Presentation on theme: "health and disability INCOME insurance Chapter 11"— Presentation transcript:
1 health and disability INCOME insurance Chapter 11 Personal FinanceFIN 235
2 HEALTH INSURANCE AND FINANCIAL PLANNING A form of protection whose primary purpose is to alleviate the financial burdens suffered by individuals because of illness or injury.Types of PlansGroup Health Insurance: employer sponsored who pay some or all of the premiumsIndividual Health Insurance: Individual health insurance covers either one person or a family. Coverage and cost vary from company to company
3 HEALTH INSURANCE AND FINANCIAL PLANNING COBRAThe Consolidated Omnibus Budget Reconciliation Act of 1986 allows workers to keep their former employer’s group coverage for a set period of time. Not everyone qualifies for COBRA.
4 HEALTH INSURANCE COVERAGE Types of Health Insurance CoverageBasic: includes hospital expense insurance coverage, surgical expense coverage, and physician expense insurance.Hospital Expense: pays part or all of hospital bills for room, board, and other charges.Surgical Expense: pays part or all of the surgeon’s fees for an operation.Physician Expense: helps pay for physician’s care that does not involve surgery
5 HEALTH INSURANCE COVERAGE Major Medical Expense Insurance CoverageProtects against the large expenses of a serious injury or a long illness.Hospital Indemnity PoliciesPays benefits only when you are hospitalized, but these benefits are paid to you in cash.Long-Term Care InsuranceHelp that you could need if you ever have an illness or disability that lasts a long time and leaves you unable to care for yourself.
6 Non-Medical Insurance Dental Expense Insurance Dental expense insurance provides reimbursement for the expenses of dental services and supplies. Vision Care Insurance A recent development in health care coverage has been vision care insurance
7 Health Insurance Policy Major Provisions EligibilityAssigned benefits (pay direct to doctor/hospital)Internal limits (max allowable payment)Copayments (flat fee paid on every visit)Service benefitsBenefit limits (dollars or days)Exclusions and limitationsGuaranteed renewableCancellation and termination
8 HEALTH INSURANCE TRADE-OFFS The benefits of health insurance policies differ, so consider the following:Reimbursement (actual $) versus indemnity (specific $)Internal limits (fixed $) versus aggregate limits (total $)Deductibles (max you pay) and coinsuranceOut-of-pocket limit (max you pay before they pay 100%)Benefits based on reasonable and customary chargesTwo ChoicesBasic plus Supplementary (See Exhibit 9 – 1)Major Medical
10 Health Plan Providers Hospital and Medical Service Plans Blue Cross & Blue ShieldBC = hospital careBS = surgical and physicians servicesHealth Maintenance Organizations (HMO)Health insurance plan that directly employs or contracts with selected physicians, surgeons, dentists, and optometrists to provide you with health care services in exchange for a fixed, prepaid monthly premium.
11 Health Plan Providers Preferred Provider Organizations (PPO) PPOs provide the services of doctors and hospitals at discount rates or give breaks in co-payments and deductibles.Employer Self-Funded Health Plansprovide the amount of protection that a specific group of people desires and can afford.
12 Health Plan Providers Health Care Accounts Flexible Savings Accounts (FSA) allow employees to contribute pretax dollars to an account managed by an employer.Health Reimbursement Accounts (HRA) are funded solely by your employer.Health Saving Accounts (HSA) allow you to contribute money to a tax-free account that can be used for out-of-pocket health care expenses.
13 Health Plan Providers Medicare Medigap Medicare is a federal health insurance program for people 65 or older, people of any age with permanent kidney failure, and certain disabled people.Part A: Hospital benefits (inpatient)Part B: Physician services and medical suppliesPart C: combines A & BPart D: Prescription drug coverageMedigapPrivately sold Supplement for Medicare plans
14 Health Plan Providers Medicaid Title XIX of the Social Security Act provides for a program of medical assistance to certain low-income individuals and families.Medicaid is administered by each state within certain broad federal requirements and guidelines.Many members of the Medicaid population are also covered by Medicare.
15 US Govt. Sources of Information Healthfinder includes links to more than 1,000 Web sites and lists topics according to subject (www.hhs.gov).Medlineplus is world’s largest collection of published medical information (www.nlm.nih.gov/medlineplus).NIH Health Information Page directs people to the consumer health information in NIH publications and on the Internet (www.nih.gov).FDA provides information about the safety of various foods, drugs, cosmetics, and medical devices (www.fda.gov).
16 DISABILITY INCOME INSURANCE Benefits provide regular cash income lost by employees as the result of an accident, illness, or pregnancy.Generally disability income policies are divided into short-term and long-term policies.There are different definitions of disability. Some policies define it as simply being unable to do your regular work, while others are stricter.
17 DISABILITY INCOME INSURANCE Sources of Disability IncomePrivate Income Insurance ProgramsEmployer PlansSocial SecurityWorkers’ compensationDisability Insurance Trade OffsWaiting or elimination periodDuration of benefitsAmount of benefitsAccident and sickness coverageGuaranteed renewability
18 Current Issues in Health Care Why does medical care cost so much?We want the best medical care available.R&D for new cures is expensive.New medical technology is expensiveTrial lawyers and frivolous lawsuits add to costsDuplication of tests, excessive or unnecessary testingAbuse of servicesFraudulent claims
19 Current Issues in Health Care What is being done to reduce costs?Affordable Health Care Act (2009)Government control of health servicesRecent GAO and CBO studies suggest costs will be significantly greater than originally thought.Corporate Health InitiativesFitness centersFinancial incentives: weight, general healthSelf-care assistance and education
20 HOMEWORK Question: (Self-audit of coverage) Do you know what type of coverage you have?Are you on your parents’ policy?Are you covered by a school policy?Do you carry your own policy”If so, what does your insurance cover in terms of;Injuries resulting from an fallIllness requiring hospitalizationBe Your Own Personal Financial Planner1 – How do you pay for health care? (no w/s)