Download Understanding Health and Disability Insurance: Types, Costs, and Trade-offs and more Slides Management Fundamentals in PDF only on Docsity!
Health and Disability Income Insurance
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Eases the financial burden people may experience as a result ofillness or injury (pay a premium to transfer risk of loss)– Medical expense insurance- pays actual medical costs– Disability income insurance- provides replacement income
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Group and individual health insurance coverage available
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COBRA^ –
Requires many employers to offer employees and dependents the optionto continue their group coverage for a set period of time following a layoff
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The Health Insurance Portability and Accountability Act^ –
Established federal portability standards
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If you change
jobs, you need not lose your health insurance
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Sources of Health Care Plans
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Health Care Plan-
generic name for any
program that pays or provides reimbursementfor health care expenses
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Group Health Care Plan
health coverage
sold collectively to an entire group of personsrather than to individuals
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Open Enrollment Period
during this time,
you can begin or make changes in coverage orswitch among alternative plans– Requirements are generally waived for family
changes (e.g., birth of a child, adoption, marriage)
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Objective 2Analyze the Costs and Benefits of VariousTypes of Health Insurance as well as MajorProvisions in Health Insurance Policies
Types of Health Insurance Coverage
BasicMajor medicalBoth
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Basic Health Insurance^ –
Hospital Expense Insurance
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Hospital room, board, and other charges (usually with a cap)
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Surgical Expense Insurance
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Surgeon's fee for an operation (often specify amount per service)
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Physician Expense (Medical Expense) Insurance
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Pays for physician’s care that does not include surgery, such asoffice visits, lab tests, X-rays (often specify amount per service)
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Types of Health Insurance Coverage
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Major Medical Expense Insurance^ – Covers expenses for serious injury or long-term illness– Goes beyond what basic health insurance pays– May include a
deductible
(initial amount paid before
insurance co. pays),
coinsurance
(e.g., 20% to 25% of
expenses after deductible), and a
stop-loss
provision
- Policy limits of $1 million are common–
Stop-loss:
policyholder pays coinsurance up to a
certain amount, after which insurance company pays100% (typically $3,000 and $5,000)
Comprehensive Health Insurance-
combines basic
health insurance and major medical into a single policy
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Major Provisions in a Health
Insurance Policy
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Eligibility^ – Varies with age, marital status, and dependency
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Assigned Benefits^ – Insurance pays your doctor or hospital directly
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Internal Limits^ – Fixed amount per day for a hospital room
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Copayment^ – Cost sharing in the form of a flat dollar amount
you pay, such as $15 per office visit or $10 perprescription
- NOT the same as co-insurance, which is a
percentage of expenses
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Major Provisions in a Health
Insurance Policy
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Service Benefits^ – Entitlement to specific services
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Benefit Limits^ – Maximum dollar amount or maximum number of days
in the hospital
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Exclusions and Limitations^ –
Pre-existing conditions
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Cosmetic surgery
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Guaranteed Renewable
(can’t cancel policy unless
fail to pay premiums; insurer can’t raise premiums forone person unless raised for an entire group)
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Cancellation and Termination^ –
Explains the circumstances under which policy can becanceled and/ or converted
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Health Insurance Must-Haves
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Objective 4
Evaluate the Differences Among Health Care Plans Offered by Private Companies
and by the Government
Private Health Care Plans •^
Private Insurance Companies^ – Individual policy– Group policy sold to an employer
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Hospital and Medical Service Plans^ – Blue Cross = hospital care– Blue Shield = surgical and medical services
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Private Health Care Plans
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Preferred Provider Organization (PPO)^ –
Several providers to choose from
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Costs more than an HMO
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More choices, fewer restrictions than an HMO
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If you go to a non-PPO provider, you pay more
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Example: NJ Direct for state of NJ employees
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Point-of-Service (POS)^ –
Combines features of HMOs and PPOs
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Home Health Care Agencies^ –
Medical care in a home setting for a fraction of the cost of hospitals
•^
Employer Self-Funded Health Plans^ –
Company runs self-insured insurance program
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Collects premiums from employees
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Pays medical benefits as needed
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New Health Care Accounts
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Health Spending Accounts (HSA)^ – Money contributed to pre-tax dollar account– Must have a high-deductible policy
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Health Reimbursement Accounts (HRA)^ – Also tied to high-deductible policies– Funded solely by employer– Unused funds carried over to next year
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Flexible Spending Accounts (FSA)^ – Workers contribute pre-tax dollars– Funds managed by employer– Unused funds forfeited at year end
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MEDICARE
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Part A:^ –
Hospital insurance
helps pay for inpatient care in a hospital or skilled
nursing facility (following a hospital stay), some home health care, andhospice care (paid for by workers’ payroll deductions)
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Part B:^ –
Medical insurance
helps pay for doctors’ services and many other
medical services and supplies not covered by hospital insurance
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Beneficiaries pay a monthly premium (varies according to income)
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Part C:^ –
Medicare Advantage plans
available in many areas
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Those with Parts A and B can choose to receive all of their health careservices through one of these provider organizations under Part C
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Part D:^ –
Prescription drug coverage
helps pay for medications doctors prescribe
for treatment
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Government Consumer Health
Information Websites
www.hhs.gov
www.nlm.nih.gov/medlineplus
- NIH Health Information Page:
www.nih.gov
www.fda.gov
www.medicare.gov
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Sources of Disability Income
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Workman’s Compensation^ – Disability from on-the-job accident or illness
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Employer Plans^ – Short or long-term group disability policy
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Social Security^ – Covers total disability lasting > 12 months– Starts in the 6
th
month
- Strict definition of disability to qualify -^
Private Income Insurance Programs^ – Supplements other disability income sources– Normally provides 40-60% of income (up to 75%)
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Disability Income Insurance
Trade-Offs
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Policy’s definition of disability–
Own Occupation-
can no longer perform previous job
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Any Occupation-
can’t work at
any
job
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Waiting or elimination Period
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Duration of benefits
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Amount of benefits
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Accident and sickness coverage
(want payment for both; accidents are
not the only cause of disability!)
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Guaranteed renewable
(guarantees coverage as long as you pay your
premium, but premiums can change for you within a class of insureds)
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Noncancellable-
Better but more expensive; no future change in premium
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Cost-of-Living Adjustments
(adjusts benefit for inflation)
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Partial benefits
(pays benefit if person can only work part-time)
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