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46 Cards in this Set
- Front
- Back
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Medical Expense Insurance pt. 1
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• Medical expense insurance provides benefit for
medical care • Contracts may provide for payment of medical expenses incurred on a – Reimbursement basis • By paying benefits to the policyowner – Service basis • By paying those who provide the services directly – Indemnity basis • By paying a set amount regardless of the amount charged for medical expenses |
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Medical Expense Insurance pt. 2
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• Medical expense or hospitalization insurance
may be written on – An individual basis – A group basis • Benefits provided cover the individual and eligible dependents |
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Medical Expense Insurance pt. 3
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Although there are many types of benefits
available, medical expense insurance can generally be categorized as – Basic medical expense insurance – Major medical insurance – Comprehensive medical insurance – Special policies |
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Medical Expense Insurance pt. 4
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• While these types of plans have been modified
and replaced in response to changes in the health care field relative to cost containment and market competition, it is important to have a general understanding of these types of coverage plans |
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Basic Hospital, Surgical, and Medical
Expense Policies pt. 1 |
• Basic coverages provided by an individual
medical expense policy include – Basic hospital expense – Basic surgical expense – Basic medical expense • Three basic coverages may be sold together or separately |
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Basic Hospital, Surgical, and Medical
Expense Policies pt. 2 |
• Usually provide first dollar coverage, meaning it
does not have a deductible • Usually provide lower limits of coverage – Limited number of days – Lower dollar amount maximums |
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Basic Hospital Expense Benefits pt. 1
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• Provides benefits for expenses incurred during
hospitalization – Hospital indemnities usually classified into two broad groups • Room and board • Miscellaneous medical expenses – Room and board benefit • Covers room and board expenses, including nursing care and special diets • May have limitations on daily expense and duration of each hospital stay |
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Basic Hospital Expense Benefits pt. 2
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– Room and board benefit (continued)
• Benefits may be paid on an – Indemnity basis • Insurer pays a specified, pre-established amount per day, as shown in a schedule in the policy, for a stated maximum number of days • Sometimes called dollar amount plans – Reimbursement basis • Insurer either pays charges for a semiprivate room or a specified percentage of the actual charges (80% common) • Also referred to as an expenses-incurred basis |
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Basic Hospital Expense Benefits pt. 3
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• Provides benefits for expenses (continued)
– Miscellaneous medical expenses benefit • Covers items such as x-rays, laboratory fees, medications, medical supplies, anesthesia, and operating and treatment rooms • Generally stated as a limit separate from room and board benefits – Stated as a flat dollar amount – Calculated as a multiple of the per-day limit for room and board |
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Basic Surgical Expense Benefits pt. 1
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• Pays surgeons’ fees and related costs incurred
when insured has an operation • Related costs might include fees for an assistant surgeon, an anesthesiologist, post operative care, even the operating room (when not covered as a miscellaneous medical item) |
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Basic Surgical Expense Benefits pt. 2
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• Scheduled plan
– Benefit amounts included in a schedule that lists major commonly performed operations and benefits payable for each – If particular type of surgery not listed in the schedule, insurers typically indemnify on the basis of the absolute value and the relative value of each surgical procedure – Scheduled limits typically listed on the back of the policy |
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Basic Surgical Expense Benefits pt. 3
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• Nonscheduled plan
– Pays on the basis of what is considered usual, customary, and reasonable (UCR) in a certain geographic area • Definition of UCR based on amount physicians in area usually charge for same or similar procedures – Allow policies to stay apace of inflation and to avoid policy restructuring every time medical costs increase – Insurer still reserves right to agree or disagree that a particular charge is usual, customary, and reasonable – Insured may be responsible for any amount above the UCR |
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Basic Surgical Expense Benefits pt. 4
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• Relative value scale
– Each surgical procedure assigned a number of points – Policy pays specific dollar amount (i.e. $5) per point |
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Basic Regular Medical Expense Benefits
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• Sometimes referred to as physicians’
nonsurgical expense • Coverage is for nonsurgical services a physician provides – Covers office visits and hospital visits – Usually pays a flat fee per physician visit – May have limitations regarding maximum number of visits per day, maximum dollar amount per visit, and maximum number of days coverage applies |
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Other Medical Expense Benefits pt. 1
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In addition to the hospital, surgical, and medical
benefits just discussed, other benefits might be included – That may be added at insured’s option – Or for which separate policies might be written |
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Other Medical Expense Benefits pt.2
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• Some other coverage options include
– Maternity – Convalescent/nursing home – Emergency first aid – Home health care – Hospice care – Prescription drugs – Dread disease – Outpatient treatment |
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Common Exclusions and Limitations pt. 1
