1. Chapter 11: Managing Health Expense Garman/Forgue Personal Finance Ninth Edition PPT slide program prepared by Amy Forgue and Ray Forgue.

2. Copyright ©Houghton Mifflin Company. All rights reserved.11 - 2 Learning Objectives 1.Identify ways that people can manage the financial burdens resulting from illness or injury. 2.Distinguish among the types of protection for direct medical expenses. 3.Describe the general benefits and limitations of medical care plans.

3. Copyright ©Houghton Mifflin Company. All rights reserved.11 - 3 Learning Objectives 4.Explain how to protect yourself from the expenses for long-term care. 5.Develop a plan for protecting your income when you cannot work due to disability.

4. Copyright ©Houghton Mifflin Company. All rights reserved.11 - 4 Addressing the Financial Burdens of Illness or Injury Group Health Plan 1.Covering Your Direct Medical Care Costs –Medicaid, Medicare 2.Covering Your Rehabilitative and Custodial Care Costs –Long-term care insurance 3.Covering Your Lost Income –Social Security disability income insurance

5. Copyright ©Houghton Mifflin Company. All rights reserved.11 - 5 Sources of Protection from Direct Medical Care Costs Medical Care Plan Health Maintenance Organizations –HMOs, Managed Care Plans –Primary-Care Physician –Individual Practice Organization

6. Copyright ©Houghton Mifflin Company. All rights reserved.11 - 6 Making Changes in Your Group Plan Changes to your group plan can be made during the open-enrollment period.

7. Copyright ©Houghton Mifflin Company. All rights reserved.11 - 7 Traditional Health Insurance Health Insurance Comprehensive Health Insurance Indemnity Plan Preferred Provider Organization

8. Copyright ©Houghton Mifflin Company. All rights reserved.11 - 8 Consumer-Driven Health Care High-Deductible Health Care Plan Health Savings Account (or HAS) Heath Reimbursement Account (or HRA)

9. Copyright ©Houghton Mifflin Company. All rights reserved.11 - 9 Making Sense of Your Medical Plan Benefits Certificate of Insurance: Paper or booklet that outlines group health insurance benefits.

10. Copyright ©Houghton Mifflin Company. All rights reserved.11 - 10 What Types of Care Are Covered? Dental expense insurance Vision care insurance Preexisting conditions

11. Copyright ©Houghton Mifflin Company. All rights reserved.11 - 11 Who Is Covered When does coverage begin and end? –Optionally renewable policies –Guaranteed renewable policies –Noncancelable policies

12. Copyright ©Houghton Mifflin Company. All rights reserved.11 - 12 How Much Must Your Pay Out of Your Own Pocket? Deductibles Copayments Coinsurance

13. Copyright ©Houghton Mifflin Company. All rights reserved.11 - 13 Policy Limits Item limits Episode limits Annual limits Lifetime or aggregate limit

14. Copyright ©Houghton Mifflin Company. All rights reserved.11 - 14 Coordination of Benefits Maintain your medical care plan between jobs. –COBRA rights –Portability option

15. Copyright ©Houghton Mifflin Company. All rights reserved.11 - 15 Planning for Long-Term Care 1.The degree of impairment required for benefits to begin –Activities of Daily Living (ADLs) 2.The level of care covered –Skilled nursing care –Intermediate care –Custodial care

16. Copyright ©Houghton Mifflin Company. All rights reserved.11 - 16 Planning for Long-Term Care 3.The person’s age 4.The benefit amount 5.The benefit period 6.The waiting period 7.Inflation protection

17. Copyright ©Houghton Mifflin Company. All rights reserved.11 - 17 Protecting Your Income During Disability Disability income insurance Social Security disability insurance

18. Copyright ©Houghton Mifflin Company. All rights reserved.11 - 18 Protecting Your Income During Disability Level of need Important disability income insurance policy provisions: –Waiting period (or elimination period) –Benefit period –Degree of disability Split-definition policies Residual clause of disability income policy –Social Security rider –Cost-of-living adjustments

19. Copyright ©Houghton Mifflin Company. All rights reserved.11 - 19 The Top 3 Financial Missteps In Managing Health Expenses People slip up in when they do the following: 1. Going unprotected for health care when changing jobs. 2. Duplicating employer-provided health care protection with your spouses. 3. Ignoring the need for protection of income during a period of disability.

20. Copyright ©Houghton Mifflin Company. All rights reserved.11 - 20 Good Money Habits in Managing Health Expenses Always maintain coverage for direct health care expenses. When changing employers, consider continuing your medical care plan coverage using rights established through the COBRA law.

21. Copyright ©Houghton Mifflin Company. All rights reserved.11 - 21 Good Money Habits in Managing Health Expenses Working people should sign up for a n employer-sponsored premium conversion plan and a flexible spending account for health care spending when available, to save money on taxes.

22. Copyright ©Houghton Mifflin Company. All rights reserved.11 - 22 Good Money Habits in Managing Health Expenses If you are a frequent user of health care, reduce spending on deductibles and coinsurance by choosing an HMO or PPO. Take advantage of employer- sponsored long-term disability income insurance or consider purchasing protection individually.

23. Copyright ©Houghton Mifflin Company. All rights reserved.11 - 23 Good Money Habits in Managing Health Expenses Regularly reevaluate your need for long- term care insurance against your resources for providing such care on your own.