1. 9-1 Copyright  2002 by Harcourt, Inc. All rights reserved. CHAPTER 9: INSURING YOUR HEALTH Clip Art  2001 Microsoft Corporation. All rights reserved.

2. 9-2 Copyright  2002 by Harcourt, Inc. All rights reserved. Need for Health Insurance  Protect against economic loss in the event of serious accidents or illnesses.  Protect against the rising cost of health care, which is outpacing other costs in general.

3. 9-3 Copyright  2002 by Harcourt, Inc. All rights reserved. Types of Health Care Plans  Also called fee-for-service plans, you typically choose the doctors and hospitals, pay for the service, and then get paid back by the insurance company.  Health care services are separate from insurer. 1. Traditional Indemnity Plans:

4. 9-4 Copyright  2002 by Harcourt, Inc. All rights reserved. 2. Managed Care Plans:  Users contract with and make monthly payments directly to health care providers.  A designated group of doctors and hospitals provide services.  Cost-efficient strategies are utilized, including controlling amount of care provided and emphasizing prevention of illness.  No deductibles are paid, just low copayments for services.

5. 9-5 Copyright  2002 by Harcourt, Inc. All rights reserved. Types of Managed Care Plans:  Health Maintenance Organizations (HMOs) comprehensive services, sometimes at one facility.  Individual Practice Associations (IPAs) physicians operate out of their own offices and community hospitals.  Preferred Provider Organizations (PPOs) broader network of “approved” physicians and allow use of out-of-network providers.

6. 9-6 Copyright  2002 by Harcourt, Inc. All rights reserved. Providers of Health Insurance  Insurance companies  Managed care organizations  Blue Cross/Blue Shield (prepaid expense plans)  Group plans (may incorporate any of the above as well as self insurance) 1. Private Insurers:

7. 9-7 Copyright  2002 by Harcourt, Inc. All rights reserved. 2. Government Agencies: Part A—Basic hospital insurance for those who are qualified. Part B—Supplementary medical insurance; optional coverage available for a monthly premium to those eligible for Part A.  Social Security’s Medicare program –Funded by Social Security taxes. –Available to qualified people 65 and older and to those receiving SS disability benefits.

8. 9-8 Copyright  2002 by Harcourt, Inc. All rights reserved. Coverage includes: –Medical and rehabilitation expenses –Disability income –Lump-sum payments for death or dismemberment –Second-injury funds  Workers’ compensation insurance Premiums paid by employers for workers injured on the job.

9. 9-9 Copyright  2002 by Harcourt, Inc. All rights reserved. 3. Other sources of health care:  Homeowner’s and automobile insurance policies contain limited amounts of medical coverage.  Other government health programs at the federal, state and local levels, including Medicaid and programs for military personnel.

10. 9-10 Copyright  2002 by Harcourt, Inc. All rights reserved. Types of Medical Expense Coverages Hospital insurance:  Pays a portion of per- day room and board charges  Use of hospital facilities  Selected other services Clip Art  2001 Microsoft Corporation. All rights reserved.

11. 9-11 Copyright  2002 by Harcourt, Inc. All rights reserved.  Pays cost of surgery either in or out of the hospital.  Not all procedures are covered, such as cosmetic or experimental surgery. Physicians expense insurance:  Pays physician fees for nonsurgical care in hospital.  Includes consultation with specialists and lab tests. Surgical expense insurance:

12. 9-12 Copyright  2002 by Harcourt, Inc. All rights reserved.  Broad coverage for illnesses and injuries of a catastrophic nature.  Amount of coverage is large.  May have lifetime limits. Dental insurance:  Covers necessary dental care and some dental injuries.  Mostly offered through group insurance plans. Major medical insurance:

13. 9-13 Copyright  2002 by Harcourt, Inc. All rights reserved. Comprehensive major medical:  The most desirable coverage, it combines major medical with basic hospital, surgical and physicians expense coverages.  Usually offered through group plans with low deductible.

14. 9-14 Copyright  2002 by Harcourt, Inc. All rights reserved. Coverages You Don’t Need!  Accident policies only cover certain types of accidents, usually travel-related ones.  Sickness and dread disease policies coverage limited to specific disease or illness; prohibited in some states.  Hospital income policies guarantee a per-diem for hospital stays, but generally exclude certain illnesses.

