1. Choosing Health Care Insurance

2. Focus Questions What are the types of health car coverage?
How do you get health insurance if your employer does not offer it?
What is managed care?

3. Key Terms coinsurance copay COBRA Medicare Medicaid Managed care
health savings account (HSA)
flexible spending account (FSA)

4. Health Insurance Types of Coverage
Medical
Basic medical coverage helps pay doctors’ fees, medical tests, hospitalization, and surgery.
Medications might also be covered.
Basic medical is usually combined with major medical coverage, which helps pay for very expensive treatment such as long term rehabilitation, organ transplants, or sophisticated cancer therapies.

5. Health Insurance Types of Coverage
Dental
Dental expenses are not usually included in a regular health care plan.
Sometimes they can be added for a higher premium.
Sometimes you would have to purchase a separate policy.

6. Dental coverage would apply to the cost of fillings, crowns, and similar procedures.
Preventive dental care such as periodic checkups, teeth cleaning, and X rays is often included for a higher premium.
Some plans also cover orthodontic care such as braces.

7. Health Insurance Types of Coverage
Vision
Vision expenses are not usually not included in a regular health care plan.
Vision coverage helps pay for eye examinations, glasses, and contact lenses.
Vision correction surgery is often included.
Treatment of eye injuries is covered under major medical insurance on many policies.

8. Health Insurance Types of Coverage
Disability
Protection is usually not covered in a regular health care plan.

9. Health Insurance Types of Coverage
Long-term care
Long term care is usually not covered in a regular health care plan.
Coverage for long term care is meant to help pay for extended nursing care that is not covered by medical plans, including Medicare.
When a person is unable to care for themselves and needs someone to provide care in the home or in a nursing home, long term care can be very important.

10. Health Insurance Understanding Costs
Premium
The premium is the amount you pay to the insurance company for your policy.
For health coverage, premiums increase as you get older.
Premiums are also higher if you have other risk factors that increase the likelihood of claims.

11. Deductible Many policies have a deductible.
This is a set amount that you pay toward your yearly expenses before your insurance coverage kicks in.
Deductible amounts range from $100 to thousands of dollars, depending on the policy.

12. Coinsurance
With some policies, after you meet your deductible you still pay part of each medical bill.
Coinsurance, usually expressed as a percentage, indicates how you and the insurance company will share the charges.
If your coinsurance is 20 percent, you would pay 20 percent of the hospital bill and the insurance company would pay 80 percent.

13. Copay
When policies have a copay, you pay a flat dollar amount each time you go to a doctor, have a medical test or treatment, or buy a prescription drug.
The insurance company pays the rest.
In policies with a deductible, the copay begins after the deductible is met.

14. Out of pocket expenses
The amounts that you pay for coverage are called your out of pocket expenses.
They include your premiums plus any deductibles, coinsurance, and copays

15. Health Insurance Sources of Health Insurance
Group – many are employer-sponsored
Several types of health care coverage might be offered, such as medical, dental, vision, and perhaps even disability.
Usually once a year, employees can choose which plan or plans they want to enroll in.

17. COBRA
COBRA is an acronym for the Consolidated Omnibus Budget Reconciliation Act.
It is a federal law that requires employers to let workers temporarily continue with their health insurance plan after leaving the company, usually for up to 18 months.
While on COBRA coverage, the former employee pays the entire premium for the policy, which is significantly higher than before, when the employer was paying part of the cost.

18. Health Insurance Sources of Health Insurance
Individual Health Insurance Policies
Pros and Cons
One advantage is that you can keep it even if you change jobs.
Most of these plans have very high monthly premiums and large deductibles.
Insurance companies might deny coverage for people with a preexisting condition – a medical condition that was present before they bought the policy.
These include conditions such as chronic asthma, diabetes, or a previous diagnosis of a serious disease.

19. Short Term Policies
Some insurance companies offer short term plans for people who want coverage for only one to six months.
These plans are intended to fill the gap if a person becomes temporarily uninsured due to job loss or some other incident.
Most of these short term plans do not let you reapply after the six month period.

