Chapter 11: Major Medical Flashcards
_____ _____ policies were introduced in the 1950s by stock and mutual insurers as a response to the shortcomings of the base plans.
Major Medical
TF: Compared to the basic plans, major medical plans provide higher limits for catastrophic coverage and broader coverage for medical expenses.
True
TF: Essentially, after the insured pays the deductible, the policy will cover the remainder of medical expenses up to a stated maximum. Most major medical plans are offered as individual and group plans.
True
Two types of Major Medical plans?
Supplemental plan
Comprehensive stand-alone plan
_____ _____ ____ plans cover expenses not included under basic medical plans.
Supplementary Major Medical
______ ____ ____ plans cover almost all medical expenses under one policy. The base plan in this plan includes medical, hospital, and surgical coverage.
Comprehensive Major Medical
In contrast to basic plans, major medical plans utilize a ______ that must be paid before the policy will begin paying benefits. They are the amount of a claim the insured must pay before the policy begins to pay. It can range in amount from $500 to $5,000, depending on the policy.
Deductible
TF: Deductibles = Risk Retention
True
Three types of deductibles?
flat, corridor, and integrated
The ____ ____ deductible is the stated dollar amount the insured must pay. This deductible must be paid before the policy will pay benefits.
flat dollar
A family deductible is typically ______ times the amount of the individual deductible.
three
______ deductibles are often used for supplementary major medical plans. This deductible coordinates with the basic medical plan.
This is how it works:
The basic plan pays medical expenses the insured incurs.
Once the base plan benefits are exhausted, the insured will pay the full deductible.
After that, major medical benefits kick in.
Corridor
Example: Assume Marge has a supplementary major medical plan. Her corridor deductible is $400. The base plan portion is $3,000 and her total bill is $10,000.
How is the bill split up?
The $400 corridor deductible will apply after $3,000 of basic medical expense benefits, and before the major medical portion of the policy kicks in. The policy will cover the first $3,000 of the $10,000 bill. This leaves $7,000, of which Marge must pay the next $400. This leaves $6,600, which will be used to establish the coinsurance (you will learn about coinsurance later in this module).
True
Some supplementary major medical plans have an _______ deductible instead of a corridor deductible. This deductible is incorporated into the basic plan’s coverage.
For example, if the supplementary plan has a $600 deductible and the insured incurs a loss of $1,000 under the basic plan, the deductible is fulfilled.
Integrated
Two ways to determine deductibles?
Calendar Year Deductible
Per Case Deductible
For the ___ ___ deductible, the deductible amount applies once per calendar year. After this deductible is met, all other claims in that calendar year will not have a deductible applied.
Calendar Year
If the major medical plan has a ___ ____ deductible, a separate deductible applies for each separate accident or illness.
Per Cause
________is the percentage amount, such as 80/20 that states how much the insured pays and how much the insurance company pays. After the deductible is paid, this applies. The policy specifies what percentage of the medical expense the insurer and insured are responsible for paying.
Coinsurance
What is the purpose of coinsurance?
The purpose of coinsurance is to prevent insureds from over-utilizing the policy.
TF: Coinsurance = Percentage
Deductible = Dollar Amount
True
After coinsurance is paid, most major medical policies incorporate a ___ ___ feature, also referred to as an out-of-pocket limit, which prevents the insured from incurring catastrophic loss.
Stop Loss
Example: Assume Jake has a major medical policy with a $200 deductible and 80/20 coinsurance that applies for the next $5,000 of expenses. After that point, the insurer will cover the remaining eligible expenses.
If Jake incurs $30,000 medical expenses, how will the bill be split up?
The total bill is $30,000. First, Jake must pay the $200 deductible. This leaves a balance of $29,800. Coinsurance will apply on the next $5,000 of the bill.
This means Jake will pay $1,000 of coinsurance (20% of $5,000 is $1,000). This leaves a balance of $28,800, which the insurer will pay. This means Jake’s total out-of-pocket expenses on the medical bill are limited to $1,200.
True
____ ____ are limits placed on certain medical coverages within a policy, such as a dollar limit for room and board, or a dollar limit for X-rays.
Inside Limits
The ______ ______ benefit is the total amount an insurer will pay on a policy for any one insured individual. Most major medical policies have these types of benefits of $1 million.
Maximum Lifetime
