Health Insurance - Medical Plans Flashcards
Two types of medical expense insurance plans:
- ) Indemnity Policies;
2. ) Managed Care Plans
Indemnity Policies
Reimburse the insured for the cost of covered medical care he or she receives. Insureds are generally free to select any doctor or medical care provider they choose.
Managed Care Plans
Systems of healthcare delivery that combine features of a health care provider and an insurer. In effect, premiums paid into a managed care plan are viewed as prepayment for medical care services and treatment to be received through the plan’s network of providers. Plan members share in the cost of care through their premiums and co-payments collected at the time of service.
Insureds vs. Subscribers/Members
Those who are covered under a traditional indemnity policy are called insureds. People covered under a managed care plan are called members (or, alternatively, subscribers or participants).
Comprehensive Coverage
Coverage under medical expense insurance that covers a variety of conditions or medical services.
Specified Coverage
Coverage under medical expense insurance that is limited to one specific form of care, such as vision or dental.
Benefit Schedule
The insurer assigns a “price,” or a dollar amount or unit value, to each specific medical cost, procedure, charge, or aspect of coverage. The amount the insurer then pays to the insured is some percentage of this assigned price.
Usual, Customary, and Reasonable (UCR) Basis
The amount payable for the covered service is based on the amount that is usual or common for the area in which the service is performed, or is based on the usual charge that most other health care providers of similar training or experience charge.
America’s Health Insurance Plans
A national trade association that publishes widely used information about costs of medical procedures in various geographical areas.
Basic Medical Expense (Indemnity) Policies
A category of medical expense insurance that provides coverage for a specific form of medical care. These “first dollar” plans pay benefits beginning with the first dollar the insured incurs, and typically do not involve a deductible or coinsurance.
Three general types of basic medical expense policies.
- ) Hospital Expense Insurance
- ) Surgical Expense Insurance
- ) Physician Expense Insurance
First Dollar Coverage
Coverage where claims are paid 100% up to a specified amount with no deductible or copayment.
Basic Hospital Expense Policies
A category of medical expense plan that covers only hospital costs usually on a per-day benefit for a certain number of days. Does no cover physician or surgeon fees.
Basic Surgical Expense Policies
A category of medical expense plan that covers only surgeons’ fees and related costs associated with surgery.
Basic Physician Expense Policies
A category of medical expense plan that covers routine doctor’s office visits, charges for diagnostic x-rays, and laboratory charges.
Major Medical Insurance Policies
Indemnity plans that pay covered medical expenses with a broader coverage, higher lifetime benefit, etc.
Two Types of Major Medical Expense Plans:
- ) Supplemental Major Medical
2. ) Comprehensive Major Medical
Supplemental Major Medical
A major medical policy that covers expenses that a basic plan does not cover.
Comprehensive Major Medical Insurance
A stand-alone major medical policy that is not combined with other medical expense coverage.
Major Medical Insurance Features
Deductibles, Coinsurance, Stop-Loss Limits, Exclusions for Pre-Existing Conditions
Deductible
A stated sum of money that must be paid before any policy benefits are paid.
Family Deductible
Deductible where once the sum of individual members’ deductibles equal the family deductible no additional deductibles must be paid.
Flat Deductible
An amount that must be paid before benefits will be paid from a policy.
Corridor Deductible
An amount that is applied after a basic plan pays benefits and before the supplemental plan pays benefits.
Carryover Credit
Eligible health care expenses incurred in the last three months of a calendar year can generally be carried over and applied toward the deductible requirement of the following calendar year. This carryover credit is applied whether or not the current year’s deductible has been met.
Coinsurance
In addition to the deductible, the insured must pay a certain percentage of the covered costs.
Stop-Loss
Protects the insured by limiting the total out-of-pocket dollar amount he or she must pay on an annual basis.
Pre-Existing Conditions
Conditions present before a policy’s effective date. Prior to the Affordable Care Act, pre-existing conditions were excluded from coverage for a specified period of time. Now, all medical expense policies must accept applicants regardless of pre-existing conditions.
Health Maintenance Organizations (HMOs)
A corporation that delivers health care services. HMOs are finances by premiums. The HMO creates a network of associated doctors, medical care staffs, and participating hospitals and clinics. This network provides curative and preventative treatment to enrolled members. HMOs operate in limited geographical areas (“service areas”) and are sometimes also known as Health Insurance Corporations (HICs).
Medical Savings Account (MSA)
The forerunners of HSAs. Group MSAs were created specifically for self-employed people and employees of small employers. Their purpose is to help fund qualifies medical expenses on a tax-advantaged basis.
Health Savings Account (HSA)
A tax-exempt account into which account holders can make tax-deductible contributions to finance health care services. Funds in an HSA account grow tax-free. If withdrawn to cover medical expenses, they are also received tax free.
An HSA has two parts:
- ) A high-deductible health insurance plan (HDHP) that covers medical expenses that exceed the high deductible
- ) A tax-favored savings account that can be used to fund expenses subject to the high-deductible health insurance plan deductible.
Medicare MSA Plan
Medicare MSA funds can be used to pay for deductibles and coinsurance, but they cannot be used to pay for prescription drugs that are covered under Medicare Part D.
Flexible Spending Accounts
An FSA is designed specifically as a group benefit that an employer can offer to its employees. It allows the employees to contribute to the plan on pre-tax basis.
Health Reimbursement Accounts
An HRA is funded solely by employer contributions, which are excluded from employees’ gross income. Employees receive tax-free reimbursements for qualified medical expenses within an annual limit. Unused funds can be applied to reimbursements in later years.
Limited (Special) Risk Health Insurance
The most common types of limited risk policies are:
- Accidental death and dismemberment (AD&D) insurance
- Hospital indemnity insurance
- Critical illness (“dread disease”) insurance
- Blanket health insurance
- Prescription drug insurance
- Vision insurance
- Dental insurance
Hospital Indemnity Insurance
Hospital indemnity insurance helps provide extra cash to cover personal expenses not covered by insurance during hospitalization. Benefits are paid in the form of periodic payments (weekly or monthly) directly to the policyowner, not the medical care provider, if the insured becomes hospitalized.
Credit Disability Insurance
Covers the risk of a loan customer becoming disabled and pays a monthly benefit equal to the loan payment amount. The policy is written so that its benefit period matches the remaining loan period.The credit company is the applicant, owner, and beneficiary. The loan customer is the insured.
Critical Illness (“Dread Disease”) Insurance
An umbrella term for a group of policies that each covers a specific type of disease or illness.
Blanket Health Insurance
An accident-only policy issued to an organization to protect a group of individuals engaged in a specified group activity.
