Chapter 11: Health Care Planning

Objectives Identify the major sources of health care

plans.

Describe the major types of coverage provided by health care plans.

Objectives Explain the major provisions of health

care plans and insurance policies.

Describe the purpose and major features of disability income insurance.

How Can You Reduce Your Personal Health Care Costs? Stay well - focus on prevention

eat a balanced diet and keep your weight under control

avoid smoking and don’t drink to excess

get enough rest, relaxation, and exercise

drive carefully and look for accident and fire hazards in your home

Health Insurance and Financial Planning

Protection against financialloss due to illness or injury.

Part of your overall risk management plan to safeguard your family’s economic security medical expense insurance disability income insurance to protect

your most valuable asset - your ability to earn an income

Health Care Planning

Direct medical care Recuperative care Rehabilitation Replacement of income

FOUR LOSS TYPES:

Health Care Providers Individual

Group

Lower rates Employee fringe Coverage for existing health problems

Health Insurance and Financial Planning

Group plans comprise more than 85% of all health insurance issued

Most group plans are sponsored by employers, with the employer paying most or all of the cost

Group plans can be supplemented with individual plans

Following divorce, a former spouse can remain covered for three years, but the premiums can be as high as $4,000 a year

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Private insurance companies

Managed care plans

Preferred provider Health maintenance

Health Care Providers

Government plans

Medicare Medicaid

Health Care Providers

Health Care Coverages Hospital

Surgical

Medical expense

Major medical expense

Comprehensive health

Dental expense and vision care

A Good Health Insurance Plan Should..

Provide quality care at a reasonable cost Offer basic coverage for doctor and hospital bills Cover 120 days’ hospital room and board Provide at least $1,000,000 lifetime maximum

per person Pay 80% of out-of-hospital expenses after the

deductible is met Have no unreasonable exclusions Limit out-of-pocket expenses

Types of Health Care Coverages Hospital

hospital room, operating room, lab tests, X-rays, medicine

Hospital indemnity pays a fixed amount for each day in

hospital. Best for people in high risk groups Surgical

surgeon's fee Physician

office visits, lab tests and X-rays

Types of Health Care Coverages Major medical

covers expenses for a long term injury or illness

Comprehensive major medical low deductible offered

without a separate, basic plan Dread disease

focuses on unrealistic fears, and only pays out for very specific conditions. Often sold by people working on commission.

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Types of Health Care Coverages Dental

group coverage for exams, cleaning, x-rays, fillings, oral surgery

Vision care some group plans include

exams and glasses Long term care

fastest growing coverage, especially for women

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Medicare supplement (Medigap)

Long-term care

Accident and dread disease

Health Care Coverages

1996, Teacher's Insurance and Annuity Association

Why Do People Buy Long-Term Care Insurance?

To avoid dependence25.0%

To avoid losing assets23.0%

Other reasons25.0%

Guarantee services12.0%

Protect standard of living

15.0%

Definitions

Who is covered

Time period

Making Sense of Health BenefitsGENERAL TERMS AND PROVISIONS:

Policy Limits

Deductibles and copayments

Coinsurance

Coordination of benefits

Making Sense of Health BenefitsPAYMENT LIMITATIONS:

Based on timing of loss

General exclusions

Maternity benefits

Making Sense of Health BenefitsCOVERAGE LIMITATIONS:

Disability Income Insurance

Disability income insurance replaces a portion of the income lost when you cannot work because of illness or injury. The chances of becoming disabled for at least three months are seven times greater than the chances of death!

Disability Income Insurance Level of need

Important policy provisions

Elimination period Benefit period Degree of disability

Disability Income Insurance Important policy provisions (continued)

Residual clause

Social Security rider

Cost-of-living adjustments

How Long YourMoney Will Last

Trade-Offs in Choosing a Policy

Reimbursement versus indemnity Inside limits versus aggregate limits Deductibles and coinsurance Out-of-pocket limit, or stop-loss Benefits based on reasonable and

customary charges

How to Choose an HMO

Consider the following factors accessibility convenient office hours alternative physicians second opinions type of coverage appeal procedures price