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Insuring Your Health. #9. Importance of Health Insurance. Protect against economic loss in the event of serious accidents or illnesses Protect against rising cost of health care which is outpacing other costs. Historical Trends in Health Insurance Costs. - PowerPoint PPT Presentation
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© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Insuring Your Health#9
Importance of Health Insurance
• Protect against economic loss in the event of serious accidents or illnesses
• Protect against rising cost of health care– which is outpacing other costs
Historical Trends in Health Insurance Costs
Health Insurance Plans
Private Insurance Plans
• Available to individuals or families
• Provided as group health insurance plans through various employers
Traditional Indemnity Plans
• Called fee-for-service plans• Typically offer unlimited choice of doctors and
hospitals• Pay deductible plus a percentage of eligible costs• Reimbursements based on “usual, customary and
reasonable” (UCR) charges• Health care services separate from insurer
Managed Care Plans
• Monthly payments made directly to health care providers
• Designated doctors and hospitals provide services
• Hold down costs by controlling amount of care provided and emphasizing prevention
• Charge monthly fees plus copayments
Types of Managed Care Plans
Health Maintenance Organizations (HMOs)
• Group HMOs provide services for members from a central facility
• Individual Practice Associations (IPAs) contract with physicians who operate out of their own offices and community hospitals
Types of Managed Care Plans
Health Maintenance Organizations (HMOs)
• Preferred Provider Organizations (PPOs) - Provide broader network of “approved” physicians and allow use of out-of-network providers at higher copay
• Exclusive Provider Organizations (EPOs) - Members use affiliated providers or bear entire cost out of pocket
• Point-of-Service Plans - Reimburse members similar to indemnity plan when providers are outside of network
Blue Cross/Blue Shield Plans
• Prepaid hospital and medical expense plans rather than insurance
• Originally non-profit, but now organized as for-profit independent corporations
• Blue Cross acts as intermediary between groups that want healthcare and physicians who contract to provide their services
Government Health Insurance Plans
Possibility of National Health Care• Debate includes the possibility of health care under the
government’s control
• Some government health care plans have been in place for some time
Government Health Insurance Plans
Medicare program• Administered by Social Security• Available to qualified people 65 and older and to those
receiving SS disability benefits• Funded by payroll taxes paid by employers, employees and
the self-employed
Components of Medicare
Part A—Basic hospital insurance
• Free for those qualified• Covers hospital room
and board, other inpatient and outpatient care
• Deductibles apply, amounts vary according to length of stay
Part B—Supplementary medical insurance
• Optional coverage available for a premium if eligible for Part A
• Covers doctors, surgeons, lab tests, x-rays, and other services, including some home health care
Medicaid
• State-run public assistance program for those unable to pay for health care– Federal government provides some funding
• Eligibility and levels of coverage vary by state
• Premiums paid by employers for workers injured on the job
• State administered; coverage varies
Coverage includes:• Medical, rehabilitation
expenses• Disability income• Lump-sum payments for
death, dismemberment• Second-injury funds
Workers’ Compensation Insurance
Health Insurance Decisions
Evaluate healthcare cost risk, consider:– Medical care and rehabilitation expenses– Loss of income from disability
Determine available coverage and resources
Choose a health insurance plan
Medical Expense Coverage and Policy Provisions
Hospitalization• Pays a portion of per-day
room and board charges• Use of hospital facilities• Selected other services
Medical Expense Coverage and Policy Provisions
Surgical expenses• Pays cost of surgery
in or out of hospital• Not all procedures
are covered– such as cosmetic or
experimental surgery
Physician expenses• Pays physician fees
for nonsurgical hospital care
• Includes consultation with specialists and lab tests
Medical Expense Coverage and Policy Provisions
Major medical insurance
• Broad coverage for illnesses and catastrophic injuries
• May have lifetime limits
Comprehensive major medical
• Combines major medical with basic hospital, surgical and physicians expense coverage
• Through group plans with low deductible
Dental services:• Covers necessary dental care and some
dental injuries.• Mostly offered through group insurance
plans.
Medical Expense Coverage and Policy Provisions
Other Types of Health Plans
• Accident policiesCover certain accidents
• Sickness and dread disease policies Coverage limited to specific disease or illness
• Hospital income policiesGuarantee a per-diem for hospital stays
Policy Provisions of Medical Expense Plans
Deductible • Initial amount not
covered• Determined on a
calendar-year or per-incident basis
Participation (Coinsurance):
• Company pays a portion of medical expenses after a deductible
• Plan may include a stop-loss provision to cap out-of-pocket expenses
Policy Provisions of Medical Expense Plans
Internal limits• Limits amount paid
on certain items to usual, customary, and reasonable charges even if cost is within the norms
Coordination of benefits
• Eliminates double payment when coverage provided under more than one policy
Terms of Coverage
• Persons and places covered • Cancellation• Preexisting conditions • Pregnancy and abortion• Mental illness • Rehabilitation coverage • Continuation of group coverage
(COBRA)
Cost Containment Provisions for Medical Expense Plans
Preadmission certification Continued stay review Second surgical opinions Waiver of coinsurance Limitation of insurer’s responsibility
Long-Term Care Insurance
Provides for delivery of medical and personal care, other than hospitalization, to persons with chronic medical conditions in nursing home, assisted living community, or patient’s home
Do You Need Long-Term Care Insurance?
• Do you have many assets to preserve for dependents?
• Can you afford the premiums?• Is there a family history of disabling disease?• What is your gender? • Do you have family who can
care for you?
Long-Term Care Provisions and Costs
Type of careEligibility requirements
Services covered Waiting period Daily benefits Renewability Benefit duration
Preexisting conditionsInflation protection
Premium levels
Typical Provisions in Long-Term Care Insurance Policies
How to Buy Long-Term Care Insurance
• Buy the policy while you are healthy• Buy the right types of coverage, but
not more than needed
• Understand what the policy covers and when it pays benefits
Disability Income Insurance
Provides families with weekly or monthly payments to replace income lost when insured is unable to work due to an illness, injury or disease
Estimating Disability Income Insurance Needs
Disability Insurance Provisions and Costs
• Definition of disability - “own occupation"• Benefit amount and duration• Probationary period• Waiting period• Renewability • Other features - (COLA), guaranteed
insurability option, and waiver of premium