Managing Personal Finances - Health and Life Insurance

1. © 2010 South-Western, Cengage Learning
Chapter
© 2016 South-Western, Cengage Learning
23.1 Health Insurance
23.2 Disability and Life Insurance
Health and Life
Insurance
23
© 2016 South-Western, Cengage Learning

2. © 2010 South-Western, Cengage Learning SLIDE 2
Chapter 23
Lesson 23.1
Health Insurance
Learning Objectives
LO 1-1 Describe group and individual health
insurance choices.
LO 1-2 List and explain common types of health
insurance coverage and plans.
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3. © 2010 South-Western, Cengage Learning SLIDE 3
Chapter 23
Group and Individual Health
Insurance
 Health insurance is a plan for sharing the risk
of high medical costs resulting from injury or
illness.
 Like other forms of insurance, health insurance
reduces individual risk by spreading it among
many people.
 In exchange for regular premiums, the insurer
promises to pay medical expenses for the
treatments covered by the policy.
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4. © 2010 South-Western, Cengage Learning SLIDE 4
Chapter 23
Group Policies
Group insurance
The most common type of health insurance
is group insurance, in which all those
insured have the same coverage and pay a
set premium.
Some employers pay the premiums as a
benefit to their employees.
More commonly, however, both share the
premium costs.
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5. © 2010 South-Western, Cengage Learning SLIDE 5
Chapter 23
Group Policies
COBRA
The Consolidated Omnibus Budget
Reconciliation Act, or COBRA, is a law that
allows people who leave employment to
continue their health insurance under the
company plan for a limited period of time
(usually 18 months).
(continued)
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6. © 2010 South-Western, Cengage Learning SLIDE 6
Chapter 23
Group Policies
HIPPA
The Health Insurance Portability and
Accountability Act of 1996 (HIPAA) limits the
pre-existing conditions that group plans may
exclude, making it illegal for insurers to deny
coverage based on health status.
A preexisting condition is any medical
condition that a person has before being
enrolled in an insurance plan.
(continued)
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7. © 2010 South-Western, Cengage Learning SLIDE 7
Chapter 23
Group Policies
Double coverage
Coordination of benefits is a group health
insurance provision that specifies how the
insurers will share the cost when more than
one policy covers a claim.
This provision assures that reimbursement
will not exceed 100 percent of allowable
expenses.
(continued)
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8. © 2010 South-Western, Cengage Learning SLIDE 8
Chapter 23
Group Policies
Flex plans
A Section 125 Flex Plan, or Flex 125 Plan,
is an employee benefit program that allows
employees to set aside money, pretax, to
help pay deductibles, co-payments, and
other health expenses during the year that
are not covered by insurance.
A Flex 125 Plan is often offered as part of a
cafeteria-style plan.
(continued)
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9. © 2010 South-Western, Cengage Learning SLIDE 9
Chapter 23
Individual Policies
High premiums
Physical exam
High-risk health insurance pools
Supplemental health insurance
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10. © 2010 South-Western, Cengage Learning SLIDE 10
Chapter 23
Health Insurance Exchanges
The Affordable Care Act (Obamacare)
was signed into law on March 23, 2010.
The law mandates that everyone have
health insurance or face a penalty for failing
to do so.
A health insurance exchange provides a
set of government-regulated, standardized
health care plans from which uninsured and
underinsured individuals may purchase
health insurance policies.
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11. © 2010 South-Western, Cengage Learning SLIDE 11
Chapter 23
Types of Coverage
 Basic health insurance
 Basic health coverage includes medical, hospital,
and surgical costs.
 Major medical insurance
 Major medical coverage provides protection
against the catastrophic expenses of a serious
injury or illness.
 A stop-loss provision is an insurance clause that
caps or sets a maximum that the insured has to pay
during any calendar year.
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12. © 2010 South-Western, Cengage Learning SLIDE 12
Chapter 23
Types of Coverage
 Dental and vision insurance
 Dental insurance covers basic dental services, such
as exams, cleanings, X-rays, and fillings.
 Vision insurance often pays for exams for eye
disease as well as for prescription adjustments and
lenses.
