HEALTH AND DISABILITY INCOME INSURANCE CHAPTER 11 Personal

HEALTH AND DISABILITY INCOME INSURANCE CHAPTER 11 Personal Finance FIN 235

HEALTH INSURANCE AND FINANCIAL PLANNING • Health insurance • A form of protection whose primary purpose is to alleviate the financial burdens suffered by individuals because of illness or injury. • Types of Plans • Group Health Insurance: employer sponsored who pay some or all of the premiums • Individual Health Insurance: Individual health insurance covers either one person or a family. Coverage and cost vary from company to company

HEALTH INSURANCE AND FINANCIAL PLANNING • COBRA • The Consolidated Omnibus Budget Reconciliation Act of 1986 allows workers to keep their former employer’s group coverage for a set period of time. Not everyone qualifies for COBRA.

HEALTH INSURANCE COVERAGE • Types of Health Insurance Coverage • Basic: includes hospital expense insurance coverage, surgical expense coverage, and physician expense insurance. • Hospital Expense: pays part or all of hospital bills for room, board, and other charges. • Surgical Expense: pays part or all of the surgeon’s fees for an operation. • Physician Expense: helps pay for physician’s care that does not involve surgery

HEALTH INSURANCE COVERAGE • Major Medical Expense Insurance Coverage • Protects against the large expenses of a serious injury or a long illness. • Hospital Indemnity Policies • Pays benefits only when you are hospitalized, but these benefits are paid to you in cash. • Long-Term Care Insurance • Help that you could need if you ever have an illness or disability that lasts a long time and leaves you unable to care for yourself.

Non-Medical Insurance • Dental Expense Insurance • Dental expense insurance provides reimbursement for the expenses of dental services and supplies. • Vision Care Insurance • A recent development in health care coverage has been vision care insurance

Health Insurance Policy Major Provisions • Eligibility • Assigned benefits (pay direct to doctor/hospital) • Internal limits (max allowable payment) • Copayments (flat fee paid on every visit) • Service benefits • Benefit limits (dollars or days) • Exclusions and limitations • Guaranteed renewable • Cancellation and termination

HEALTH INSURANCE TRADE-OFFS • The benefits of health insurance policies differ, so consider the following: • Reimbursement (actual $) versus indemnity (specific $) • Internal limits (fixed $) versus aggregate limits (total $) • Deductibles (max you pay) and coinsurance • Out-of-pocket limit (max you pay before they pay 100%) • Benefits based on reasonable and customary charges • Two Choices • Basic plus Supplementary (See Exhibit 9 – 1) • Major Medical

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Health Plan Providers • Hospital and Medical Service Plans • Blue Cross & Blue Shield • BC = hospital care • BS = surgical and physicians services • Health Maintenance Organizations (HMO) • Health insurance plan that directly employs or contracts with selected physicians, surgeons, dentists, and optometrists to provide you with health care services in exchange for a fixed, prepaid monthly premium.

Health Plan Providers • Preferred Provider Organizations (PPO) • PPOs provide the services of doctors and hospitals at discount rates or give breaks in co-payments and deductibles. • Employer Self-Funded Health Plans • provide the amount of protection that a specific group of people desires and can afford.

Health Plan Providers • Health Care Accounts • Flexible Savings Accounts (FSA) allow employees to contribute pretax dollars to an account managed by an employer. • Health Reimbursement Accounts (HRA) are funded solely by your employer. • Health Saving Accounts (HSA) allow you to contribute money to a tax-free account that can be used for out-of-pocket health care expenses.

Health Plan Providers • Medicare is a federal health insurance program for people 65 or older, people of any age with permanent kidney failure, and certain disabled people. • Part A: Hospital benefits (inpatient) • Part B: Physician services and medical supplies • Part C: combines A & B • Part D: Prescription drug coverage • Medigap • Privately sold Supplement for Medicare plans

Health Plan Providers • Medicaid • Title XIX of the Social Security Act provides for a program of medical assistance to certain low-income individuals and families. • Medicaid is administered by each state within certain broad federal requirements and guidelines. • Many members of the Medicaid population are also covered by Medicare.

US Govt. Sources of Information • Healthfinder includes links to more than 1, 000 Web sites and lists topics according to subject (www. hhs. gov). • Medlineplus is world’s largest collection of published medical information (www. nlm. nih. gov/medlineplus). • NIH Health Information Page directs people to the consumer health information in NIH publications and on the Internet (www. nih. gov). • FDA provides information about the safety of various foods, drugs, cosmetics, and medical devices (www. fda. gov).

DISABILITY INCOME INSURANCE • Benefits provide regular cash income lost by employees as the result of an accident, illness, or pregnancy. • Generally disability income policies are divided into short-term and long-term policies. • There are different definitions of disability. Some policies define it as simply being unable to do your regular work, while others are stricter.

DISABILITY INCOME INSURANCE • Sources of Disability Income • Private Income Insurance Programs • Employer Plans • Social Security • Workers’ compensation • Disability Insurance Trade Offs • Waiting or elimination period • Duration of benefits • Amount of benefits • Accident and sickness coverage • Guaranteed renewability

Current Issues in Health Care • Why does medical care cost so much? • We want the best medical care available. • R&D for new cures is expensive. • New medical technology is expensive • Trial lawyers and frivolous lawsuits add to costs • Duplication of tests, excessive or unnecessary testing • Abuse of services • Fraudulent claims

Current Issues in Health Care • What is being done to reduce costs? • Affordable Health Care Act (2009) • Government control of health services • Recent GAO and CBO studies suggest costs will be significantly greater than originally thought. • Corporate Health Initiatives • Fitness centers • Financial incentives: weight, general health • Self-care assistance and education

HOMEWORK • Question: (Self-audit of coverage) • Do you know what type of coverage you have? • Are you on your parents’ policy? • Are you covered by a school policy? • Do you carry your own policy” • If so, what does your insurance cover in terms of; • Injuries resulting from an fall • Illness requiring hospitalization • Be Your Own Personal Financial Planner • 1 – How do you pay for health care? (no w/s)