their health care services through one of these provider organizations under Part C • Part D: – Prescription drug coverage helps pay for medications doctors prescribe for treatment 9-16
  17. 17. Government Consumer Health Information Websites • Healthfinder: www.hhs.gov • Medline Plus: www.nlm.nih.gov/medlineplus • NIH Health Information Page: www.nih.gov • FDA: www.fda.gov • Medicare: www.medicare.gov 9-17
  18. 18. Objective 5 Explain the Importance of Disability Income Insurance in Financial Planning and Identify its Sources Disability Income Insurance • Designed to protect against loss of income; protects your “earning power” • Most overlooked type of insurance • Young, healthy people don’t consider the risks related to their future earning potential • Provides regular cash income lost by employees as the result of an accident or illness 9-18
  19. 19. Sources of Disability Income • Workman’s Compensation – Disability from on-the-job accident or illness • Employer Plans – Short or long-term group disability policy • Social Security – Covers total disability lasting > 12 months – Starts in the 6th month – Strict definition of disability to qualify • Private Income Insurance Programs – Supplements other disability income sources – Normally provides 40-60% of income (up to 75%) 9-19
  20. 20. Disability Income Insurance Trade-Offs • Policy’s definition of disability – Own Occupation- can no longer perform previous job – Any Occupation- can’t work at any job • Waiting or elimination Period • Duration of benefits • Amount of benefits • Accident and sickness coverage (want payment for both; accidents are not the only cause of disability!) • Guaranteed renewable (guarantees coverage as long as you pay your premium, but premiums can change for you within a class of insureds) • Noncancellable- Better but more expensive; no future change in premium • Cost-of-Living Adjustments (adjusts benefit for inflation) • Partial benefits (pays benefit if person can only work part-time) 9-20
  21. 21. • 2009 Health care costs ≈ $2.56 trillion • U.S. has highest per capita health care cost of any country in the world. • Rapid increase in medical expenditures – 16.9% of GDP in 2009 • High administrative costs – Administration = 26% of costs Objective 6 Explain Why the Costs of Health Insurance and Health Care have been Increasing 9-21
  22. 22. Reasons for High Health Care Costs • Sophisticated technologies • Duplicate tests • Variety and frequency of treatments • Increasing number and longevity of elderly • Regulations • Increase in emergency treatments • Limited competition • Rapid earnings growth for health care professionals • Using more unnecessary medical care • Built-in inflation in the health care system • Aging baby boomers • Other major factors: fraud, waste 9-22
  23. 23. What Can You Do to Reduce Personal Health Care Costs ? • Eat a balanced diet • Keep weight under control • Avoid smoking • Don’t drink excessively • Get sufficient rest, relaxation, and exercise • Drive carefully • Protect yourself from medical ID theft • Carefully review health care fees • Community health education programs 9-23
  24. 24. Wrap Up • Chapter Quiz • Concept Check 9-1- True or False? • Concept Check 9-2- Health Insurance Terminology • Concept Check 9-3- What Trade-offs Would You Consider? • Concept Check 9-5- Disability Insurance Terminology
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