insuring your health
DESCRIPTION
Insuring Your Health. #9. Learning Goals. Importance of Health Insurance. Exhibit 9.1. Health Insurance Plans. Private Health Insurance Plans. Traditional Indemnity Plans. Managed Care Plans. Types of Managed Care Plans. Health Maintenance Organizations (HMOs). - PowerPoint PPT PresentationTRANSCRIPT
© 2012 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
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Learning Goals
Discuss why having adequate health insurance is important, and identify factors contributing to the growing cost of health insurance
Differentiate among the major types of health insurance plans, and identify major private and public health insurance providers
Analyze your own health insurance needs and explain how to shop for appropriate coverage
Explain the basic types of medical expenses covered by the policy provisions of health insurance plans
Assess the need for and features of long-term care insurance
Discuss the features of disability income insurance and how to determine your need for it
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Importance of Health Insurance
Protect against economic loss in the event of serious accidents or illnesses
Protect against rising cost of health care
In 2010, 50% of US personal bankruptcies were attributable to medical costs
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Exhibit 9.1
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Health Insurance Plans
Private Health Insurance PlansAvailable to individuals or families
Provided as group health insurance plans through various employers
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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
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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
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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
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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
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Blue Cross/Blue Shield Plans
Prepaid hospital and medical expense plans rather than insurance
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
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Exhibit 9.2 Most Common Types of Health Plans
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Government Health Insurance PlansHealth Care Reform
Goal of recently-passed legislation is to provide more people with access to needed services at affordable rates
Some government health care plans have been in place for some time
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Government Health Insurance PlansMedicare 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
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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
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Medicaid
State-run public assistance program for those unable to pay for health care
Federal government provides some funding
Over 63 million people covered by Medicaid
Eligibility and levels of coverage vary by state
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• Premiums paid by employers for workers injured on the job
• State administered; coverage varies
Workers’ Compensation Insurance
Coverage includes:• Medical,
rehabilitation expenses
• Disability income• Lump-sum payments
for death, dismemberment
• Second-injury funds
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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
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Medical Expense Coverage and Policy Provisions
HospitalizationPays a portion of per-day room and board charges
Use of hospital facilities
Selected other services
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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
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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
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Dental services:
Medical Expense Coverage and Policy Provisions
Covers necessary dental care and some dental injuries.
Mostly offered through group insurance plans.
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Other Types of Health Plans
Accident policies - Cover certain accidents
Sickness policies (dread disease policies) - Coverage limited to specific disease or illness
Hospital income policies - Guarantee a per-diem for hospital stays
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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
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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
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Terms of Coverage
Persons and places covered
Cancellation
Preexisting conditions
Pregnancy and abortion
Mental illness
Rehabilitation coverage
Continuation of group coverage (COBRA)
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Cost Containment Provisions for Medical Expense Plans
Preadmission certification
Continued stay review
Second surgical opinions
Waiver of co-insurance
Limitation of insurer’s responsibility
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Long-Term Care Insurance
Involves the 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
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Do You Need Long-Term Care Insurance?
Do you have 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?
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Long-Term Care Provisions and Costs
Type of careEligibility requirements
Services covered Waiting period Daily benefits Renewability Benefit duration
Preexisting conditionsInflation protection
Premium levels
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Typical Provisions in Long-Term Care Insurance Policies
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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
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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
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Estimating Disability Income Insurance Needs
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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