(continued)
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13. © 2010 South-Western, Cengage Learning SLIDE 13
Chapter 23
Types of Private Health Plans
Unmanaged care
Managed care
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14. © 2010 South-Western, Cengage Learning SLIDE 14
Chapter 23
Unmanaged Care
Unmanaged care (traditional fee-for-
service) plans allow participants to
choose any doctor and to be reimbursed
for a portion of the expenses incurred
after a deductible is met.
Deductibles often range from $100 to
$1,000 per patient, or $500 or more per
family.
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15. © 2010 South-Western, Cengage Learning SLIDE 15
Chapter 23
Health Savings Accounts
A health savings account (HSA) is
used in association with a medical plan
that carries a higher annual deductible
than typical health plans.
Money is set aside to pay medical expenses
not paid by insurance.
Contributions are made pre-tax and are tax-
deductible.
Employer may contribute to account.
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16. © 2010 South-Western, Cengage Learning SLIDE 16
Chapter 23
Managed Care
 Managed care plans rely on a network of
health care providers.
 A health maintenance organization, or HMO, is
a group plan offering prepaid medical care to
its members.
 A preferred provider organization, or PPO, is a
group of health care providers (doctors and
hospitals) who band together to provide health
services for set fees.
 Point of service (POS) plans give people more
choice and control over medical services by
combining the features of HMOs and PPOs.
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17. © 2010 South-Western, Cengage Learning SLIDE 17
Chapter 23
Medicare and Medicaid
Medicare is government-sponsored
health insurance for people age 65 or
older.
Medicaid is government-sponsored
health insurance for people with low
incomes and limited resources.
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18. © 2010 South-Western, Cengage Learning SLIDE 18
Chapter 23
Lesson 23.2
Disability and Life Insurance
Learning Objectives
LO 2-1 Discuss different types of disability
insurance.
LO 2-2 Describe the characteristics of
different life insurance plans.
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19. © 2010 South-Western, Cengage Learning SLIDE 19
Chapter 23
Disability Insurance
 Disability insurance is an insurance plan that
makes regular payments (usually monthly) to
replace income lost when illness or injury
prevents the insured from working.
 Common types of disability insurance include:
 Group disability insurance, both short- and
long-term
 Social Security disability insurance
 Workers’ compensation insurance
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20. © 2010 South-Western, Cengage Learning SLIDE 20
Chapter 23
Life Insurance
 Life insurance provides funds to the
beneficiaries when the insured dies.
 A group life insurance plan insures a large
number of people under the terms of a single
policy without requiring a medical exam.
 Portability means that when you leave your
employer, you are able to continue paying the
premiums and convert your group policy into
an individual policy.
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21. © 2010 South-Western, Cengage Learning SLIDE 21
Chapter 23
Provisions of Life Insurance
Policies
 You have the right to name your beneficiary.
 An incontestable clause is a provision of a life
(or health) insurance policy stating that once
the policy has been in effect for a stated period
of time (usually two years), the insurer may no
longer question items on the application in
order to deny coverage.
 Double indemnity means that the beneficiary
is paid double the face amount of the
insurance policy.
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22. © 2010 South-Western, Cengage Learning SLIDE 22
Chapter 23
Types of Life Insurance
There are two main types of life
insurance:
Temporary life insurance
Permanent life insurance
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23. © 2010 South-Western, Cengage Learning SLIDE 23
Chapter 23
Temporary Life Insurance
Temporary life insurance lasts for a
specified period, such as 20 years.
Temporary life insurance is often referred
to as term life insurance.
Several variations of term life insurance:
Decreasing term insurance
Level term insurance
Renewable term insurance
Convertible term insurance
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24. © 2010 South-Western, Cengage Learning SLIDE 24
Chapter 23
Permanent Life Insurance
 Permanent life insurance remains in effect for
the insured’s lifetime and builds a cash value.
 Cash value is the savings accumulated in a
permanent life insurance policy that you would
receive if you canceled your policy.
 Four common types of permanent life policies:
 Whole life
 Limited-pay life
 Universal life
 Variable life
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