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• Limitations – limit benefits payable for certain
types of injuries and illnesses • Exclusions – completely omit coverage for certain types of injuries and illnesses • Common exclusions include – Preexisting conditions (see your state law supplement regarding your state’s handling of preexisting conditions) – Self-inflicted injuries – Suicide |
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Common Exclusions and Limitations pt. 2
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• Common exclusions (continued)
– War or acts of war resulting in death or injury (whether or not war is officially declared) – Military duty (usually a suspension of the policy that ends when insured is released from such duty) – Noncommercial air travel (any air travel other than as a scheduled airline passenger) – Injury while committing a felony – Injury, illness, or death while under the influence of intoxicants or narcotics |
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Common Exclusions and Limitations pt. 3
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• Common exclusions (continued)
– Cosmetic surgery, except for surgery required as the result of an accidental injury or a congenital defect – Dental expense (some policies cover such expenses resulting from accidental injury) – Vision correction (such as eye exams and eyeglasses) – Experimental procedures – Alcohol or drug abuse treatment |
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Major Medical Insurance
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• Covers much broader range of medical
expenses with generally higher individual benefits and policy maximums – Providing more complete coverage with fewer gaps • These more extensive health policies divided roughly into two groups – Comprehensive major medical expense – Supplemental major medical expense |
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Comprehensive Major Medical Benefits
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• More traditional basic coverages and essentially
any other type of medical expense are combined into a single comprehensive policy |
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Comprehensive Major Medical Benefits
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• Deductibles
– A deductible is the amount of expense or loss to be paid by the insured before the health insurance policy starts paying benefits – Generally an important feature of major medical policies – Most major medical benefits begin to be paid after the deductible is satisfied • Although not common, some policies provide first dollar coverage, meaning covered expenses paid as soon as they are incurred (effectively have a deductible of zero) |
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Comprehensive Major Medical Benefits
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• Coinsurance
– Coinsurance means insurer and insured share any expenses above the deductible amount • Coinsurance factor applied after insured has satisfied their deductible requirement – Another important feature of major medical coverage – Insurer always carries the bulk of the expense • 80/20 common, but other proportions could apply (i.e. 75/25) – Insurer pays 80% of covered expenses / insured pays 20% of covered expenses |
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Comprehensive Major Medical Benefits
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• Stop-loss limit and maximum benefits
– Designed to cap losses to the insured and included in many major medical policies – Dollar amount beyond which the insured no longer participates in payment of the expenses • After insured’s total coinsurance and deductible payments reach the applicable required amount, insurer picks up the entire cost of remaining expenses, up to a stated maximum benefit • Stop-loss limits and maximum benefit vary by insurer |
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Comprehensive Major Medical Benefits
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• Stop-Loss Limit and Maximum Benefits
(continued) – How a stop-loss cap is defined depends on the policy • One policy may stipulate that the policy will cover 100% of eligible expenses after the insured incurs a specified amount (i.e. $5,000) in out-of-pocket expenses – Stop-loss limit includes the deductible |
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Comprehensive Major Medical Benefits
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– How a stop-loss cap is defined (continued)
• Another policy may specify that the coinsurance provision applies only to the next specified amount (i.e. 20% of the next $5,000) of covered expenses after the deductible is paid – Stop-loss limit applies after the deductible has been met |
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Comprehensive Major Medical Benefits
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• Stop-Loss Limit and Maximum Benefits
(continued) – Stop-loss limit sometimes known as the out-of-pocket limit • Deductible + coinsurance (up to the stop-loss limit) = insured’s maximum out-of-pocket expense |
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Supplemental Major Medical Benefits pt. 1
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• Coverage begins with a traditional basic policy,
which pays first, and the major medical coverage is added to pick up expenses not covered by the basic policy – Supplements a basic policy (that includes hospital, surgical, and medical coverage) with an additional policy covering a broader range of medical expenses – Basic plan generally will pay covered medical expenses with no deductible, up to the policy limit |
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Supplemental Major Medical Benefits pt. 2
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• Coverage (continued)
– After the basic policy limits are exhausted, the insured must pay a deductible, after which the major medical coverage begins • Because the deductible comes between the basic policy and the major medical policy, it is often called a corridor deductible – Once the supplemental coverage begins, the supplemental policy operates identically to a comprehensive policy (including a coinsurance requirement) that provides no other first dollar coverage |
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Supplemental Major Medical Benefits pt. 3
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• A supplemental plan is likely to include a stoploss
limit and a maximum benefit limit |
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Covered Expenses pt. 1
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• Major medical policies, whether supplemental or
comprehensive, cover a wide range of medical expenses • While coverage may vary somewhat by policy, most plans include the following – Hospital inpatient room and board, including intensive and cardiac care – Hospital medical and surgical services and supplies – Physicians’ diagnostic, medical, and surgical services – Other medical practitioners’ services |
