Chapter 12 Flashcards
Medical Expense Insurance (Hospital Expense)
Medical Expense policies covering sickness and disease usually require that the illness must be diagnosed and treated while the policy is in force for coverage to apply. The terms of the policy determine the amount of benefits paid upon the claim. Medical Expense policies normally provide reimbursement on an indemnity basis with a period of January 1 through December 31 of each year. These policies do not cover loss of income while hospitalized.
Medical Expense Insurance Associated Terminology
Deductible
Coinsurance
Co-payment
Out of Pocket Limits (Stop-Loss)
Deductible
Cost containment method used in insurance and designed to help control rising premium costs. It is usually expressed as a specific dollar amount that the insured pays first.
Coinsurance
Participation requirement on a percentage basis, the cost of expenses in excess of the deductible.
Co-payments
Do not usually contribute toward any policy out of pocket maximums.
Out Of Pocket Limits (Stop Loss)
A dollar amount beyond which the insured no longer participates in the payment of expenses and the insurer then pays 100% up to policy limits.
Medical Expense Payment Structure
Blanket Payment Scheduled Payment Cash Payment Reimbursement (Expenses Incurred) Service Usual, Customary, Reasonable (UCR)
Blanket Payment
Maximum Dollar Limit Set, with no itemizing of costs, used for sports teams, schools, etc.
Scheduled Payment
Scheduled listing the amount payable for each medical expense.
Cash Payment
Specified amount per day during hospitalization up to a maximum number of days.
UCR
Not scheduled, but is based on the average fee charged by all doctors in a given geographical area. Many insurers pay the UCR amount and the balance of any overcharges or costs of any disallowed services are the insured’s responsibility.
Medical Expense Insurance
Pay for doctor’s care while in hospital, ambulance chances, maternity is included as a rider. Vision and dental are not included. Reimburse up to limits, not private rooms. Surgeon, anesthesiologist, hospital.
Regular (Basic) Medical Policy Expense Policy
Medical Expenses traditionally cover doctor visits while in the hospital (hospital expense) and are usually expanded to include payment for office visits, diagnostic x-rays, laboratory charges, ambulance, nursing expenses when not hospitalized, and for an additional premium, maternity benefits. Medical Expense policies do not cover vision or dental care as a policy provision.
Basic Health Characteristics
Basic Hospital Expense - pays for a hospital room (semi-private), and for room and board up to a limit.
Basic Surgical Expense - Schedule lists surgeries covered, if not listed, may pay for a comparable one. Pays surgeon’s fees, operating room charges and anesthesiologist fees. Basic policies usually use a schedule to specify benefit limits for covered expenses.
Basic Medical Expense - Pays for nonsurgical physician services.
Major Medical Policy
High Maximum Limit, carries a deductible on an annual basis, individual or family. Includes catastrophic losses. Many have 20% copay after deductible, hospice and long term are rarely covered. Common Accident Provision is applicable to Major Medical policy.
Carryover -failed to meet deductible an expenses can be applied to the next year. Last quarter. Policies have a maximum amount, claim free, some will restore some coverage. After a period, all is recovered. Insure may increase benefits. Unscheduled Benefits in Major Medical Policies.
Major Medical Policy
Stand-Alone provide benefits for prolonged injury or illness.
High maximum limit of coverage (lifetime max).
Deductible, per person, per family, per year, not per expense.
Coinsurance
Designed to protect against losses that may be catastrophic.
Hospice and home health care are rarely covered.
Provisions that may be included in a Major Medical Policy
Stop Loss Provision (AKA Stop Loss Limit) Common Accident Provision Family Deductible Carry Over Provision Restoration of Benefits Provision Recurrent Hospitalization Provision Accumulation Provision
Stop Loss Provision
May or may not include the deductible
Common Accident Provision
If several family members are injured in the same accident, only one deductible is applied.
Carry Over Provision
Expenses that did not satisfy the previous year’s deductible and were incurred in the last 3 months of that year are used towards satisfying the current year’s deductible.
