1. 1 (of 20) FIN 200: Personal Finance Topic 13-Health and Disability Insurance Lawrence Schrenk, Instructor

2. 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. 3 (of 20) Health Insurance

4. 4 (of 20) Issues Medical Costs Rising Health Insurance Premiums Rising Greater Longevity More Sophisticated (and Expensive) Procedures Political Issues

5. 5 (of 20) Health Insurance Coverage Medical Mental Health Prescription Plan Dental Vision

6. 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. 7 (of 20) Medical Physician Surgery Hospitalization Major Medical

8. 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. 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. 10 (of 20) Delivery Styles Government  Medicare  Medicaid Indemnity Plans Managed Care  Health Maintained Organization (HMO)  Preferred Provider Organization (PPO) Individual versus Group

11. 11 (of 20) Key Trade-Off Costs versus Flexibility/Coverage CostFlexibility Indemnity ↑↑ PPO HMO

12. 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. 13 (of 20) Dollar Limits and Referrals Dollar Maximum  Per Claim  Per Lifetime  Per Procedure/Expense Referrals  In-Network List  Referrals/Pre-Authorization

14. 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. 15 (of 20) Long Term Care and Disability Insurance

16. 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. 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

18. Project Notes I 18 (of 20)

19. Project Notes II 19 (of 20)

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?