Standard 7.01Classify types of health insurance and features of types of coverage.

Essential Questions

What are the types of health insurance and things to consider when selecting options?

Handling Risk

Individuals handle risk in three ways:

1. Prepare to bear the costs themselves.2. Use safety and avoidance measures to try to avoid

costly incidents.3. Transfer risks to another party by purchasing

insurance policies.

Insurance is a risk-management technique, an arrangement in which an insured pays money to an insurer to gain protection against risks and compensation for loses.

Types of Coverage

Medical benefits Pay a large part of hospital and surgical care, may also

pay part of some other medical expenses (doctor’s visits)

Major Medical Pays for long-term illness expenses after basic medical

benefits limits have been reached (cancer) Dental Insurance

Covers all/part of routine services (examination cleanings, Xrays) and some other procedures

Vision Benefits May cover all or part of eye examinations, glasess, and

contact lens

Vision Insurance

Dental Insurance

Medical Benefits

Major Medical

Types of Coverage

Disability Insurance Supplies all/part of a worker’s pay if unable to work due to

illness or injury. Short term vs. Long Term Often a waiting period before payments begin

Long-term care insurance Intended to cover the costs of extended home nursing care

and related expenses which are not covered by regular medical benefits

Accident Insurance Covers costs from injuries that occur at an eligible location

and/or time. Large group rates keep costs low, but do not cover illness.

Medigap Insurance Private insurance available to citizens 65 and older who

have Medicare A and B plans. Covers the cost of co-payments and deductibles.

Disability Insurance Long-Term Care Insurance

Accident Insurance Medigap Insurance

Government Programs

Medicare

The federal government pays some of the medical expenses of the elderly, ages 65 and over, and for some people with disabilities.

Client can choose managed Medicare called “Medicare Advantage” or get fee-for service

Medicaid

State and federal governments share the cost to pay certain medical bills for low-income persons

Government Programs

Children’s Hospital Insurance Programs (CHIP) Health insurance for

children under eighteen whose parents earn too much to qualify for Medicaid, but not enough to buy private insurance.

Federal funds are distributed by state programs to cover costs.

COBRA Consolidated Omnibus Budget Reconciliation Act

Gives the right to pay one’s own premiums and continue employer-sponsored group health insurance plan for a limited time after leaving a job.

Non-Government Programs

Health Maintenance Organization (HMO)

A health care group that provides health care services to members for a set fee and a small co-pay.

Preferred Provider Organization (PPO)

An agreement between health providers with employers or insurers to provide services at a reduced rate to employees.

Non-Government Programs

Point of Service (POS)

Members use a primary physician who refers them as needed to participating specialist or members can see non-participating health providers.

But, members pay more to use non-participating health providers.

Fee for Services plan

A plan in which an insured can select his/her own doctors and hospitals, pay costs at time of visit, and file form with insurance company for reimbursement of covered expenses.

Non-Government Programs

Health Savings Account Employer-sponsored plan where monies are

automatically deposited before taxes into a savings account to cover predicted medical, dental, vision, and child care expenses for a twelve month period.

Monies not spent within the year are transferred to the savings account provider.

Seek the plan whose features best meets your needs

Co-payments The percentage of costs you pay once the deductible is

met Deductible

The amount of medical expenses you pay each term (usually one year) before insurance will cover any expenses.

The higher the deductible the lower the premiums Pre-existing conditions

Expenses that are not covered because they existed when coverage began

E.g. pregnancy expenses for 10 months after the policy goes into effect

Maximum benefit The maximum dollar amount the insurance company

will pay over the term and/or a lifetime. Chiropractic care often has a term limit and cancer

expenses often have a lifetime limit.

Seek the plan whose features best meets your needs

Open enrollment period The period of time during which a person whose is

eligible has to consider their options before enrolling without cost increases or exclusions.

Preauthorization Insurance approval is required in advance for expensive

and/or extensive tests, treatments, and/or surgery. Exclusions

Items that the insurance policy will not cover E.g. cosmetic surgery, teen pregnancy, new treatments

that do not yet have FDA approval Renewability

What extenuating circumstances would cause the insurance company to not renew your policy at the end of the policy contract period.

Choosing a Health Care Plan

Review several policies to determine exclusions and deductibles

Consider the costs Ask advice from others who have used the plan Consider services that may/may not be covered

Office visits, medical tests, maternity care, physical therapy, outpatient surgery, inpatient hospital services, prescription drugs, preventative care, and home health care