20. Health Insurance Sources of Health Insurance
Government Programs
Federal and state governments run health care programs for specific segments of the population.
They are primarily meant to help people who have no private coverage.
These government programs include Medicare, Medicaid, State run programs, and workers’ compensation.

21. Medicare
The best known federal health care program is Medicare, which provides health insurance to senior citizens and people with certain disabilities.
Senior citizens must be at least 65 years old to qualify for coverage.
Medicare Part A pays for hospital care, and home health care.
Medicare Part B pays for doctor visits and other medical services.

22. Medicare does not pay for everything
Medicare does not pay for everything. Individuals are responsible for their deductibles and copays.
To help pay those costs, they can buy supplemental insurance.
Supplemental policies are sold by private insurance companies and will pick up some of the costs that Medicare does not cover.

23. Medicaid
The other major health care program run by the government is Medicaid.
Medicaid is subsidized health insurance for low income people and families who cannot afford private health insurance or their own medical care.
Medicaid assistance is paid with funds from both federal and state governments.

24. State Run Health Care Programs
Many states offer health care programs for people who cannot afford their own private health insurance but do not qualify for Medicaid and are not offered health care benefits where they work.
Some of these state run programs focus on insuring children.
Others offer coverage for families and individuals.
More than half the states offer health care plans to people who have medical conditions that prevent them from getting insurance elsewhere.

25. Workers' Compensation
Employers pay into a state run workers’ compensation plan that covers people injured or killed on the job.
Workers’ comp indemnifies (protects against loss) the injured worker’s salary.
In addition, the medical portion of workers’ comp helps cover medical bills.
Those who accept workers’ comp payments must give up their right to sue the employer.

26. What do we call the amount you have to pay on yearly health costs before the insurance company begins to pay?
Deductible
Co-payment
PIP
Annuity
PPO

27. What do we call the amount you have to pay on yearly health costs before the insurance company begins to pay?
Deductible
Co-payment
PIP
Annuity
PPO

28. Health Insurance Types of Health Insurance
The type of policy you have is important because it determines what is covered, how free you are to choose your health care providers, and how much you will pay when you use your benefits.
The plans explained here apply to medical, dental, and vision coverage.
Disability and Long term care insurance are different types of policies.
The two types of health care policies include traditional plans and managed care plans.

29. Traditional Plans
If your health care coverage is through a traditional plan, you have the greatest choice of health care providers.
You can choose to stay with your family doctor, select the best surgeon in the town, or go to a hospital near your home.
You are also likely to pay considerably more for this privilege.
Traditional plans are becoming less common.

30. Managed Care Plans
Managed care insurance plans focus on managing the overall cost, use, and quality of the health care system.
The specific details can vary, but these plans usually have agreements with health care providers to accept lower fees.
As a result, you are likely to be limited in your access to and choice of doctors, hospitals, and other medical providers.
You might have to get preapproval from the insurance company before you can have surgery or other expensive medical treatments.
Managed care plans are typically less costly than traditional plans.

31. HMOs
The oldest type of managed care plan is the health maintenance organization.
HMOs emphasize wellness by encouraging checkups, immunizations, and screenings for disease.
You have a primary care physician (PCP) who provides most services or refers you to a specialist in the plan, if necessary.
In most HMOs, you cannot see another plan doctor without a referral from the PCP, and there is no coverage for care by anyone outside of the plan.
There is usually no deductible, and out of pocket expenses are often lower than for other plans.

32. PPOs
A second type of managed care plan is the preferred provider organization (PPO).
This is similar to an HMO, with a few differences. A PPO consists of a network of doctors and other health care providers, called “preferred” providers.
You can go to a provider outside the network, but you will pay considerably more.
There is usually a deductible, and you typically have to fill out more paperwork than HMO participants do.

