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.
