1. Insurance &

2. Chapter 2 Insurance & Health Care Agencies Copyright ©2004 Pearson Education, Inc. All rights reserved.11-2

3. Copyright ©2004 Pearson Education, Inc. All rights reserved.11-3 Chapter Objectives Identify and compare the types of private health care plans Explain the use of government health care plans Describe long-term care insurance Explain the benefits of disability insurance

4. Private Health Care *Health care facilities that are privately-owned (not run by the govt) Growth—one of the largest and fastest growing industries in the United States Employment opportunities—employs over 13 million workers in over 200 careers Expenditures—it is a four-billion-dollar- per-day business and growing Copyright ©2004 Pearson Education, Inc. All rights reserved.11-4

5. Private Health Care Facilities *Health care facilities that are privately-owned (not run by the govt) Emergency care services Laboratories Home health care Hospice agencies Mental health facilities Genetic counseling centers Rehabilitation facilities Health maintenance organizations (HMOs) School health services Hospitals Long-term care facilities (LTC or LTCF) Independent living and assisted living Medical offices Dental offices Clinics or satellite centers Optical centers Industrial health care centers or occupational health clinics Copyright ©2004 Pearson Education, Inc. All rights reserved.11-5

6. Public Health Care & Organizations *(govt supported) Government services are tax supported such as: –World Health Organization (WHO) a specialized agency of the United Nations (UN) that is concerned with international public health and focuses on improving the health of the world's people and preventing or controlling communicable diseases on a worldwide basis through various technical projects and programs. –U.S. Department of Health and Human Services (USDHHS) department of the U.S. federal government with the goal of protecting the health of all Americans and providing essential human services. Copyright ©2004 Pearson Education, Inc. All rights reserve.11-6

7. Public Health Organizations National Institutes of Health (NIH) –the nation’s medical research agency—supporting scientific studies that turn discovery into health. Centers for Disease Control and Prevention (CDC) –leading national public health institute of the United States that protects public health and safety through the control and prevention of disease, injury, and disability. Food and Drug Administration (FDA) –a federal agency of the United States Department of Health and Human Services that oversees a majority of the organization's obligations involving food, drugs, cosmetics, animal food, dietary supplements, medical devices, biological goods and blood products. Copyright ©2004 Pearson Education, Inc. All rights reserved.11-7

8. Public Health Organizations Agency for Health Care Policy and Research (AHCPR) –supports research "to improve the outcomes and quality of health care, reduce its costs, address patient safety and medical errors, and broaden access to effective service. Occupational Safety and Health Administration (OSHA) –assures safe and healthful working conditions for working men and women by setting and enforcing standards and by providing training, outreach, education and assistance. Health Departments –a part of government which focuses on issues related to the general health of the citizenry. Copyright ©2004 Pearson Education, Inc. All rights reserved.11-8

9. Copyright ©2004 Pearson Education, Inc. All rights reserved.11-9 Health Insurance Health insurance: a type of insurance offered by private insurance companies or the government that covers health care expenses incurred by policyholders for necessary medical care Critical component of financial planning

10. Copyright ©2004 Pearson Education, Inc. All rights reserved.11-10 Health Insurance Cost of providing health care is rising Your health insurance decision is not whether to obtain it, but which health plan to purchase and how much coverage to purchase Many options available

11. Health Insurance Terminology Deductible –A fixed dollar amount during the benefit period - usually a year - that an insured person pays before the insurer starts to make payments for covered medical services. Plans may have both per individual and family deductibles. Co-insurance –A form of medical cost sharing in a health insurance plan that requires an insured person to pay a stated percentage of medical expenses after the deductible amount, if any, was paid Co-payment – A form of medical cost sharing in a health insurance plan that requires an insured person to pay a fixed dollar amount when a medical service is received. Copyright ©2004 Pearson Education, Inc. All rights reserved.11-11

12. Health Insurance Terminology (Cont.) Maximum out-of-pocket expense - The maximum dollar amount a group member is required to pay out of pocket during a year. Until this maximum is met, the plan and group member shares in the cost of covered expenses. After the maximum is reached, the insurance carrier pays all covered expenses, often up to a lifetime maximum Copyright ©2004 Pearson Education, Inc. All rights reserved.11-12

13. Copyright ©2004 Pearson Education, Inc. All rights reserved.11-13 Private Health Insurance Private health insurance: health insurance that can be purchased from private insurance companies to provide coverage for health care expenses Types of private health insurance coverage –Hospital insurance, physician insurance, and surgical insurance

14. Copyright ©2004 Pearson Education, Inc. All rights reserved.11-14 Private Health Insurance Options for purchasing private health insurance –Many employers offer health insurance as part of benefit package Cost usually shared between employee and employer –Self-employed individuals must pay entire cost of their health insurance