33. POS Plans
There are some hybrid plans that combine the features of both HMOs and PPOs.
One of these is a point of service (POS) plan.
As with an HMO, you have a primary care physician who makes referrals to other providers in the plan.
However, as with a PPO, you can choose providers outside the plan – at a higher cost.

34. POS Plans
The amount the insurance company will pay depends on where the service is obtained – the ‘point of service.”
There is usually no deductible if you use network providers, but a deductible would apply if you choose providers outside the network.

35. Health Insurance Other Options
A variety of alternatives some more useful than others are available to help reduce the high cost of health care.

36. Health Savings Accounts
The purpose of a health savings account (HSA) is to set aside money that can be used to pay for health care expenses not covered by insurance.
Such an account would allow you to lower your health insurance premiums by switching to a health care policy with a very high deductible.
In addition, HSAs provide three way tax advantages:
tax deductible contributions to the account,
tax free earnings,
tax free withdrawals for medical expenses.

37. Only people who have medical insurance with a deductible in the thousands of dollars qualify.
If you have such a high deductible plan, you can deposit money from each paycheck into your health savings account, where it earns interest.
You make withdrawals as needed to pay for services not covered by insurance or to pay toward your deductible.
Any balance left at the end of the year can be rolled over and used the following year.

38. The account goes with you change jobs or change your medical coverage.
It passes to your spouse or beneficiary upon your death.

39. Flexible Spending Accounts
A flexible spending account (FSA), is set up by an employer for its employees.
If you choose to participate, you decide how much will be deducted from each paycheck.
Your employer puts that amount into your flexible spending account.
Because the deduction is made before taxes, it reduces your withholding.

40. You can use the money as needed for deductibles, coinsurance, copays, and health care expenses not covered by insurance.
Any money left over at the end of a year is generally forfeited, so it is important to estimate your annual out of pocket medical expenses as accurately as possible.

41. Discount Health Plans Some companies offer discount health plans.
These are not insurance policies.
They do not pay anything toward your medical bills.
Instead, you pay a membership fee and then receive a list of providers who offer discounts on health care.

42. For people who cannot afford health insurance or who cannot get it, these plans provide limited assistance with medical bills.
Or, if your insurance has a high deductible, you can buy a membership in a discount health plan to help cover your out of pocket expenses until that deductible is met.

43. Evaluating Medical Insurance
You need to know what kinds of care the plan pays for
The choices you have about the care
What your out of pocket costs will be

44. How much are the premiums
You will make payments on a regular basis to the insurance company
What are those costs per year?
If you get medical insurance through your employer, the premiums might be deducted from your paycheck.

45. What is covered under the policy
Exactly what is included can vary
Are mental health, dental, vision, and prescription drug coverage part of the plan?

46. How much freedom do you have in choosing your health care provider
With some plans, particularly most HMOs, you can see only the physicians in the plan and only with your primary physician’s referral.
In other plans, you can choose your physicians or pay more for using providers outside the network.

47. Are preexisting conditions excluded
Some policies require a waiting period, often six months to a year or longer, before they will pay to treat conditions that already existed when you bought the policy.
Find out what rules apply

48. How much will you pay toward claims?
Some policies have a yearly deductible.
You also need to know whether your policy has a coinsurance provision or if there is a copay required every time you visit your doctor or fill a prescription.
These out of pocket expenses add up.

49. Is there is a maximum out of pocket for the year?
Some plans pay at 100 percent after you meet a yearly maximum for out of pocket expenses.

50. Are there lifetime maximum benefits?
Some plans stop paying completely when you reach a maximum benefit.
If your health insurance has such a maximum, how would you protect yourself against the high costs of a catastrophic medical condition?