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Covered Expenses pt. 2
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• While coverage may vary (continued)
– Nursing services, including private-duty service outside a hospital – Anesthesia and anesthetist services – Outpatient services – Ambulance service to and from a hospital – X-rays and other diagnostic and laboratory tests – Radiological and other types of therapy – Prescription drugs |
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Covered Expenses pt. 3
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• While coverage may vary (continued)
– Blood and blood plasma – Oxygen and its administration – Dental services resulting from injury to natural teeth • Benefits typically paid on usual, customary, and reasonable basis • Common exclusions generally parallel those previously listed with the basic medical policies |
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Other Major Medical Concepts pt.1
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• Deductible features
– Deductibles in major medical policies can be handled in different ways, and include • Per-cause deductible – Insured pays one deductible for all expenses incurred for each cause of injury or illness • All-cause deductible – Expenses for all causes of illness or injury are accumulated to meet the deductible during a single calendar year – Once enough expenses have been paid by insured to meet stated deductible, all other covered charges are paid during remainder of calendar year – Also referred to as a cumulative, or calendar year, deductible |
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Other Major Medical Concepts pt.2
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• Carryover provision
– Under the all-cause deductible arrangement – If expenses incurred at the end of the calendar year but are not enough to satisfy the current year deductible and thus qualify for benefits, this provision • Permits those expenses to be carried over into the next year where they can be used to satisfy the deductible for that next calendar year • Typically applies to expenses incurred in the last two or three months of the calendar year |
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Other Major Medical Concepts pt. 3
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• Family deductible
– Applicable to policies that cover entire families – Policy has a family deductible versus a per person deductible • Maximum family deductible – Sets a maximum number of deductibles for all members of the family (i.e. three) – Once that number of deductibles met, no other family members will be required to reach their deductible before benefits will begin |
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Other Major Medical Concepts pt.4
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• Common injury or illness provision
– Advantageous to families – When two or more members of same family are injured in a common accident or become ill concurrently from the same sickness, only one deductible will apply |
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Medical Expense Limitations pt. 1
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• Reimbursement-type medical expense policies
frequently provide limited coverage or benefits for certain medical conditions, which include – Rehabilitation and skilled nursing/extended care facilities care – Home health care – Hospice care – Ambulance services – Outpatient treatment – Medical equipment and supplies – Reconstructive cosmetic surgery |
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Medical Expense Limitations pt. 2
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• Reimbursement-type medical expense
(continued) – Treatment of AIDS – Infertility and sterilization – Maternity/complications of pregnancy/well-baby care – Psychiatric conditions – Substance abuse – Organ transplants – Preexisting conditions – Reimbursement for nonphysician services |
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Medical Expense Exclusions pt. 1
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• Common medical expense policy exclusions
include – Preexisting conditions – War – Intentionally self-inflicted injuries – Active military duty – Workers’ compensation – Government plans (care in government facilities) – Well-baby care |
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Medical Expense Exclusions pt. 2
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• Common medical expense policy exclusions
(continued) – Cosmetic surgery – Dental care – Eyeglasses – Hearing aids – Custodial care – Routine physicals and medical care |
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Prescription Drugs
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• Prescription drug benefits are most often found
in group health insurance policies • Some individual health insurance policies offer this benefit as a rider • Usually requires a small deductible • Typically works one of two ways – Insureds can be reimbursed for their prescription drug expenses using standard claim forms – Prescription drug card can be issued • Actual prescription benefits vary by insurer and policy |
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Vision Care
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• Includes eye examinations (refractions) and
eyeglasses • Usually offered as an optional benefit under group health insurance • This option on an individual policy will generally pay a specific amount or the entire cost of an annual eye examination • Normally also covers all or part of the cost of prescribed eyeglasses once in every two-year period |
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Hospital Indemnity Rider
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• Provides for payment of a daily benefit for each
day insured is hospitalized as an inpatient • Pays in addition to any other medical benefits paid to the insured • Will pay the daily amount as long as insured is hospitalized, up to the benefit period specified in the rider |
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Nursing or Convalescent Home
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• Pays a daily maximum amount for each day
insured is confined to a nursing or convalescent home after a hospital stay • Benefits are paid generally for as short as one month or up to one year |
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Organ Transplants
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• More insurers are offering this coverage as it
becomes less experimental and more commonplace • To provide coverage, many insurers require that a transplant be performed only in life-threatening situations • Some of the more commonly covered transplants include bone marrow and kidney |