15. 9-15 Copyright  2002 by Harcourt, Inc. All rights reserved. Policy Provisions of Medical Expense Plans Terms of Payment: How much your medical expense plan will pay is usually determined by the following 4 provisions:

16. 9-16 Copyright  2002 by Harcourt, Inc. All rights reserved.  The initial amount not covered.  Determined on a calendar-year or per- incident basis. Participation (Coinsurance):  Company pays only a portion of the medical expenses after the deductible.  Plan may include a stop-loss provision to cap your out-of-pocket expenses. Deductible:

17. 9-17 Copyright  2002 by Harcourt, Inc. All rights reserved.  Limits amount paid on certain items to usual, customary, and reasonable charges even if cost of entire surgery or illness is within the norms. Coordination of benefits:  Eliminates double payment when coverage provided under more than one policy. Internal limits:

18. 9-18 Copyright  2002 by Harcourt, Inc. All rights reserved. Terms of Coverage: Important provisions to consider include:  Persons and places covered—Who is covered and where are you covered?  Cancellation—Obtain a policy that cannot be canceled unless premiums are not paid.  Continuation of group coverage (COBRA)— At your expense, you can continue your previous employer’s coverage for up to 18 months after you leave the job.

19. 9-19 Copyright  2002 by Harcourt, Inc. All rights reserved.  Pregnancy and abortion—What is the extent of the coverage provided?  Mental illness—How restricted is the coverage?  Rehabilitation coverage—How much is provided?  Preexisting conditions—How are they covered?

20. 9-20 Copyright  2002 by Harcourt, Inc. All rights reserved. How Insurance Companies Try to Keep Costs Down in Policies  Pre-admission certification  Continued stay review  Second surgical opinions  Waiver of coinsurance Clip Art  2001 Microsoft Corporation. All rights reserved.

21. 9-21 Copyright  2002 by Harcourt, Inc. All rights reserved. Long-Term Care Insurance Provides for delivery of medical and personal care, other than hospital care, to persons with chronic medical conditions due to illness or frailty.

22. 9-22 Copyright  2002 by Harcourt, Inc. All rights reserved. Long-Term Care Policy Provisions:  Type of Care—What types of care are covered? Ex: nursing home, in-home.  Eligibility Requirements— Gatekeeper requirements determine when insured qualifies for benefits.  Services Covered—What levels of service are covered? Ex: skilled, intermediate care, custodial.

23. 9-23 Copyright  2002 by Harcourt, Inc. All rights reserved.  Benefit Duration— How long will the benefits last?  Waiting period— Once eligible, how long before the payments begin?  Daily Benefits—What is the daily maximum reimbursement? Clip Art  2001 Microsoft Corporation. All rights reserved.

24. 9-24 Copyright  2002 by Harcourt, Inc. All rights reserved.  Preexisting Conditions—How will they be handled?  Inflation Protection—Can you increase benefits with rising costs?  Premium Levels—How much are they? Will they increase?  Renewability—Is the policy guaranteed renewable? Optional renewability NOT desired!

25. 9-25 Copyright  2002 by Harcourt, Inc. All rights reserved. Who Needs Long-Term Care Insurance?  Do you have a lot of assets to preserve for your dependents?  Can you afford the premiums?  Is there a family history of disabling disease?  Do you have family who can care for you?

26. 9-26 Copyright  2002 by Harcourt, Inc. All rights reserved. Considerations in Purchasing Long-Term Care Insurance  Buy the policy while you are healthy.  Buy the right types of coverage, but don’t buy more coverage than you need.  Understand what the policy covers and when it pays benefits.

27. 9-27 Copyright  2002 by Harcourt, Inc. All rights reserved. Disability Insurance Provides families with weekly or monthly payments to replace income lost when the insured is unable to work due to an illness, injury or disease.

28. 9-28 Copyright  2002 by Harcourt, Inc. All rights reserved. Estimating Disability Needs 1. Calculate monthly take-home pay. 2. Estimate existing benefits, such as: –Social Security –Other government benefits –Company disability benefits –Group disability policy benefits 3. Subtract the total of (2) from (1)

29. 9-29 Copyright  2002 by Harcourt, Inc. All rights reserved. Disability Insurance Provisions:  Definition of disability—"Own occupation" most desirable.  Benefits—How much will they be and how long will they last?  Probationary period—How long after policy is issued before benefit privileges are available?

30. 9-30 Copyright  2002 by Harcourt, Inc. All rights reserved.  Renewability—Is it guaranteed renewable or noncancelable?  Other features—Look for cost of living adjustment, guaranteed insurability option, and waiver of premium.  Waiting period—Once disabled, how long before benefits begin? Clip Art  2001 Microsoft Corporation. All rights reserved.

31. 9-31 Copyright  2002 by Harcourt, Inc. All rights reserved. Shopping for Insurance  Consider your needs.  How much can you afford?  What can you do to lower your health care needs?  Compare policies and costs.  What does your employer provide?  Select a quality company with a good agent.

32. 9-32 Copyright  2002 by Harcourt, Inc. All rights reserved. THE END!