1. Health, Disability and Life Insurance
Chapter 14
Health, Disability and Life Insurance

2. Costs of going to the hospital
Cost of having a child?
$ $11,000
Ambulance Ride
$500 - $1000
Average cost of someone staying in the hospital…
$21,000
Average cost of paying medical insurance without help of job.
$370 per month or about $4500 per year.
Family of 4 almost $13,000 per year.

3. Health Insurance and what does it mean?
Health insurance is a form of protection that eases the financial burden people may experience as a result of illness or injury.
2 subsets of health insurance
Medical expense insurance
Pays for the actual medical cost
Disability income insurance.
If you lose your job and have no medical coverage. You can stay on the plan, but have to pay for it individually.

4. Type of health insurance
Group Health
Many employees are grouped under the same plan so cost is fairly low.
Individual Health Plans
Self-employed people have these, not covered under a group plan.
Can meet special needs.
COBRA
Consolidated Omnibus Budget Reconciliation Act
If an employee looses their job they are covered for a set period of time.
Usually private companies or state or local government are eligible for these benefits.

5. Basic Health Coverage Hospital Expenses Surgical Expenses
Pay for some or all of the costs of room and board during the hospital stay. Routine nursing care, minor medical supplies. Usually have a number of set days that the policy will cover. Usually also a deductable.
Surgical Expenses
Covers all or part of the surgical fees for an operations.
Policies have a list of the total amount that the policy will cover and you have to pay the rest.
For example a appendectomy may be $1000 and your policy only covers $500 so you have to pay $500

6. Physician Expenses
Meets some or all of the costs of a physician care that do not involve surgery.
Physician expense coverage is usually combined with surgical and hospital coverage in a basic health insurance package.

7. Major medical expense insurance.
Coinsurance – is the percentage of the medical expenses the policyholder must pay in addition to the deductible amounts.
Usually 20% to 25% of expense after they have paid the dudctible.

8. Stop- Loss Provisions
Is a provision that requires the policyholder to pay all costs up to a certain amount, after which the insurance company pays 100 percent of the remaining expenses covered in the policy.

9. Comprehensive major Medical
Is a type of complete health insurance that helps pay hospital, surgical, medical and other bills.

10. Hospital Indemnity Policy
A hospital indemnity policy pays benefits when you are hospitalized.
Used to supplement – not replace basic health insurance or major medial insurance policies

11. Dental Expense Insurance
Covers many different types of surgical, and examinations for the mouth.
Does not usually cover alternative surgeries.
Teeth whitening ex….

12. Dread Disease Care
Dread Disease, trip accident, death insurance, and cancer policies are usually sold through the mail, and are illegal in some states.
Usually pick on the elderly in a scare type of tactic.

13. Long-term care insurance
It covers a lengthy stay in a nursing home and help at home with daily activities such as dressing, bathing, and household chores.
Premiums can range from $900 to $15,000 depending no age and amount of coverage.
Sending your grandparents or parents to a nursing home can range $60,000 to $100,000 per year.

14. Health insurance trade-offs
Reimbursement vs. Indemnity
Reimbursement policy – is a policy that pays you back for actual expenses
Indemnity policy – pays specified amounts, regardless of how much the actual expenses may cost.
EXAMPLE
Two people go the doctor
1st person has a reimbursement policy – this person has to pay the deductable then the rest is covered for that year.
2nd has a indemnity policy – this person has to pay a certain amount each time.

15. Health Insurance trade-off (con’t)
Internal Limits vs. Aggregate Limits
A policy with internal limits covers only a fixed amount for an expense, such as the daily cost of room and board during a hospital stay.
A policy with aggregate limits may limit only the total amount of coverage (the maximum dollar amount paid for all benefits in a year) such as $1 million in major expense benefits, or it may have not limits at all.

16. Health Insurance trade-off (last page)
Deductibles and Coinsurance
The cost of a health insurance policy is affected by the size of the deductible, which is the set amount that the policyholder must pay toward medical expenses before the insurance company pays benefits.

17. Private and Government Plans
Section 14.2

18. Terms that you hear everyday….
HMO
PPO
Blue Cross/Blue Shield
Medicaid
Medicare

19. Health Insurance Companies
Private Insurance Companies
Provide group health plans to companies
Premiums may be paid fully or partially by employer and balance is paid to the employee
Parkway School District has a Private Insurance company.

20. Health Insurance Companies
Hospital and Medical Service Plans
BLUE CROSS/ BLUE SHIELD
Blue Cross – is an insurance company that provides hospital care benefits.
Blue Shield – is an insurance company that provides surgical and medical services performed by physicians.

