1 (of 20) fin 200: personal finance topic 13-health and disability insurance lawrence schrenk,...

1 (of 20)

FIN 200: Personal Finance

Topic 13-Health and Disability Insurance Lawrence Schrenk, Instructor

2 (of 20)

Learning Objectives

1. Describe the features of health insurance. ▪

2. Explain how to buy health insurance effectively.

3. Describe the features of disability insurance.

4. Describe the features of long term care insurance.▪

3 (of 20)

Health Insurance

4 (of 20)

Issues

Medical Costs Rising Health Insurance Premiums Rising Greater Longevity More Sophisticated (and Expensive)

Procedures Political Issues

5 (of 20)

Health Insurance Coverage

Medical Mental Health Prescription Plan Dental Vision

6 (of 20)

Terminology

Indemnity versus Managed Care Co-Payment versus Co-Insurance Premium Deductible Out-of-Pocket Expenses In- versus Out-of-Network Referrals

7 (of 20)

Medical

Physician Surgery Hospitalization Major Medical

8 (of 20)

Mental Health, Prescription Plan

Mental Health May be in Medical Coverage varies by Plan

Prescription Plan May be in Medical Formulary Generic versus Name-Brand Levels of Co-Payments

9 (of 20)

Dental, Vision

Dental Check Ups Predominately Covered Typical Levels of Payment

Higher–Fillings Some–Crowns None–Implants

Vision Check Ups Predominately Covered Partial Payment for Glasses, Contacts

10 (of 20)

Delivery Styles

Government Medicare Medicaid

Indemnity Plans Managed Care

Health Maintained Organization (HMO) Preferred Provider Organization (PPO)

Individual versus Group

11 (of 20)

Key Trade-Off

Costs versus Flexibility/Coverage

Cost Flexibility

Indemnity

↑ ↑PPO

HMO

12 (of 20)

Selection Guidelines

High Coverage Limit Reasonable Out-of-Pocket Cap No Dollar Limits on Individual Expenses No Referral Requirement Global Coverage

13 (of 20)

Dollar Limits and Referrals

Dollar Maximum Per Claim Per Lifetime Per Procedure/Expense

Referrals In-Network List Referrals/Pre-Authorization

14 (of 20)

Other

HIPAA–Health Insurance Portability and Accountability Act of 1996 ‘Preexisting Conditions’ Continuous Enrollment

COBRA–Consolidated Omnibus Budget Reduction Act of 1985 18 Months

15 (of 20)

Long Term Care and Disability Insurance

16 (of 20)

Disability Insurance

Substitutes payments for income if disabled. Sources

Individual Employer Social Security Worker’s Compensation

Payments are typically percentage of current salary.

17 (of 20)

Long Term Care Nursing Home, Assisted Living, At Home High Cost

Average Nursing Home Costs (2008) $70,000-$90,000/year Specialized: $20,000+ per month

Premiums $2,000-3,000+ Points to Consider

Coverage Daily or Monthly Benefit and Benefit Period Elimination or Waiting Period Inflation Protection

Project Notes I

18 (of 20)

Project Notes II

19 (of 20)

20 (of 20)

Ethical Dilemma

Vera is an 85-year-old widow and retiree from a large corporation. Her former employer recently changed the health care coverage for retirees to an HMO. Vera is having difficulty with her knees and has requested a referral to an orthopedist. After ordering x-rays, her primary care physician informs her that her knees are not serious enough to warrant knee replacement and he gives her a prescription to alleviate the pain. Several weeks later Vera reads an article that doctors in her HMO are rewarded for keeping utilization costs down. a. Discuss the ethics of HMOs rewarding physicians for

keeping utilization costs down. b. Does Vera have any options?