Health Insurance
Chapter 41
Medical Insurance
 One type of health insurance is Medical
insurance. Medical Insurance is
categorized in the following 5 ways:
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1) Hospital
2) Surgical
3) Regular Medical
4) Major Medical
5) Comprehensive Medical
Hospital Insurance
 when an illness or injury requires you to be
hospitalized.
 Will pay for most of your room, food, operating
room, anesthesia, X rays, laboratory tests and
medicines.
 Because of high cost of hospitalization, more
people purchase hospital insurance than any
other kind.
 200 million Americans are covered by this.
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Surgical Insurance
 Covers all or part of the surgeon’s fees
for an operation.
 The typical surgical policy lists the types of
operations that it covers and the amount
allowed for each type.
 They generally do not provide coverage for
pre-existing conditions or illnesses or
injuries that are covered by other
insurance.
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Regular Medical
 Pays part or all of the fees for nonsurgical
care given in the doctor’s office, the patient’s
home, or a hospital.
 Some plans also provide payments for diagnostic
and laboratory expenses.
 Usually combined with hospital and surgical
insurance.
 The protection provided by regular medical,
hospital, and surgical coverages is referred to as
basic health coverage.
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Major Medical
 Provides protection against the high costs of
serious illnesses or injuries.
 Helps pay for most kinds of health care prescribed
by a doctor.
 It covers the cost of treatment in and out of the
hospital, special nursing care, X-rays, psychiatric
care, medicine and many other health care
needs.
 Maximum benefits range up to $250,000 and
higher.
 Major Medical policies also usually contain a
coinsurance clause--back
Major Medical-page 2
 Coinsurance clause means that the policy
holder will be expected to pay a certain
percentage, generally 20 or 25 percent, of the
costs over and above the deductible amount.
 This clause discourages the filing of minor claims.
 This clause encourages the policyholder to keep
medical expenses as reasonable as possible.
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Comprehensive Medical
 This policy combines the features of
hospital, surgical, regular, and major
medical insurance.
 It only has one deductible.
 Usually less expensive than the total of the
separate coverages.
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Dental Insurance
 Helps pay for normal dental care, often
including examinations, X-rays, cleaning,
fillings, and more complicated types of dental
work.
 It also covers dental injuries resulting from
accidents.
 May contain deductible and coinsurance
provisions
 Offered mainly in group plans
 Annual claims exceed 25 billion.
Vision Care
 Covers eye examinations, prescription
lenses, frames, and contact lenses.
 Usually doesn’t cover vanity items like
tinted lenses, coated or plastic lenses,
nonprescription lenses, and vision training.
Disability Income Insurance
 For most people, income from employment is
their single most important economic
resource.
 Protecting your income is very important.
 This insurance protects you against the loss
of income caused by a long illness or an
accident.
 The insured receives weekly or monthly payments
until that person is able to return to work.
 Frequently includes a waiting period provision
which requires that the policyholder wait a
specified length of time after the disability occurs
before payment begins.
Health Insurance Providers
 You can buy health insurance as an individual
or as a member of a group.
 The most popular way to buy health insurance is
as a member of a group.
 Organizations that sponsor health insurance often
pay part of all of the premium costs for their
employees.
 This is provided as a benefit in addition to salary.
 Group policies are more economical to administer than
individual plans.
Individual Health Insurance
 If you are not a member of a group that
provides some type of group insurance
you may have to buy individual health
insurance.
 These policies are rather expensive,
require a physical examination and have a
waiting period before the policy is in force.
Managed Care Plans
 In the last 20 years, various alternatives to
traditional fee-for-service health insurance
have grown in popularity.
 This is know as Managed Health Care.
 These plans now cover more than 2/3 of
Americans.
 They typically provide comprehensive health care
at a lower cost through networks of providers such
as doctors, hospitals, and clinics.
 Patients benefit from lower premiums, low or not
deductibles, low co-payments, and little or no
paperwork.
Managed Care Plans-(cont.)
 Major drawback to these types of plans
is that patients have less control or
choice over whom they see for health
problems and the specific treatment that
is covered by managed care plans
compared to traditional insurance.
 Go by various names-such as
HMOs,PPOs, POS.
Managed Care-(cont.)
 Health Maintenance Organizationsnormally consist of a staffed medical clinic
organized to serve its members.
 As a member you are entitled to a wide range of
prepaid health care services including
hospitalization.
 HMOs emphasize preventative health care.
 Early detection and treatment of illnesses help to keep
people out of hospitals and keep cost down.
 Cosmetic surgery, if not necessary, is excluded.
Managed Care-(cont.)
 Preferred provider Organization(PPO)-this
organization contracts with employers to
provide medical services to employees.
 These providers agree to charge set fees for their
services.
 Not required to stay within the organization for
treatment.
 May receive partial payment for treatment received
somewhere else.
State Government Assistance
 Workers’ Compensation-is an insurance
plan that provides medical and survivor
benefits for people injured, disable, or killed
on the job.
 Under these laws, most employers are required to
provide and pay for insurance for their employees.
 If unable to return to the job, the worker is paid a
certain proportion of wages as benefits.
 Usually about 2/3 of their regular wage.
State Government Assistance
 Medicaid-a form of medical aid to lowincome families.
 The federal government shares with states
the cost of providing health benefits to
financially needy families.
 Needy is defined as one whose income
provides for basic necessities but who
could not afford adequate medical care or
pay large medical bills.
Federal Government
Assistance
 The nation’s Social Security laws
provide a national program of health
insurance know as Medicare.
 It is designed to help people age 65 and
older and some disabled people pay the
high cost of health care.
 Medicare has two basic parts-hospital
insurance and medical insurance.
Medicare-(cont)
 No premium payments are required for
the hospital insurance, and almost
everyone 65 years old and older may
qualify.
 The medical insurance portion of
Medicare is often called supplementary
or voluntary medical insurance.
 This requires a small monthly premium.
Costs
 The cost of health care has been increasing
two to three times faster than inflation.
 Cost of Health Care is determined by 4
factors.
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Extent of Coverage
Number of claims filed by policyholders.
Age of the policyholder.
Number of dependents.