21. Managed Care
A plan that directly employs or contracts with selected or preapproved, physician and other medical professionals to provide health care services in exchange for fixed, prepaid monthly premiums.
Based on the idea for preventive care
Pay a small co-payment
Must attend your selected doctor – unless it is an emergency
HMO – Health Maintenance organization

22. Preferred provider organization
P.P.O.
Preferred provider organization
Is a group of doctors and hospitals that agree to provide specified medical services to members at prearranged fees.
Often pay no deductibles
Often have more flexibility
Premiums are much higher than those of a HMO
HMO
Require members to receive care from only HMO providers

23. Point of Service Plan Combines features of both HMO’s and PPO’s
Use a network of participating physicians and medical professionals who have contracted to provide services for certain fees.
As long as you receive care from a pre-approved provider you pay little or nothing
However you can see outside help but for a higher fee.

24. Government Health Care Programs
Medicare
Medicade

25. Medicade
Federally funded program
For people over 65
Additional coverage (like a rider)
2 parts
Part A
Hospital Insurance
Part B
Medical insurance
Charged a monthly premium and government matches
Medicare
The other well known government health plan
Medical assistance offered to certain low-income individuals and families.
Administered by the state but funded by the state and federal funds.
Covers
Physician visits
Prescription drugs
Eyeglasses and many other things as well.

26. Medicade
Things that are not covered.
Long-term nursing care
Out-of-hospital prescription drugs, routine checkups, dental care
If a doctor doesn’t accept Medicare full payment, patient has to pay the rest.
Or can apply for medigap insurance
Medicare
With Medicade coverage there is usually not a need for supplemental insurance.

27. Section 14.3
Disability Insurance

28. Disability Income Insurance
Provides regular cash income when an employee is unable to work due to pregnancy, a non-work-related accident or an illness.

29. Sources of Disability Income
Worker’s Compensation
If your disability is a result of an accident or illness on the job.
Employer
Provided through group health plans
Social Security
If you pay social security, then you are eligible for social security benefits.
Very strict qualifications, but last as long as you need it.
Personal plans
Pay as much as 60-75%

30. 14.3 Life Insurance

31. Purpose of life insurance
Pay off a home mortgage or other debts at the time of death
Provide lump-sum payments as a n endowment for children when they reach a certain age
Provide an education or income for children
Accumulate savings
Establish a regular income for survivors
Set up an estate plan
Pay estate and death taxes

32. Age
Both Sexes
Male
Female
76.9
74.1
79.5 45
34.4
32.2
36.3 1
76.4
73.7 79 50
30.0
27.9
31.8 5
72.5
69.8
75.1 55
25.7
23.8
27.4 10
67.6
64.9
70.1 60
216
19.9
23.1 15
62.6
59.9
65.2 65
17.9
16.3
19.2 20
57.8
55.2
60.3 70
14.4
13.0
15.5 25
53.1
50.6
55.4 75
11.3
10.1
12.1 30
48.3
45.9 80
8.6
7.6
9.1 35
43.6
41.3
45.8 85
6.3
5.6
6.7 40
38.9
36.7
41.0

33. Types of Life Insurance policies
Term Life insurance
Also called temporary life insurance – is insurance that provides protection against loss of life for only a specified term or period of time.
Could be for 1,5,10, or 20 years or even up to the age of 70.
If you stop paying your coverage stops.
Used mostly when raising children so that in case something happens to you, there is money to help raise the children.

34. Term insurance still….. Decreasing Term – Renewable Term insurance
Coverage of term insurance ends at the conclusion of the term, but you can continue it for another term. If you take the option though you have to pay higher premiums.
Multiyear level term insurance
Or straight term guarantees that you will pay the same amount for the term of the insurance.
Conversion Term
This type of policy allows you to change from term to permanent coverage. This change will require higher premiums. (could be thought of as like a convertible ARM?)
Decreasing Term –
pays less to the beneficiary as time passes, however you pay the same premium over life of insurance. Used to make sure that debt is paid if you pass.

35. Whole life insurance
Is a permanent policy for which you pay a specified premium each year for the rest of your life. The insurance company pays a set amount after you die.
A savings account is put together for this.
Limited Policy – pay for set number of year, the insurance stays until death
Variable life – premiums are placed in stocks and are paid an amount depending on how market does.
Adjustable – change coverage as needed.
Universal life – part of premium is put into an account and you can borrow against it if need be.

36. Other types of policies
Group Life – much like group health insurance, much cheaper on premiums
Credit life – pays off debts in the event that you die before they are paid in full.
Endowment – is life insurance that provides coverage for a specific period of time and pays a sum of the money to the policyholder if he or she is living at the end of the endowment period

37. Provisions to life
Provision – is what things can the company has to make sure that they do not pay the premiums that you pay.
Beneficiary designation - if your beneficiary passes with you and you do not change it no one gets the money.
Incontestability clause – if the company was to go under bankrupt then the policyholder is still covered.
Suicide clause - only receives the amount that the policy holder pays in premiums.

38. Last couple of slides Riders to Life insurance
Waiver of premiums for disability – if you have a disability you can say that you will take care of the disability out of pocket to keep premiums lower.
Accidental Death Benefit – Double indemnity – meaning the policy will pay double if the policyholder was killed in accident.
Guaranteed insurability
Cost of living protection.