1. health and disability INCOME insurance Chapter 11
Personal Finance
FIN 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 Plans
Group Health Insurance: employer sponsored who pay some or all of the premiums
Individual 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
COBRA
The 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 Coverage
Basic: 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 Coverage
Protects against the large expenses of a serious injury or a long illness.
Hospital Indemnity Policies
Pays benefits only when you are hospitalized, but these benefits are paid to you in cash.
Long-Term Care Insurance
Help 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
Eligibility
Assigned benefits (pay direct to doctor/hospital)
Internal limits (max allowable payment)
Copayments (flat fee paid on every visit)
Service benefits
Benefit limits (dollars or days)
Exclusions and limitations
Guaranteed renewable
Cancellation 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 coinsurance
Out-of-pocket limit (max you pay before they pay 100%)
Benefits based on reasonable and customary charges
Two Choices
Basic plus Supplementary (See Exhibit 9 – 1)
Major Medical

9. Chapter Break

10. Health Plan Providers Hospital and Medical Service Plans
Blue Cross & Blue Shield
BC = hospital care
BS = surgical and physicians services
Health 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 Plans
provide 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 supplies
Part C: combines A & B
Part D: Prescription drug coverage
Medigap
Privately 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 (
Medlineplus is world’s largest collection of published medical information (
NIH Health Information Page directs people to the consumer health information in NIH publications and on the Internet (
FDA provides information about the safety of various foods, drugs, cosmetics, and medical devices (

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 Income
Private Income Insurance Programs
Employer Plans
Social Security
Workers’ compensation
Disability Insurance Trade Offs
Waiting or elimination period
Duration of benefits
Amount of benefits
Accident and sickness coverage
Guaranteed 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 expensive
Trial lawyers and frivolous lawsuits add to costs
Duplication of tests, excessive or unnecessary testing
Abuse of services
Fraudulent claims

19. Current Issues in Health Care
What is being done to reduce costs?
Affordable Health Care Act (2009)
Government control of health services
Recent GAO and CBO studies suggest costs will be significantly greater than originally thought.
Corporate Health Initiatives
Fitness centers
Financial incentives: weight, general health
Self-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 fall
Illness requiring hospitalization
Be Your Own Personal Financial Planner
1 – How do you pay for health care? (no w/s)