51. What do you think? Discussion
Should the federal government stop insurance companies from denying preexisting condition coverage? Explain.
Why does managed care cost less? What are drawbacks to managed care? Advantages?
Should we have national health insurance? Explain.
© EMC Publishing, LLC
© EMC Publishing, LLC

61. Disability and Long Term Care Insurance
You have to protect yourself against the worst losses.

62. Financial Survival During Disability
Think about what happens to the family if a parent is unable to work for a period of time.
Even if you are single the bills will keep coming if you cannot work due to illness or accident.
If you lose your ability to earn income for an extended period of time, the loss in wages might even be more costly than your medical bills.
It could jeopardize your ability to pay for housing, your car loan, and other everyday expenses.

63. Disability insurance can provide some ongoing income.
Typically, coverage pays 50 percent to 70 percent of your regular pay.
Getting disability coverage should be a goal, even if you are just starting out.
It can come from several sources, including your employer, the government, or an individual policy you purchase for yourself.

64. Employer Plans
Some employers offer group disability insurance in a package with health insurance or life insurance.
In fact, short term disability coverage is required in many states.
The length of time covered by short term disability varies considerably, but two years is usually maximum.

65. Employers might also make long term disability coverage available.
These benefits would begin after a certain number of weeks or months or when short term disability coverage runs out.
Depending on the policy, benefits might continue for a specified number of years of even for life.

66. Social Security Disability Coverage
If your disability is expected to keep you from working at any job for more than a year, you can apply for Social Security disability benefits.
The amount of the payments you can receive depends on your wages and on the number of years you have been paying into the Social Security system.
Dependents of workers can also qualify for Social Security benefits.

67. Workers’ Compensation Insurance
If you are injured on the job and unable to work for a significant period of time, part of your salary would be covered by the workers’ compensation program.
The states each have a workers’ compensation division.

68. Individual Disability Insurance
Even if you are covered under an employer’s disability plan, you might want to supplement that by buying an individual policy for yourself.
The coverage offered by employer plans can vary and might be as little as 50 percent or less.
If you become permanently disabled, could you get along on only 50 percent of your salary for 10 years or longer?

69. Do you need Long Term Care Insurance?
Long term care insurance helps pay the costs of health care assistance in the home, in an assisted living facility, or in a nursing home.
These services are most often needed by the elderly but a severe injury or illness at any age can leave you unable to take care for yourself.

70. Life Insurance Why Buy It?
Pay off debts
Provide income to spouse / dependents (beneficiaries)
Provide education for children
Make charitable donations

71. Life Insurance Types of Life Insurance
Term
Set period of time
Permanent (whole)
Entire life

72. What do we call the person who receives the payment of a life insurance policy?
Benefactor
Premier
Administrator
Beneficiary
Sponsor

73. What do we call the person who receives the payment of a life insurance policy?
Benefactor
Premier
Administrator
Beneficiary
Sponsor

74. Life Insurance Sources of Life Insurance
Employer
Fully funded
Partially funded
Individual

75. Life Insurance Determining Premiums
Actuarial tables

76. Life Insurance Determining Premiums
Actuarial tables
Individual lifestyles
Occupation / hobbies
Smoking / alcohol use
Medical conditions
May be denied insurance

77. Life Insurance Evaluating Life Insurance
Term
Less expensive when younger
Less coverage when older

78. Life Insurance Evaluating Life Insurance
Term
Less expensive when younger
Less coverage as age
Whole
Investment
Coverage does not change
with age

79. Life Insurance Evaluating Life Insurance
How much do you need?

80. Life Insurance Annuities
Payments after you retire

81. Which of the following would most likely lower your life insurance premium?
You quit smoking.
You take up race car driving.
You find out you have a serious chronic disease.
The life expectancy average falls.
All of these would likely lower your premium.

82. Which of the following would most likely lower your life insurance premium?
You quit smoking.
You take up race car driving.
You find out you have a serious chronic disease.
The life expectancy average falls.
All of these would likely lower your premium.

83. What do you think? Discussion
“The chief beneficiary of life insurance policies for young, single people is the life insurance agent” (Wes Smith). What does this quotation mean?
When should you carry the most life insurance?
Is term or whole life insurance a better choice? Why?
© EMC Publishing, LLC
© EMC Publishing, LLC

84. The End