CHAPTER 9: INSURING YOUR HEALTH

1
CHAPTER 9INSURING YOUR HEALTH
2
Importance of Health Insurance

• Protect against economic loss in the event of
  serious accidents or illnesses.
• Protect against the rising cost of health care,
  which is outpacing other costs in general.

3
Historical Trends in Health Insurance Costs
4
Health Insurance Options
1. Private Insurance

• Available to individuals or families.
• Provided as group health insurance plans through
  various employers.

5
Traditional Indemnity Plans

• Also called fee-for-service plans.
• Usually offer unlimited choice of doctors and
  hospitals.
• You pay a deductible plus a percentage of
  eligible costs.
• Deductible can range from 100 - 2,000
• Typically plan pays 80 insured pays 20
• Reimbursements based on usual, customary and
  reasonable (UCR) chargeswhat the insurer
  considers to be the prevailing fees within your
  area, not what your doctor or hospital actually
  charges.
• Health care services are separate from insurer.

6
Managed Care Plans

• Monthly payments made directly to health care
  providers.
• Designated group of doctors and hospitals
  provide services.
• Plans hold down costs by controlling amount of
  care provided and emphasizing prevention of
  illness.
• Charge monthly fees plus small co-payments for
  services.
• No deductible

7
Types of Managed Care Plans

• Health Maintenance Organizations (HMOs)
• Organization of hospitals, physicians, and other
  healthcare providers
• Provide comprehensive health care to its members
• Members pay monthly fee plus co-pay each time
  service is used
• Advantages include no deductible, few or no
  exclusions, and not having to file insurance
  claim
• Disadvantages include not able to choose
  physicians limitations if care is needed outside
  geographic area

8
Two Main Types of HMOs

• Group HMOs provide services for members from a
  central facility one stop shopping!
• Individual Practice Associations (IPAs) contract
  with physicians who operate out of their own
  offices and community hospitals.

9

• Preferred Provider Organizations (PPOs)

• Insurance company or provider contracts with
  network of physicians and hospitals
• Network agrees to accept a negotiated fee for
  services provided to PPO customers
• Advantages Provides broader network of
  approved physicians and also allows use of
  out-of-network providers for a higher copay.

10

• Other Managed Care Plans
• Exclusive Provider Organizations (EPOs) allow
  members to use only affiliated providers or bear
  entire cost out of pocket.
• Point-of-Service Plans reimburse members similar
  to indemnity plan when providers outside of
  network are used.

11
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.

12
HMO or PPO?

• Video from U.S. News

13
2. Government Health Insurance Plans

• Medicare program
• Health insurance administered by Social Security.
• Available to qualified people 65 and older and to
  those receiving social security disability
  benefits.
• Funded by payroll taxes paid by employers,
  employees, and the self-employed.

14
Components of Medicare

• Part ABasic hospital insurance
• Provided free for those who are qualified.
• Covers hospital room and board and various other
  inpatient and outpatient care.
• Deductibles apply, with amounts varying according
  to length of stay.
• Part BSupplementary medical insurance
• Optional coverage available for a monthly premium
  to those eligible for Part A.
• Covers services of doctors and surgeons, lab
  tests, x-rays, and various other services,
  including some home health care.

15
Components of Medicare

• Part DPrescription Drug Coverage
• Voluntary participation
• Covers both brand name generic prescriptions
• All Medicare recipients are eligible
• Participants pay a monthly fee, yearly
  deductible, copayment

16
Medicaid

• State administered healthcare program for people
  of any age of low economic means.
• Federal government also provides some amount of
  funding.
• Eligibility and levels of coverage vary by state.

17
Workers compensation insurance

• Mandatory health insurance that compensates
  workers for job-related illness or injury.
• Premiums paid by employers.
• Premiums based on merit employers who file the
  most claims pay the highest rates
• State administered coverage varies.
• Coverage typically includes
• Medical and rehabilitation expenses
• Disability income
• Lump-sum payments for death or dismemberment

18
Health Insurance Decisions

• Evaluate your healthcare cost risk, considering
• Medical care and rehabilitation expenses
• Loss of income from disability
• Determine available coverage and resources
• Choose a health insurance plan

19
Other Health Insurance Information

• Health Reimbursement Account
• Employer contributes to account
• Employees can use it to pay for medical expenses
• Usually combined with high deductible policy
• At end of year, unused portion can be rolled
  over
• If you change jobs, money stays with employer
• Health Savings Account
• Tax-free savings account
• Funded by employer, employee, or both
• Used for routine medical costs
• Usually combined with high-deductible policy
• If you change jobs, money goes with you

20
Medical Expense Coverage and Policy Provisions

• Hospitalization
• Pays a portion of per-day room and board charges
• Cost of ancillary services (x-rays, lab tests,
  meds)
• Selected other services (out-patient, in-home
  rehab, diagnostics, etc.)
• Limit on number of days and max dollars for
  ancillary services

21
Surgical Expenses

• Pays cost of surgery either in or out of the
  hospital.
• Reasonable customary based on survey of
  previous year
• Schedule of benefitsreimburse for fixed amount
  for particular procedure
• Not all procedures are covered, such as cosmetic
  or experimental surgery.