Recurrent Hospitalization Provision
If the insured returns to the hospital for the same injury or sickness within a certain period of time, only the first deductible will apply.
Accumulation Provision
Rewards an insured for maintaining a policy in force by increasing the benefits periodically.
Supplemental Major Medical Plan
Supplements a Basic health plan. No deductible is used, insured must pay the Corridor Deductible. Comes at expiration of basic plan, but prior to major supplemental.
Supplemental Major Medical Policy
A major Medical Policy that is written to pay over an above any Basic Plan.
A corridor deductible is used between the Basic Plan (when the limits of coverage are exhausted) and the start of coverage under the Supplemental Major Medical Policy. The corridor deductible is the specified expense the insured must personally incur before the supplemental benefits begin.
Comprehensive Major Medical Plan
Best Major Medical and Basic Health.
Issued as group or individual polices, deductibles, coinsurance and stop-loss provisions. Policy is based as reasonable and necessary.
Benefits that must be provided or offered
Newborn Infant Coverage - immediate unlike life insurance 14-15 days after birth.
Dependent Child Coverage
Child health supervision services
Speech and Hearing Disorder Coverage
Mammography Coverage
Cervical Cancer Examination
Alcohol Abuse
Chemical Dependency - prescribed medication
Mental Illness - depression, stress,
Diabetes Treatment
Genetic Testing - some illnesses are genetic coded.
Newborn Infant Coverage
All individual and group health insurance polices written, on an expense incurred basis, providing coverage for depends of the insured must provide coverage for the insured’s newborn child form the moment of birth. Adopted children are covered at the date of placement for adoption.
Coverage shall include injury or sickness, including the necessary care and treatment of medically diagnosed congenital defects and birth abnormalities.
Notification of birth or adoption and payment of the required premium must be within 31 days after the date of birth or adoption in order to continue coverage beyond 31 days, otherwise, the coverage is only 31 days.
Dependent Child Coverage (Limiting Age Law)
In CA, the law provides that coverage for a dependent child terminates upon attainment of the limiting age for dependent children specified in the policy or contract, unless the child is and continues to be both:
Incapable of self-sustaining employment by reason of mental retardation or physical handicap.
Chiefly dependent upon the insured for support and maintenance, provided that proof of such incapacity and dependency is furnished to the insurer by the insured within 31 days of the child’s attainment of limiting age.
If a child cannot be claimed as a dependent on Federal IRS Tax Forms, an insurer might deny coverage of a stepchild or refuse court-ordered premium payments.
Child Health Supervision Services
Coverage for a physician’s periodic review of a child’s physical and emotional status shall be offered.
Such coverage shall be effective from the moment of birth through age 12. May also be referred to as the Wellness Program.
These Benefits are subject to the same deductibles and coinsurance as other services.
Speech and Hearing Disorder Coverage
Coverage shall be offered for the necessary care and treatment of loss or impairment of speech or hearing and subject to the same duration limits, deductibles, and coinsurance factors as other covered services.
Mammography Coverage
All individual and group health policies providing coverage on an expense incurred basis must provide coverage for low dose mammography screening for any eligible, non-symptomatic woman covered under such policy.
Baseline mammogram from age 35-39.
Mammogram for women ages 40-49 every 2 years.
Mammogram every year for women over age 50.
Coverage is subject to the same dollar limits, deductibles, and coinsurance factors as other radiological examination benefits.
Alcohol Abuse
Some States require individual and group health policies to at least offer treatment for alcoholism as an optional coverage, while other states stipulate that treatment for alcoholism must be provided, while confined, on the same basis as an other illness for a limited number of days.
Chemical Dependency
Every Medical Expense Policy shall offer benefits for chemical dependency, and be subject to maximum benefit per policy period.
Mental Illness
Every medical expense policy shall offer coverage for mental illness. The lifetime maximum benefit for this coverage varies from state to state. Coverage will be subject to the same deductibles and coinsurance factors as those that apply to any physical illness.
