Health and Life Insurance Your Personal Security Chapter 15

15.1 Health Insurance Basics Malpractice insurance – doctors and health care providers buy this to protect themselves against lawsuits resulting from their medical services

Basic Coverage's Hospitalization Surgery Outpatient Services Major Medical

Additional Coverage Choices Medications ▫Alternative cheaper choice is to get generic drugs (not name brand) Dental Care Vision Care

What’s Not Covered Cosmetic Surgeries that aren’t necessary Some don’t cover regular checkups Experimental Drugs and Surgical Procedures Duplicate Benefits ▫If both you and your spouse have a policy, your total benefits will not exceed the actual cost of medical service

Insurance for Special Health Needs Catastrophic and Specified-Disease Insurance ▫When something is going to cost way more than the set limit, or requires long hospitalization stay or many surgeries Long-Term Care Insurance ▫Chronic Illness or disability Disability Income Insurance ▫Replaces lost income due to inability to work because of an accident or illness

15.2 Health Insurance Plans Fee-for-Service and Managed Care ▫Both offer medical, surgical and hospital expenses ▫Pay premiums monthly ▫No plan pays for all of your medical expenses

Fee-for-Service Plans Indemnity Plan ▫You pay for health services as you receive them ▫Your doctor’s office submits a claim to the insurance company for reimbursement Costs ▫All have a deductible (amount of a covered expense you pay before the insurance company pays anything) ▫80/20 Coverage  Insurance pays 80%, you pay 20%  20% is your coinsurance  Reimbursement is based on reasonable and customary charges Limits ▫Maximum out of pocket amount

Managed Care Plans How they work ▫Insurance company controls the cost of health insurance by negotiating fees with providers who want to participate  You must choose doctors and hospitals that participate ▫Capitation – when they pay the doctors and hospitals a fixed amount per year no matter what  Good and bad to this ▫Copayment – amount you pay for services regardless of the cost of those services

Health Maintenance Organizations HMO – managed care plan that charges a set amount for each member each year. Members are covered for most medical services at no extra cost or for a small copayment Primary Care Physician – you must choose one ▫You must see your doctor first and then be referred to a specialist Pay for only doctors and hospitals in their plan Usually least expensive of options

Preferred Provider Organizations PPO – managed care plan that is most like a fee- for-service plan Contract with doctors, hospitals, and other health care providers to offer care at reduced costs Can go out of plan if they pay a larger part of cost In plan visits pay a copayment

Point-of-Service Plan POS Plan – combines some aspects of an HMO and some of a PPO You must select a primary care physician within the POS plan, but like a PPO, you can go outside of the plan (you still pay a large part of cost – more than with a PPO)

15.3 Choose a Health Plan Group Health Insurance ▫Employer-Sponsored Plans  Open Enrollment  Part-time employees usually do not get health insurance, sometimes able to pay all of it if you want ▫COBRA (Consolidated Omnibus Budget Reconciliation Act)  18 months after you leave

Group Health Insurance Con’t ▫Pre-Existing Conditions  Medical condition diagnosed or treated before you joined a new insurance plan  Health Insurance Portability Act of 1997  New plan must cover any pre-existing conditions without a waiting period if you have been previously insured continuously over the last 12 months  After 12 months waiting, it must be covered

Individual Health Insurance Able to purchase if your employer does not offer insurance or you are self-employed More expensive than group insurance College and universities require students to be insured ▫Able to purchase a basic policy through your school ▫Sometimes open to recent grads

Government-Sponsored Health Insurance Medicare ▫65+ or certain disabilities Contribute by automatic payroll deduction Medigap ▫Supplemental insurance sold by private insurance companies to cover more than what is covered with Medicare

Government-Sponsored Health Ins. Con’t Medicaid ▫Americans with low incomes or disabilities ▫No age requirement ▫Usually those who qualify for welfare qualify for Medicaid Workers’ Compensation ▫Pays for work related injuries, illnesses and death ▫Usually receive 2/3 of their salary while they are disabled ▫In case of death $ is paid to family

How to Shop for Health Insurance Read them carefully Check A.M. Best and Standard & Poor’s ratings Main goal is to protect yourself from expenses that are too high for you to pay on your own Try to keep premiums affordable

Questions to ask yourself Coverage for yourself or your family? Starting a family? Chronic illness or disability? Is your doctor in the health plan? How important is convenience in access to health care for you? How much can you afford for premiums?

Insurance Provider Concerns Physical exams and health screenings Preventive care Prescription drugs Dental and vision care Chiropractic care Care by specialists And more….

Health Care Rights and Responsibilities Patients’ Bill of Rights 1.You have the right to receive accurate, easily understood information about health plans, professionals, and facilities 2.You have the right to a choice of health care providers that is sufficient to ensure access to appropriate high-quality health care. 3.You have the right to access emergency health care services when and where the need arises

Patients’ Bill of Rights Con’t 4.You have the right and responsibility to fully participate in all of your health care decisions 5.You have the right to considerate, respectful care from all members of the health care system and nondiscrimination in delivery of services 6.You have the right to communicate with health care providers in confidence and to have confidentiality of your health care information protected 7.You have the right to a fair and efficient resolution to differences with your health providers, including an appeals system

Your Responsibilities Practice healthful habits, such as exercising, not smoking, and eating a healthful diet Become involved in health care decisions Work with your providers Avoid knowingly spreading disease Show respect for other patients and health workers Make a good-faith effort to meet your financial obligations Many more….

Referrals A request from your primary care physician for services from a particular specialist If you go to a specialist without seeing your primary care physician first, they may not pay for the cost of your treatment Specialists generally charge high fees Takes awhile to see the specialist because you have to schedule first appointment then schedule appointment with specialist

In-Plan Providers Providers from your network or plan Pre-approvals ▫Might need to get pre-approved for non- emergency operations ▫Might require a second opinion Second Opinions ▫Maybe the doctors proposed treatment isn’t necessary

Experimental Treatments Insurance companies often classify new treatments as experimental and refuse to pay for them

The Appeals Process Start with the company If you still aren’t satisfied, take your complaint to your state insurance commissioner or state department of health Last resort is court action

15.5 Life Insurance How Life Insurance Works? ▫When you buy life insurance, you specify who will receive the payment or death benefit ▫You may specify several beneficiaries

Term Life Insurance Pays a death benefit if the policyholder dies within a specified period of time, its term If they don’t die, the policy terminates at the end of its term and has no remaining value Good for young people

Different Types of Term Life Ins. Level Term Life Insurance ▫Pay a fixed benefit for a fixed premium over a specified number of years ▫Premium do not increase as you grow older Renewable Term Life Insurance ▫Able to renew policy at end of each year regardless of health and without physical exam ▫Cannot be canceled if you become ill or as you grow older ▫Usually expire around 65 or 70 Convertible Term Life Insurance ▫Means that at any time during the term, you can choose to convert the term policy into a permanent policy

Permanent Life Insurance Provides a death benefit plus a savings plan Coverage lasts throughout the policyholder’s life Often called a cash value life insurance

Whole-Life Insurance Most common and least expensive Policy is yours for life Pay a fixed premium that cannot be increased You can borrow against the cash value

Variable Life Insurance Yours for your whole life Able to select from several investment options Riskier plan May not withdraw from your cash value account during your lifetime or change amount of your coverage or premium

Universal Life Insurance Permanent life policy that is very flexible Able to borrow against or withdraw from your cash value during your lifetime Can change amount of coverage and your premium Cannot choose how your savings are invested

How much Life Insurance Should You Buy? Family Responsibilities Financial Situation Future Special Needs