Ch. 4 - Medical Expense Insurance Flashcards
Basic Medical Expense Isurance
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 limi
Major Medical Expense Policy
A health insurance policy that provides broad coverage and high benefits for hospitalization, surgery, and physician services. Characterized by deductibles and coinsurance cost sharing.
Deductable
An amount of expense or loss to be paid by the insured before a health insurance policy starts paying benefits.
Flat Deductible
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”.
Corridor Deductible
A Corridor 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.
Integrated Deductible
An Integrated Deductible is used when a major medical plan is supplementing basic coverages. Example- If the major medical has a $500 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 satisfies 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.
Per-Cause Deductible
With a Per-Cause Deductible the insured must satisfy a deductible for each accident or illness.
All-Cause Deductible
With an All-Cause Deductible the insured only has to meet the deductible amount once during the benefit period.
Carryover Provisioin
The Carryover Provision allows an insured to defer current health charges to the following year’s deductible instead of the current year’s deductible. The major medical deductible carryover period normally applies to expenses incurred during the last three months of the plan year.
Coinsurance
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 %.
Stop-Loss
A Stop-Loss is designed to stop the company’s loss at a given point, as an aggregate payable under a 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.
Preexisting Conditions
Preexisting conditions is an illness or medical condition that existed before a policy’s effective date; usually excluded from coverage, through the policy’s standard provisions or by waiver.
Health Savings Accounts (HSA)
Tax-advantaged medical savings accounts available to taxpayers in the United States 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
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 Accounts (MSA’s)
Medical Savings Accounts (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.
