FIN 2081 Chapter Notes - Chapter 9: Preferred Provider Organization, Disability Insurance, Managed Care
Chapter 9 - Health and Disability Income Insurance
What is health insurance?
Health insurance is a form of protection that eases the financial burden people may experience as a result of
illness or injury.
You pay a premium, or fee, to the insurer. In return, they may reimburse you for hospital stays, doctor's
visits, medications, and sometimes vision and dental care.
Health insurance includes both medical expense insurance, and disability income insurance.
Types of Health Insurance Coverage
Basic Health Insurance Coverage Includes:
Hospital expense coverage
Pays for some or all of the daily costs of room and board during a hospital stay.
Routine nursing care, minor medical supplies, and the use of other hospital facilities are covered as
well.
Surgical expense coverage
Pays all or part of the surgeon's fees for an operation, whether it is done in a hospital or in the
doctor's office.
Policies often have a list of the service that they cover, which specifies the maximum payment for
each type of operation.
Physician expense coverage
Meets some or all the costs of physician care that do not involve surgery.
This form of health insurance covers treatment in a hospital, a doctor's office, or even a patient's
home.
Plans may cover routine doctor visits, X-rays, and lab tests.
Major Medical Expense Insurance Coverage
This coverage pays the large costs involved in long hospital stays and multiple surgeries.
In other words, it takes up where basic health insurance coverage leaves off.
Almost every type of care and treatment prescribed by a physician, in and out of a hospital, is covered.
Coinsurance is the percentage of the medical expenses the policyholder must pay in addition to the
deductible amount. Many policies require policyholders to pay 20 or 25 percent of expenses after they
have paid the deductible.
Stop-loss is a provision that requires the policyholder to pay all costs up to a certain amount, after
which the insurance company pays 100% of the remaining expenses, as long as they are covered in the
policy.
Major medical expense insurance may be offered as a single policy with basic health insurance
coverage, or it can be bought separately.
Comprehensive major medical expense insurance is a type of complete insurance that helps pay
hospital, surgical, medical, and other bills.
Hospital Indemnity Policies
A hospital indemnity policy pays benefits when you're hospitalized. Unlike most of the other plans
mentioned, however, these policies don't directly cover medical costs.
Instead you are paid in cash, which you can spend on medical or nonmedical expenses as you choose.
Hospital indemnity policies are used as a supplement to- and not a replacement for - basic health or
major medical policies.
The average person who buys such a policy, usually pays much more in premiums than her or she
receives in payment.
Dental Expense Insurance
This insurance provides reimbursement for the expenses of dental services and supplies.
It encourages preventive dental care.
Long-Term care Insurance
LTC provides coverage for the expense of daily help that you may need if you become seriously ill or
disabled and are unable to care for yourself.
Coverage Trade-Offs
Reimbursement Vs. Indemnity
Document Summary
Chapter 9 - health and disability income insurance. Health insurance is a form of protection that eases the nancial burden people may experience as a result of illness or injury. You pay a premium, or fee, to the insurer. In return, they may reimburse you for hospital stays, doctor"s visits, medications, and sometimes vision and dental care. Health insurance includes both medical expense insurance, and disability income insurance. Pays for some or all of the daily costs of room and board during a hospital stay. Routine nursing care, minor medical supplies, and the use of other hospital facilities are covered as well. Pays all or part of the surgeon"s fees for an operation, whether it is done in a hospital or in the doctor"s o ce. Policies often have a list of the service that they cover, which speci es the maximum payment for each type of operation.