15. Copyright ©2004 Pearson Education, Inc. All rights reserved.11-15 Private Health Insurance Private health care plans –Indemnity plan : health insurance that reimburses individuals for part or all of the expenses they incur from health care providers; individuals are free to decide whether to seek care from a primary care physician or a specialist

16. Copyright ©2004 Pearson Education, Inc. All rights reserved.11-16 Private Health Insurance –Managed health care plan : a health insurance policy under which individuals receive services from specific doctors or hospitals that are part of the plan Health maintenance organization (HMO): a health insurance plan that covers health care services approved by doctors; a primary care physician provided general health services and refers patients to a specialist as necessary

17. Copyright ©2004 Pearson Education, Inc. All rights reserved.11-17 Private Health Insurance Preferred provider organization (PPO): a health insurance plan that allows individuals to select a health care provider and covers most of the fees for services –Discount on charge arrangement: an arrangement in which the preferred provider organization agrees to pay a specific percentage of the health care provider’s charges –Per diem rate arrangement: an arrangement in which the preferred provider organization pays the provider a specific sum per day a patient is hospitalized

18. Copyright ©2004 Pearson Education, Inc. All rights reserved.11-18 Private Health Insurance Differences

19. Copyright ©2004 Pearson Education, Inc. All rights reserved.11-19 Private Health Insurance If insurance is lost (like if an employee leaves a job), in order to MAINTAIN private health care insurance coverage: –COBRA allows continuation of coverage provided through an employer’s plan for 18 months –HIPPA (The Health Insurance Portability and Accountability Act) prohibits insurance companies from denying health insurance coverage based on applicant’s health status, medical history, previous claims, or disability

20. HIPPA Assists in the following restrictions & parameters: Health care access Preventing health care fraud Tax-related health provisions Application and enforcement of group health plan requirements Revenue offsets Copyright ©2004 Pearson Education, Inc. All rights reserved.11-20

21. Copyright ©2004 Pearson Education, Inc. All rights reserved.11-21 Private Health Insurance Expenses not covered by private insurance plans should be included in your budget –Flexible spending account : an account established by the employer for the employee to use pretax income to pay for medical expenses Funds cannot roll over into the next year

22. Copyright ©2004 Pearson Education, Inc. All rights reserved.11-22 Government Health Care Plans Medicare –Provides health insurance to people over age 65 –Part A covers inpatient care in hospitals or nursing facilities and some home health –Part B is optional coverage –Medigap insurance: insurance provided by private insurance companies to cover medical expenses that are not covered by Medicare

23. Copyright ©2004 Pearson Education, Inc. All rights reserved.11-23 Government Health Care Plans Medicaid: a federal program that provides health care to the aged, blind, disabled, and need families with dependent children Recipients must meet federal guidelines Administered on a state-by-state basis

24. Copyright ©2004 Pearson Education, Inc. All rights reserved.11-24 Long-Term Care Insurance Long-term care insurance: covers expenses associated with long-term health conditions that cause individuals to need help with everyday tasks –Provided by private insurance companies –Covers care in a nursing home, assisted living facility, or at home –Premiums quite expensive

25. Copyright ©2004 Pearson Education, Inc. All rights reserved.11-25 Additional Types of Health Care Plans Dental insurance: covers part or all of the fees imposed for dental services, including annual checkups, orthodontics and oral surgery Vision insurance: covers part or all of the fees imposed for optician and optometrist services, including annual checkups, glasses, contact lenses and surgery

26. Copyright ©2004 Pearson Education, Inc. All rights reserved.11-26 Disability Insurance Disability income insurance: insurance that provides income to policyholders in the event that they become disabled –Can be get an independent policy or through job.

27. Copyright ©2004 Pearson Education, Inc. All rights reserved.11-27 Disability Insurance Sources of disability income insurance –Individual disability insurance –Employer disability insurance –Insurance from Social Security Income determined by amount of Social Security contributions you have made –Insurance from Workers’ Compensation

28. Copyright ©2004 Pearson Education, Inc. All rights reserved.11-28 Disability Insurance Disability insurance provisions –Amount of coverage May be a dollar amount or a percentage of your income –Probationary period: the period extending from the time your disability income application is approved until your coverage goes into effect

29. Copyright ©2004 Pearson Education, Inc. All rights reserved.11-29 Disability Insurance –Waiting period: the period from the time you are disabled until you begin to receive disability income benefits –Length of time for disability benefits –Non-cancelable provision –Renewable provision Deciding on disability insurance –Contact private companies or employer

30. Copyright ©2004 Pearson Education, Inc. All rights reserved.11-30 How Health and Disability Insurance Fit Within Your Financial Plan Key decisions about health and disability insurance that should be included within your financial plan are: –Do you have adequate insurance to protect your wealth? –How much insurance should you plan to have in the future?

31. Copyright ©2004 Pearson Education, Inc. All rights reserved.11-31 Disability Insurance