1. Lecture 11 Medical Benefits: Traditional Plans (Indemnity Plans) Providers of Traditional Coverage –Blue Cross-Blue Shield –Insurance Companies Basic Medical Expense Coverage Major Medical Coverage Managed Care Provisions in Traditional Plans Medical Savings Accounts

2. Providers of Traditional Coverage Blue Cross-Blue Shield vs. Insurance Companies –Regulation –Taxation –Form of benefits –Types of benefits –Reimbursement of providers –National coverage –Flexibility –Rating –Marketing

3. Basic Medical Expense Coverage Traditional –Hospital expense benefits In-patient –Room and board –Other charges Outpatient –Surgery –Preadmission testing –Emergency room treatment Exclusions –Surgical expense benefits Fee schedule Relative value schedule Reasonable and customary charges –Physicians’ visits expense benefits In-hospital coverage Out-of-hospital coverage

4. Basic Medical Expense Coverage - (cont.) Newer –Extended care facilities –Home health care –Hospice care –Ambulatory care –Birthing centers –Diagnostic x-ray and laboratory services –Radiation therapy –Prescription drug expense benefits –Vision care –Supplemental accident benefits

5. Major Medical Coverage Types –Supplemental –Comprehensive Characteristics –Covered expenses –Exclusions Occupational injuries or diseases Cosmetic surgery Convalescent, custodial or rest care –Limitations

6. Major Medical Coverage Characteristics - (cont.) –Treatment of Mental Illness, Alcoholism and Drug Addiction –Deductibles –Coinsurance –Maximum Benefits Annual Lifetime Per cause

7. Managed Care Provisions in Traditional Plans Hospital certification Second surgical opinions Carve-outs for mental illness and substance abuse treatment Maternity management Pre-approval of visits to specialists

8. Medical Savings Accounts Pilot program under Health Insurance Portability and Accountability Act Personal savings account for unreimbursed medical expenses Tax-exempt trust or custodial account Contributions are tax deductible Distributions for eligible expenses not taxable Other distributions taxed and penalized (15%) if account holder is not 65, dead or disabled Strict regulations on contributions and eligible plans