Health Insurance

Chapter 41

Medical Insurance

One type of health insurance is Medical insurance. Medical Insurance is categorized in the following 5 ways: 1) Hospital 2) Surgical 3) Regular Medical 4) Major Medical 5) Comprehensive Medical

Hospital Insurance

when an illness or injury requires you to be hospitalized. Will pay for most of your room, food, operating

room, anesthesia, X rays, laboratory tests and medicines.

Because of high cost of hospitalization, more people purchase hospital insurance than any other kind.

200 million Americans are covered by this.

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Surgical Insurance

Covers all or part of the surgeon’s fees for an operation. The typical surgical policy lists the types of

operations that it covers and the amount allowed for each type.

They generally do not provide coverage for pre-existing conditions or illnesses or injuries that are covered by other insurance.

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Regular Medical

Pays part or all of the fees for nonsurgical care given in the doctor’s office, the patient’s home, or a hospital. Some plans also provide payments for diagnostic

and laboratory expenses. Usually combined with hospital and surgical

insurance. The protection provided by regular medical,

hospital, and surgical coverages is referred to as basic health coverage.

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Major Medical

Provides protection against the high costs of serious illnesses or injuries. Helps pay for most kinds of health care prescribed

by a doctor. It covers the cost of treatment in and out of the

hospital, special nursing care, X-rays, psychiatric care, medicine and many other health care needs.

Maximum benefits range up to $250,000 and higher.

Major Medical policies also usually contain a coinsurance clause---

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Major Medical-page 2

Coinsurance clause means that the policy holder will be expected to pay a certain percentage, generally 20 or 25 percent, of the costs over and above the deductible amount. This clause discourages the filing of minor claims. This clause encourages the policyholder to keep

medical expenses as reasonable as possible.

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Comprehensive Medical

This policy combines the features of hospital, surgical, regular, and major medical insurance. It only has one deductible. Usually less expensive than the total of the

separate coverages.

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Dental Insurance

Helps pay for normal dental care, often including examinations, X-rays, cleaning, fillings, and more complicated types of dental work. It also covers dental injuries resulting from

accidents. May contain deductible and coinsurance

provisions Offered mainly in group plans Annual claims exceed 25 billion.

Vision Care

Covers eye examinations, prescription lenses, frames, and contact lenses. Usually doesn’t cover vanity items like

tinted lenses, coated or plastic lenses, nonprescription lenses, and vision training.

Disability Income Insurance For most people, income from employment is

their single most important economic resource. Protecting your income is very important. This insurance protects you against the loss of

income caused by a long illness or an accident. The insured receives weekly or monthly payments

until that person is able to return to work. Frequently includes a waiting period provision which

requires that the policyholder wait a specified length of time after the disability occurs before payment begins.

Health Insurance Providers

You can buy health insurance as an individual or as a member of a group. The most popular way to buy health insurance is

as a member of a group. Organizations that sponsor health insurance often

pay part of all of the premium costs for their employees. This is provided as a benefit in addition to salary. Group policies are more economical to administer than

individual plans.

Individual Health Insurance

If you are not a member of a group that provides some type of group insurance you may have to buy individual health insurance. These policies are rather expensive,

require a physical examination and have a waiting period before the policy is in force.

Managed Care Plans

In the last 20 years, various alternatives to traditional fee-for-service health insurance have grown in popularity.

This is know as Managed Health Care. These plans now cover more than 2/3 of Americans. They typically provide comprehensive health care at a

lower cost through networks of providers such as doctors, hospitals, and clinics.

Patients benefit from lower premiums, low or not deductibles, low co-payments, and little or no paperwork.

Managed Care Plans-(cont.)

Major drawback to these types of plans is that patients have less control or choice over whom they see for health problems and the specific treatment that is covered by managed care plans compared to traditional insurance. Go by various names-such as

HMOs,PPOs, POS.

Managed Care-(cont.)

Health Maintenance Organizations-normally consist of a staffed medical clinic organized to serve its members. As a member you are entitled to a wide range of

prepaid health care services including hospitalization. HMOs emphasize preventative health care. Early detection and treatment of illnesses help to keep

people out of hospitals and keep cost down. Cosmetic surgery, if not necessary, is excluded.

Managed Care-(cont.)

Preferred provider Organization(PPO)-this organization contracts with employers to provide medical services to employees. These providers agree to charge set fees for their

services. Not required to stay within the organization for

treatment. May receive partial payment for treatment received

somewhere else.

State Government Assistance

Workers’ Compensation-is an insurance plan that provides medical and survivor benefits for people injured, disable, or killed on the job. Under these laws, most employers are required to

provide and pay for insurance for their employees. If unable to return to the job, the worker is paid a

certain proportion of wages as benefits. Usually about 2/3 of their regular wage.

State Government Assistance

Medicaid-a form of medical aid to low-income families. The federal government shares with states

the cost of providing health benefits to financially needy families.

Needy is defined as one whose income provides for basic necessities but who could not afford adequate medical care or pay large medical bills.

Federal Government Assistance

The nation’s Social Security laws provide a national program of health insurance know as Medicare. It is designed to help people age 65 and

older and some disabled people pay the high cost of health care.

Medicare has two basic parts-hospital insurance and medical insurance.

Medicare-(cont)

No premium payments are required for the hospital insurance, and almost everyone 65 years old and older may qualify.

The medical insurance portion of Medicare is often called supplementary or voluntary medical insurance. This requires a small monthly premium.

Costs

The cost of health care has been increasing two to three times faster than inflation.

Cost of Health Care is determined by 4 factors. Extent of Coverage Number of claims filed by policyholders. Age of the policyholder. Number of dependents.