Diabetes Treatment
Each Entity offering individual and group health insurance on an expense-incurred basis shall offer coverage for all physician prescribed medically appropriate and necessary equipment, supplies and self-management training used in the management and treatment of diabetes. This diabetes treatment cannot be subjected to any greater deductible or co-payment than any other health care service offered under the plan.
Genetic Testing
Every infant who is born in that state should be treated for phenylketonuria and such other metabolic diseases prescribed by the department. On an expense-incurred basis group or individual, this service will not be subject to any greater deductible or co-payment than any other services provided by the plan.
Optional Medical Expense Benefits
Vision Dental Supplemental Accident Prescription Drugs Maternity Rider
Prescription Drugs
Most often found in a group health insurance policy. However, some individual health insurance policies provide the benefit as a rider.
The Benefit is written requiring a small co-payment, a flat amount, for each prescription. Elective medication may or may not be included such as birth control pills.
Vision Care
Annual Refraction. May provide for cost of lenses, frames, contact lenses, but not cost to replace frames or lenses that were broken. It doesn’t pay for sunglasses or safety glasses. Doesn’t pay for medical expenses as a result of injury to the eye or disease.
Supplemental Accident
Available as a rider on both group and individual polices. Pays on a first dollar basis for medical expenses incurred as a result of an accident.
The maximum amount payable for any one accident is normally $500.
Maternity Rider
Medical plans will usually cover the complications of pregnancy as an illness, without paying the extra premium for this rider. Normally Birthing Costs are paid only with this rider added.
If this rider is added, a health plan must provide 96 hours of inpatient care following a caesarean section birth. Normal birth is 48 hours. A shorter stay allowed if approved by physician.
Limited Policies
Limited health exposures are generally covered by limited policies that specify the exposure to be covered and the amount of the corresponding benefit, such as prescription drugs, vision care etc. State laws require that the agent/insurer make special note or reminder to the insured regarding the fact that the policy pays only under stipulated conditions.
Limited Policies
Accidental Death and Dismemberment Accidental Injury Only Limited Accident Critical Illness Hospital Income or Indemnity (Cash Payment) Credit Insurance Short Term Medical Expense Plan
Accidental Death and Dismemberment
Limited - may be written as a separate policy or added to a Health/Disability, or Life Policy as a rider. The policy or rider will not pay for loss due to infectious disease, and usually provides that death must occur within 90 days from the date of accident. A smaller amount (capital) amount as stated in the policy, may be paid for the loss of sight in one eye or the loss of one limb.
Accidental Injury Only
These plans pay a specified amount towards medical services and treatments resulting from covered accidents. Typically lump sum directly to the insured and will be paid regardless of other insurance coverage. Different plans such as basic, standard, enhanced or plus. These plans are almost always guaranteed renewable as long as premiums are paid. Disadvantage is that they don’t have a cap on out of pocket expenses.
Limited Accident
Provide specific benefits for specific injuries from specified causes, such as associated with travel, athletic events. As with accident insurance, these policies generally pay in lump sum, regardless of existing coverage.
Critical Illness
Limited Sickness, Dreaded Disease, or Specified Disease - provides specific benefits for a specified sickness, such as cancer and heart disease.
Hospital Income or Indemnity (Cash Payment)
Pays directly to the insured a specified dollar amount per day during hospitalization. Payment is based solely on the number of days the insured is hospitalized. It pays the daily amount stated in the policy. This type of policy excludes payment for long term care services.
Credit Insurance
Credit Accident and Health/Disability Insurance
Covers a debtor, with the creditor receiving the benefits to pay the debt if the debtor is disabled or dies accidentally.
It is commonly sold as a group plan, however, individual contracts may be written. It may not exceed the total amount of the debt or the amount of the monthly payment.