22

• Physician Expenses
• Pays physician fees for nonsurgical care in
  hospital.
• Includes consultation with specialists and lab
  tests.
• Often first few visits with physician for any
  single cause will be excluded.

23
Major Medical Insurance

• Designed to supplement the basic coverage
  discussed above.
• Broad coverage for illnesses and injuries of a
  catastrophic nature.
• Amount of coverage is large.
• May have lifetime limits.

24
Comprehensive Major Medical

• The most desirable coverage it combines major
  medical with basic hospital, surgical and
  physicians expense coverages.
• Usually offered through group plans with low
  deductible.

25

• Dental Insurance
• Covers necessary dental care and some dental
  injuries.
• Maximum limits are often low--1,000 to 2,500
  per patient per year
• Mostly offered through group insurance plans.

26
Supplemental Insurance

• Accident policies
• Only cover certain types of accidents, usually
  travel-related ones.
• Sickness and dread disease policies
• Coverage limited to specific disease or illness
  prohibited in some states.
• Hospital income policies
• Guarantee a per-diem for hospital stays, but
  generally exclude certain illnesses.

27
Policy Provisions of Medical Expense Plans

• Terms of Payment
• How much your medical expense plan will pay is
  usually determined by the following 4 provisions

28
Deductible

• The initial amount not covered.
• Determined on a calendar-year or per-incident
  basis.
• Participation (Coinsurance)
• Company pays only a portion of the medical
  expenses after the deductible.
• Plan may include a stop-loss provision to cap
  your out-of-pocket expenses.

29
Internal limits

• Limits amount paid on certain items to usual,
  customary, and reasonable charges even if cost of
  entire surgery or illness is within the norms.
• Coordination of benefits
• Eliminates double payment when coverage provided
  under more than one policy.

30
Terms of Coverage

• Important provisions to consider include

• Persons and places coveredWho is covered and
  where are you covered?
• CancellationObtain a policy that cannot be
  canceled unless premiums are not paid.
• Preexisting conditionsPhysical or mental
  problems insured had at time policy was
  purchased.
• Pregnancy and abortionWhat is the extent of the
  coverage provided?

31

• Mental illnessHow restricted is the coverage?

• Rehabilitation coverage Provides coverage for
  counseling occupational therapy, etc. if you
  become disabled.
• Continuation of group coverage (COBRA)At your
  expense, you can continue your previous
  employers coverage for up to 18 months after you
  leave the job.

32
Cost Containment Provisions for Medical Expense
Plans

• Pre-admission certificationget approval from
  insurer before hospital admission (except for
  emergencies)
• Continued stay reviewget approval from insurer
  for stay that exceeds original approved limits
• Second surgical opinions
• Waiver of coinsuranceinsurer agrees to pay 100
  for outpatient in lieu of inpatient hospital
  stay insurer agrees to pay 100 for generic
  drugs in lieu of 80 for brand-name
  pharmaceuticals.
• Limitation of insurers responsibilitylimit
  insurers responsibility to costs that are
  considered reasonable and customary.

33
Long-Term Care Insurance

• Provides for delivery of medical and personal
  care, other than hospital care, to persons with
  chronic medical conditions due to illness or
  frailty.

34
Do You Need Long-Term Care Insurance?

• Do you have a lot of assets to preserve for your
  dependents?
• Can you afford the premiums?
• Is there a family history of disabling disease?
• Are you male or female?
• Do you have family who can care for you?

35
Long-Term Care Provisions

• Type of careWhat types of care are covered? Ex
  nursing home, in-home.
• Eligibility requirements Gatekeeper provisions
  determine when insured qualifies for benefits.
• Services coveredWhat levels of service are
  covered? Ex skilled, intermediate care,
  custodial.

36

• Daily benefits What is the daily maximum
  reimbursement?
• Benefit duration How long will the benefits
  last?
• Waiting period Once eligible, how long before
  the payments begin?

37

• RenewabilityIs the policy guaranteed renewable?
  Optional renewability are renewable only at the
  option of insurer.
• Preexisting conditionsHow will they be handled?
• Inflation protectionCan you increase benefits
  with rising costs?
• Premium levelsHow much are they? Will they
  increase?

38
Typical Provisions in Long-Term Care Insurance
Policies
39
How to Buy Long-Term Care Insurance

• Buy the policy while you are healthy.
• Buy the right types of coverage, but dont buy
  more coverage than you need.
• Understand what the policy covers and when it
  pays benefits.

40
Disability Insurance

• Provides families with weekly or monthly payments
  to replace income lost when the insured is unable
  to work due to an illness, injury or disease.

41
Estimating Disability Needs

• 1. Calculate monthly take-home pay.
• 2. Estimate existing benefits, such as
• Social Security
• Other government benefits
• Company disability benefits
• Group disability policy benefits
• 3. Subtract the total of (2) from (1)

42
Disability Insurance Provisions

• Definition of disability"Own Occupation" most
  desirable. Benefits may never kick in if you can
  perform Any Occupation.
• BenefitsHow much will they be and how long will
  they last?
• Probationary periodHow long after policy is
  issued before benefit privileges are available?

43

• Waiting period--once disabled, how long before
  benefits begin?
• RenewabilityIs it guaranteed renewable or
  noncancelable?
• Other featuresLook for cost of living adjustment
  (COLA), guaranteed insurability option, and
  waiver of premium.

44

THE END!