Chapter 9

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Chapter 9

  1. 1. CHAPTER 9: INSURING YOUR HEALTH
  2. 2. Need for Health Insurance <ul><li>Protect against economic loss in the event of serious accidents or illnesses. </li></ul><ul><li>Protect against the rising cost of health care, which is outpacing other costs in general. </li></ul>
  3. 3. Types of Health Care Plans <ul><li>Also called fee-for-service plans, you typically choose the doctors and hospitals, pay for the service, and then get paid back by the insurance company. </li></ul><ul><li>Health care services are separate from insurer. </li></ul>1. Traditional Indemnity Plans :
  4. 4. 2. Managed Care Plans : <ul><li>Users contract with and make monthly payments directly to health care providers. </li></ul><ul><li>A designated group of doctors and hospitals provide services. </li></ul><ul><li>Cost-efficient strategies are utilized, including controlling amount of care provided and emphasizing prevention of illness. </li></ul><ul><li>No deductibles are paid, just low copayments for services. </li></ul>
  5. 5. Types of Managed Care Plans : <ul><li>Health Maintenance Organizations (HMOs) </li></ul><ul><li>Comprehensive services, sometimes at one facility. </li></ul><ul><li>Individual Practice Associations (IPAs) </li></ul><ul><li>Physicians operate out of their own offices and community hospitals. </li></ul><ul><li>Preferred Provider Organizations (PPOs) </li></ul><ul><li>Broader network of “approved” physicians and allow use of out-of-network providers. </li></ul>
  6. 6. Providers of Health Insurance <ul><li>Insurance companies </li></ul><ul><li>Managed care organizations </li></ul><ul><li>Blue Cross/Blue Shield (prepaid expense plans) </li></ul><ul><li>Group plans (may incorporate any of the above as well as self insurance) </li></ul>1. Private Insurers :
  7. 7. 2. Government Agencies : <ul><li>Part A —Basic hospital insurance for those who are qualified. </li></ul><ul><li>Part B —Supplementary medical insurance; pays doctor </li></ul><ul><li>Social Security’s Medicare program </li></ul><ul><ul><li>Funded by Social Security taxes. </li></ul></ul><ul><ul><li>Available to qualified people 65 and older and to those receiving SS disability benefits. </li></ul></ul>
  8. 8. <ul><li>Coverage includes : </li></ul><ul><ul><li>Medical and rehabilitation expenses </li></ul></ul><ul><ul><li>Disability income </li></ul></ul><ul><ul><li>Lump-sum payments for death or dismemberment </li></ul></ul><ul><ul><li>Second-injury funds </li></ul></ul><ul><li>Workers’ compensation insurance </li></ul><ul><li>Premiums paid by employers for workers injured on the job. </li></ul>
  9. 9. 3. Other sources of health care : <ul><li>Homeowner’s and automobile insurance policies contain limited amounts of medical coverage. </li></ul><ul><li>Other government health programs at the federal, state and local levels, including Medicaid and programs for military personnel. </li></ul>
  10. 10. Types of Medical Expense Coverages <ul><li>Hospital insurance : </li></ul><ul><li>Pays a portion of per-day room and board charges </li></ul><ul><li>Use of hospital facilities </li></ul><ul><li>Selected other services </li></ul>
  11. 11. <ul><li>Pays cost of surgery either in or out of the hospital. </li></ul><ul><li>Not all procedures are covered, such as cosmetic or experimental surgery. </li></ul><ul><li>Physicians expense insurance : </li></ul><ul><li>Pays physician fees for nonsurgical care in hospital. </li></ul><ul><li>Includes consultation with specialists and lab tests. </li></ul>Surgical expense insurance :
  12. 12. <ul><li>Broad coverage for illnesses and injuries of a catastrophic nature. </li></ul><ul><li>Amount of coverage is large. </li></ul><ul><li>May have lifetime limits. </li></ul><ul><li>Dental insurance : </li></ul><ul><li>Covers necessary dental care and some dental injuries. </li></ul><ul><li>Mostly offered through group insurance plans. </li></ul>Major medical insurance :
  13. 13. Comprehensive major medical : <ul><li>The most desirable coverage, it combines major medical with basic hospital, surgical and physicians expense coverages. </li></ul><ul><li>Usually offered through group plans with low deductible. </li></ul>
  14. 14. Coverages You Don’t Need ! <ul><li>Accident policies </li></ul><ul><li>only cover certain types of accidents, usually travel-related ones. </li></ul><ul><li>Sickness and dread disease policies </li></ul><ul><li>coverage limited to specific disease or illness; prohibited in some states. </li></ul><ul><li>Hospital income policies </li></ul><ul><li>guarantee a per-diem for hospital stays, but generally exclude certain illnesses. </li></ul>
  15. 15. Policy Provisions of Medical Expense Plans <ul><li>Terms of Payment : </li></ul><ul><li>How much your medical expense plan will pay is usually determined by the following 4 provisions: </li></ul>
  16. 16. <ul><li>The initial amount not covered. </li></ul><ul><li>Determined on a calendar-year or per-incident basis. </li></ul><ul><li>Participation (Coinsurance) : </li></ul><ul><li>Company pays only a portion of the medical expenses after the deductible. </li></ul><ul><li>Plan may include a stop-loss provision to cap your out-of-pocket expenses. </li></ul>Deductible :
  17. 17. <ul><li>Limits amount paid on certain items to usual, customary, and reasonable charges even if cost of entire surgery or illness is within the norms. </li></ul><ul><li>Coordination of benefits : </li></ul><ul><li>Eliminates double payment when coverage provided under more than one policy. </li></ul>Internal limits :
  18. 18. Terms of Coverage : <ul><li>Important provisions to consider include: </li></ul><ul><li>Persons and places covered —Who is covered and where are you covered? </li></ul><ul><li>Cancellation —Obtain a policy that cannot be canceled unless premiums are not paid. </li></ul><ul><li>Continuation of group coverage (COBRA ) — At your expense, you can continue your previous employer’s coverage for up to 18 months after you leave the job. </li></ul>
  19. 19. Long-Term Care Insurance <ul><li>Provides for delivery of medical and personal care, other than hospital care, to persons with chronic medical conditions due to illness or frailty. </li></ul>
  20. 20. <ul><li>Benefit Duration — How long will the benefits last? </li></ul><ul><li>Waiting period — Once eligible, how long before the payments begin? </li></ul><ul><li>Daily Benefits —What is the daily maximum reimbursement? </li></ul>
  21. 21. LTC Insurance Provisions <ul><li>Location of care </li></ul><ul><li>Triggering conditions </li></ul><ul><li>Renewable </li></ul><ul><li>Level premiums </li></ul><ul><li>Inflation protection </li></ul><ul><li>Wavier of premium </li></ul>
  22. 22. Disability Insurance Provides families with weekly or monthly payments to replace income lost when the insured is unable to work due to an illness, injury or disease.
  23. 23. <ul><li>Renewability —Is it guaranteed renewable or noncancelable? </li></ul><ul><li>Other features —Look for cost of living adjustment, guaranteed insurability option, and waiver of premium. </li></ul><ul><li>Waiting period —Once disabled, how long before benefits begin? </li></ul>
  24. 24. THE END

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