Types of Health Care Plans

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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.

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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.

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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

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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)

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Government Agencies

• Social Securitys Medicare program
• Part Abasic hospital insurance for those 65 and
  over who are qualified
• Part Bsupplementary medical insurance optional
  coverage available for a monthly premium to those
  eligible for Part A

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• 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

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Other sources of health care

• Homeowners 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.

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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.

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• 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

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• 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

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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.

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Coverages You Dont 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

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Policy Provisions

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

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• 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

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• 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

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Terms of Coverage

• Important provisions to consider in your health
  care policy include the following items

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• Persons and places coveredWho is covered and
  where are you covered?
• CancellationObtain a policy that cannot be
  canceled unless premiums are not paid.
• 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.

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• Rehabilitation coverageHow much is provided?
• Preexisting conditionsHow are they covered?
• Pregnancy and abortionWhat is the extent of the
  coverage provided?
• Mental illnessHow restricted is the coverage?

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How Insurance Companies Try to Keep Costs Down in
Policies

• Pre-admission certification
• Continued stay review
• Second surgical opinions
• Caseworkers
• Waiver of coinsurance

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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.

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Long-Term Care Policy Provisions

• CareWhat types and levels of care are covered?
• BenefitsWhat are the eligibility requirements?
  How much is the daily benefit and how long will
  it last?
• Waiting periodOnce eligible, how long before the
  payments begin?

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• RenewabilityIs the policy guaranteed renewable?
• Preexisting conditionsHow will they be handled?
• PremiumsHow much are they? Will they increase?
  Is there an inflation clause?

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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?

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Considerations in Purchasing Long-Term Care
Insurance

• Buy the policy while you are healthy.
• Dont 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.

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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.

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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)

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Disability Insurance Provisions

• Definition of disability"own occupation" most
  desirable.
• BenefitsHow much will they be and how long will
  they last?
• Probationary periodhow long after policy is
  issued before benefits are available?

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• Waiting periodonce disabled, how long before
  benefits begin?
• RenewabilityIs it guaranteed renewable or
  noncancelable?
• Other featuresLook for cost of living
  adjustment, guaranteed insurability option,
  waiver of premium.

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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.