Flashcards in Ch. 3* - Medical Expense Insurance Deck (35)
Basic medical expense insurance
insurance is a health insurance policy that provides "first dollar" benefits for specified (and limited) health care, such as hospitalization, surgery, or physician services. Characterized by limited benefit periods and relatively low coverage limits.
Major medical expense policy
is a health insurance policy that provides broad coverage and high benefits for hospitalization, surgery, and physician services. Characterized by deductibles and coinsurance cost sharing.
an amount of expense or loss to be paid by the insured before a health insurance policy starts paying benefits
deductible is a stated dollar amount that applies to a covered loss (e.g. $500). This deductible is applied per occurrence, per insured individual. Sometimes referred to as an "initial deductible"
comes in to play when a major medical policy is supplementing basic coverage that contains no deductible), the corridor deductible is not applied until the basic coverage has been exhausted
is used when a major medical plan is supplementing basic coverages. Example - if the major medical has a $400 deductible and the insured has basic coverage of $500 or more, then in the event of a claim, the amount paid by the basic coverage satisfied the major medical deductible. However, if the basic does not cover the entire deductible amount of the major plan, the insured is required to make up the difference.
the insured must satisfy a deductible for each accident or illness
the insured only has to meet the deductible amount once during the benefit period
allows an insured to defer current health charges to the following year's deductible. The major medical deductible carryover period normally applies to expenses incurred during the last three months of the plan year.
is the principle under which the company insures only part of the potential loss, the policyowners paying the other part. For instance, in a major medical policy, the company may agree to pay % of the insured expenses, with the insured to pay the other %.
is designed to stop the company's loss at a given point, as an aggregate payable under the policy, a maximum payable for any one disability, or the like; also applies to individuals, placing a limit on the maximum out-of-pocket expenses an insured must pay for health care, after which the health policy covers all expenses.
is an illness or medical condition that existed before a policy's effective date; usually excluded from coverage, through the policy's standard provision or by waiver.
Health Savings Accounts (HSA)
are tax-advantaged medical savings accounts available to taxpayers in the US who are enrolled in a high-deductible health plan (HDHP). the funds contributed to an account are not subject to federal income tax at the time of deposit.
Health Reimbursement Arrangements
are employer-funded and employer-established, tax-advantaged health benefit plans that reimburse employees for out-of-pocket medical expenses and individual health insurance premiums. Unused amounts may be carried forward for reimbursement in future years. Reimbursements may be tax-free if the employee paid for qualified medical expenses or a qualified medical plan.
Medical savings account (MSA's)
were created to help employees of small employers, as well as self-employed individuals, pay for their medical care expenses. MSA's are tax-free accounts set up with financial institution such as banks and insurance companies. Qualified medical savings accounts are available for employers with no more than 50 employees.
Flexible Savings Accounts or Flexible Spending Accounts
are tax-advantaged accounts that can be set up through a cafeteria plan of an employer. An FSA allows an employee to set aside a portion of earnings to pay for qualified medical expenses (such as prescription medication) as established in the cafeteria plan.
Hospital Indemnity Policies
are forms of health insurance providing a stipulated daily, weekly, or monthly indemnity during hospital confinement; payable on all unallocated basis without regard to actual hospital expense.
Limited Benefit Policies
restrict benefits to specified accidents or diseases, such as travel policies, dread policies, ticket policies, and so forth
Limited Risk (dread disease) policies
provide a variety of benefits for a specific disease such as cancer or heart disease. Benefits are usually paid as a scheduled, fixed-dollar amount for specified perils or medical procedures such as hospital confinement or chemotherapy
critical illness policies
are an insurance product in which the insurer is contracted to typically make a lump sum cash payment if the policyholder is diagnosed with one of the specific illnesses on a predetermined list as part of an insurance policy.
Hospital expense policies
cover hospital room and board, miscellaneous hospital expenses (such as lab and x-ray charges), medicines, use of operating room, and supplies. these expenses are covered while the insured is confined in a hospital. There is no deductible and the limits on room and board are set at a specified dollar amount per day up to a max number of days.
Hospital room and board benefits
cover expenses for occupancy of the room and bed, general nursing care, food and beverages, and personal hygiene items. These limits may not provide for the full amount of hospital room and board charges incurred by the insured. For example, if the hospital expense benefit was under $200 per day and the hospital actually charged $400 per day, the insured would be responsible for the additional $200/day
Surgical expense policies
are commonly written in conjunction with hospital expense policies. These policies pay for the costs of surgeons' services, whether the surgery is performed in or out of the hospital. Coverage includes surgeon's fees, anesthesiologist, and the operating room.
under the surgical schedule approach...
every surgical procedure is assigned a dollar amount by the insurer
The relative value approach
is similar to the surgical schedule method. the difference is that instead of a flat dollar amount being assigned to every surgical procedure, a specified set of units is assigned. The policy will carry a stated dollar-per-units amount (known as the conversion factor) to determine the benefit.
under the usual, customary, and reasonable approach (UCR)
the surgical expense is compared to what is deemed reasonable and customary for the geographical part of the country where the surgery was performed. The usual, customary, and reasonable approach is the maximum amount an insurer will consider eligible for reimbursement under a health insurance plan.
N has a amjor medical policy that only pays a portion of N's medical expenses. N is responsible for paying the remaining balance. This provision is known as...
What best describes the intent of a coinsurance clause in a major medial policy?
Discourages over-utilization of insurance coverage
Major medical policies typically...
contain a deductible and coinsurance