Health and Life Insurance 27 Health and Life Insurance 27.1 Health Insurance 27.2 Disability and Life Insurance

Lesson 27.1Health Insurance GOALS Describe group and individual health insurance choices. Discuss common types of health insurance coverage. Discuss common types of health insurance plans. Explain Medicare and Medicaid coverage. Chapter 27

Group and Individual Health Insurance Health insurance is a plan for sharing the risk of high medical costs resulting from injury or illness. Like other forms of insurance, health insurance reduces individual risk by spreading it among many people. In exchange for regular premiums, the insurer promises to pay medical expenses for the treatments covered by the policy. Chapter 27

Group Policies Group insurance The most common type of health insurance is group insurance, in which all those insured have the same coverage and pay a set premium. Some employers pay the premiums as a benefit to their employees. More commonly, however, the two share the premium costs. Chapter 27

Group Policies (continued) COBRA The Consolidated Omnibus Budget Reconciliation Act, or COBRA, is a law that allows people who leave employment to continue their health insurance under the company plan for a limited period of time (usually 18 months). Chapter 27

Group Policies Pre-existing conditions (continued) The Health Insurance Portability and Accountability Act of 1996 (HIPAA) limits the pre-existing conditions that group plans may exclude. It also makes it illegal for an insurer to deny coverage based on health status, though it does not limit the amount the insurer may charge for coverage. Chapter 27

Group Policies Double coverage (continued) Double coverage Coordination of benefits is a group health insurance provision that specifies how the insurers will share the cost when more than one policy covers a claim. This provision assures that reimbursement will not exceed 100 percent of allowable expenses. Chapter 27

Group Policies Flex plans (continued) Flex plans A Section 125 Flex Plan, or Flex 125 Plan, is an employee benefit program that allows employees to set aside money, pretax, to help pay deductibles, copayments, and other health expenses during the year that are not covered by insurance. Chapter 27

Individual Policies High premiums Physical exam High-risk health insurance pools Chapter 27

Types of Coverage Basic health insurance Major medical insurance Basic health coverage includes medical, hospital, and surgical costs. Major medical insurance Major medical coverage provides protection against the catastrophic expenses of a serious injury or illness. A stop-loss provision is an insurance clause that caps or sets a maximum that the insured has to pay during any calendar year. Chapter 27

Types of Coverage Dental and vision insurance (continued) Dental insurance covers basic dental services, such as exams, cleanings, Xrays and fillings. Vision insurance often pays for exams for eye disease as well as for prescription adjustments and lenses. Chapter 27

Types of Health Plans Unmanaged care Managed care Chapter 27

Unmanaged Care Unmanaged care plans allow participants to choose any doctor and to be reimbursed for a portion of the expenses incurred after a deductible is met. Deductibles often range from $100 to $1,000 per patient, or $500 or more per family. Chapter 27

Health Savings Accounts A health savings account, commonly known as an HSA, is used in association with a medical plan that carries a high deductible. Money is set aside to pay medical expenses not paid by insurance. Contributions are tax-deductible. Employer may contribute to account. Chapter 27

Managed Care A health maintenance organization, commonly called an HMO, is a group plan offering prepaid medical care to its members. A preferred provider organization, commonly called a PPO, is a group of health care providers (doctors and hospitals, for example) who band together to provide health services for set fees. Point of service (POS) plans give people more choice and control over medical services by combining the features of HMOs and PPOs. Chapter 27

Medicare and Medicaid Medicare is government-sponsored health insurance for people age 65 or older. Medicaid is government- sponsored health insurance for people with low incomes and limited resources. Chapter 27

Lesson 27.2Disability and Life Insurance GOALS Discuss different types of disability insurance. Describe the characteristics of different life insurance plans. Chapter 27

Disability Insurance Disability insurance is an insurance plan that makes regular payments (usually monthly) to replace income lost when illness or injury prevents the insured from working. Common types of disability insurance include: Group disability insurance Social Security disability insurance Workers’ compensation insurance Chapter 27

Life Insurance Life insurance provides funds to the beneficiaries when the insured dies. A group life insurance plan insures a large number of people under the terms of a single policy without a medical examination. Portability means that when you leave your employer, you are able to continue paying the premiums and convert your group policy into an individual policy. Chapter 27

Provisions of Life Insurance Policies You have the right to name your beneficiary. An incontestable clause is a provision of a life (or health) insurance policy that once the policy has been in effect for a stated period of time (usually two years), the insurer may no longer question items on the application in order to deny coverage. Double indemnity means that the beneficiary is paid double the face amount of the insurance policy. Chapter 27

Types of Life Insurance There are two main types of life insurance: Temporary life insurance Permanent life insurance Chapter 27

Temporary Life Insurance Temporary life insurance lasts for a specified period, such as 20 years. The most common form of temporary life insurance is term insurance. Term life insurance is a life insurance policy that remains in effect for a specified period of time. Chapter 27

Permanent Life Insurance Permanent life insurance remains in effect for the insured’s lifetime and builds a cash value. Cash value is the savings accumulated in a permanent life insurance policy that you would receive if you canceled your policy. Four common types of permanent life policies: Whole life Limited-pay life Universal life Variable life Chapter 27