Types of Health Care Plans Traditional Indemnity Plans: Also called fee-for-service plans, you typically choose the doctors and hospitals, pay for the service, and then get paid back by the insurance company. Managed Care Plans: Users make monthly payments directly to health care providers. A designated group of doctors and hospitals provide services. No deductibles are paid, just low copayments for services. Types of Managed Care Plans: Health maintenance organizations (HMOs) Comprehensive services usually at one facility Individual practice associations (IPAs) Physicians operate out of their own offices and community hospitals Preferred Provider Organizations (PPOs) Broader network of “approved” physicians and allows use of out-of-network providers Providers of Health Insurance Private Insurers: Insurance companies Managed care organizations Blue Cross/Blue Shield (prepaid expense plans) Group plans (may incorporate any of the above) Government Agencies: Social Security’s Medicare program Part A—basic hospital insurance for those 65 and over who are qualified Part B—supplementary medical insurance; optional coverage available for a monthly premium to those eligible for Part A Workers’ compensation insurance Premiums paid by employers for workers injured on the job Coverage includes: Medical and rehabilitation expenses Disability income Lump-sum payments for death or dismemberment Second-injury funds Other sources of health care: Homeowner’s and automobile insurance policies contain limited amounts of medical coverage. Other government health programs at the federal, state and local levels, including Medicaid and programs for military personnel. Types of Medical Expense Coverages Hospital insurance: pays a portion of per-day room and board charges, use of hospital facilities, and selected other services. Surgical expense insurance: pays cost of surgery either in or out of the hospital not all procedures are covered, such as cosmetic or experimental surgery Physicians expense insurance: pays physician fees for nonsurgical care in hospital includes consultation with specialists and lab tests Major medical insurance: broad coverage for illnesses and injuries of a catastrophic nature amount of coverage is large Dental insurance: covers necessary dental care and some dental injuries mostly offered through group insurance plans 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. Coverages You Don’t Need! 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 Policy Provisions Terms of Payment: How much your medical expense plan will pay is usually determined by the following 4 provisions: 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 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 Terms of Coverage: Important provisions to consider in your health care policy include the following items: Persons and places covered—Who is covered and where are you covered? Cancellation—Obtain a policy that cannot be canceled unless premiums are not paid. Continuation of group coverage (COBRA)—At your expense, you can continue your previous employer’s coverage for up to 18 months after you leave the job. Rehabilitation coverage—How much is provided? Preexisting conditions—How are they covered? Pregnancy and abortion—What is the extent of the coverage provided? Mental illness—How restricted is the coverage? How Insurance Companies Try to Keep Costs Down in Policies Pre-admission certification Continued stay review Second surgical opinions Caseworkers Waiver of coinsurance 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. Long-Term Care Policy Provisions: Care—What types and levels of care are covered? Benefits—What are the eligibility requirements? How much is the daily benefit and how long will it last? Waiting period—Once eligible, how long before the payments begin? Renewability—Is the policy guaranteed renewable? Preexisting conditions—How will they be handled? Premiums—How much are they? Will they increase? Is there an inflation clause? 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? Will your family be able to care for you? Considerations in Purchasing Long-Term Care Insurance Buy the policy while you are healthy. Don’t buy more coverage than you need. (But how much is that?) Increase the waiting period if you can cover costs yourself for a certain time period. Understand the policy provisions and when benefits are paid. Disability Insurance Provides families with weekly or monthly income to replace income lost when the insured is unable to work due to an illness or injury. Estimating Disability Needs Estimate monthly living expenses Estimate existing benefits, such as: – Social Security – Other government benefits – Company benefits – Group disability policy benefits Subtract (2) from (1) Disability Insurance Provisions: Definition of disability—"own occupation" most desirable. Benefits—How much will they be and how long will they last? Probationary period—how long after policy is issued before benefits are available? Waiting period—once disabled, how long before benefits begin? Renewability—Is it guaranteed renewable or noncancelable? Other features—Look for cost of living adjustment, guaranteed insurability option, waiver of premium. Shopping for Insurance Consider your needs. How much can you afford? What can you do to lower your health care needs? Compare policies and costs. What does your employer provide? Select a quality company with a good agent.
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