Short Term Medical Expense Plan
Normally written on persons unemployed or fulfilling a waiting period. Coverage may be from 30-180 days and generally only renewable once up to 180 days. It is not considered a guaranteed renewable policy.
Limited Policies
Accidental Death and Dismemberment - Capital Amount 50-75% of Principal Amount.
Limited Accident - if injury occurs during a specific event, travel.
Limited Sickness - cancer specified amount
Indemnity Hospital - days, regardless of other expenses/insurance.
Blanket - sports, no itemizing. No individual underwriting, no certificate.
Credit Insurance - Banks and Finance Companies.
Short Term Medical Expense - meet eligibility, or unemployed. Maximum 30-180 days. Generally non renewable.
Common Exclusions from Coverage
Individual or group disability policies or medical expense policies, depending on insurer:
Preexisting conditions may be excluded, or subject to probationary periods.
Intentionally self-inflicted injuries (suicide).
War or act of War
Elective Cosmetic surgery
Medical Expenses payable under Workers’ compensation, or any Occupational Disease Law.
Aviation
Military Service and Overseas Residence
Care in Government Facility
Common Exclusions
8 Items
Preexisting Conditions - for a specified period 6-12 months.
Intentionally Self-Inflected Injuries
War or Act of War
Elective Cosmetic Surgery
Medical Expenses paid under Workers’ compensation or any Occupational Disease Law
Aviation - greater risk, will honor passenger commercial.
Military service or overseas residence.
Care in government facility.
Dental Insurance
A dental plan offered by an insurer must state the benefits, exclusions, and any reductions in coverage. Plans are normally written stating an annual maximum dollar benefit, not the number of appointments or the number of teeth repaired. Dental insurance contracts may be written on either an individual or group basis. Some plans limit selection of dentists, others the benefits. Services received immediately prior to a plan termination are normally covered. Some group health and dental plan share the same deductible (integrated deductible).
Types of Dental Care
Endodontics - Services covering dental pulp and root canals.
Orthodontics - teeth alignment and irregularities.
Periodontics - Gum Problems and Gum Disease.
Prosthodontics - bridgework and debentures
Restorative Care - Services to restore the functional use of natural teeth. Cavities
Oral Surgery - jaw defects.
Dental Insurance Types
Benefits may be payable on a Basic (Scheduled Plan), a Comprehensive (Nonscheduled) Plan or a combination of both.
Benefit maximums of a Basic (scheduled) plan are commonly paid on a lower amount than the usual and customary dental charges.
Comprehensive (nonscheduled benefits) are paid on a reasonable and customary basis. Dentures are a major dental expense and would be paid using this benefit provision.
Dental Insurance Exclusions
Cosmetic Services
Replacement of Prosthetic Devices
Duplicate debentures or prosthetic devices.
Oral hygiene instruction or training.
Occupational injuries covered by Workers’ compensation
Services furnished by or on behalf of government agencies.
Certain services that began prior to the date of coverage.
Dental Insurance Cost Containment
Deductibles are normally waived for routine preventative care, exams and/or cleaning. Preventative care is more fully covered, stressing preventative dentistry similar to Health HMO’s.
Coinsurance and deductibles apply.
Limitation to least expensive treatment, such as gold or silver filings, payment for silver even if gold is used.
Both annual and lifetime maximums are imposed.
Employer Group Dental Expense
Minimizing adverse selection is a goal and concern. Policy may include a 1-year benefit reduction up to 50%, or exclude certain benefits altogether for a specified period for those who enroll after the initial eligibility date. Frequent open enrollments would add more exposure to immediate claims and concerns of increasing adverse selection.
Service Categories
Typically, there are two categories. Basic and Major,
Basic - routine check ups, x-rays, and cleaning. Major dental care includes any fillings, root canals, debentures or bridge work, and the use of braces.
Individual Plans
Are available as prepaid plans, blue cross/ blue shield and HMO’s.
Group - separate endorsement.
Comprehensive - not scheduled, reasonably and customary charges. Deductible and coinsurance and maximum benefits.
