Medical Expense Insurance

Question 0

Basic Hospital Expense Policy

Answer 0

First dollar coverage with no deductible (pays the first part of the bill up to a specified limit)
1 year policy
Hospital room & board only

Question 1

Health Insurance

Answer 1

Covers sickness
Three types of Health Insurance: 
1) Medical Expense insurance 
2) Disability Income Insurance
3) Limited Types (covers things like cancer...)

Life Insurance - covers death

Question 2

Basic Surgical Expense Policy

Answer 2

Covers only surgical services listed

Operations not listed covered on a “relative value” basis (covers a percentage)

Question 3

Comprehensive Major Medical

Answer 3

Catastrophic injury or sickness

Deductible + copay (e.g. 80/20)

Question 4

Supplemental Major Medical

Answer 4

Covers both first-dollar coverage (basic plan) and the high limits (major medical)
Corridor Deductible - After the Basic first-dollar amount is exhausted, the deductible applies, followed by the co-pay.
Covers costs in and out of hospital blanket coverage (doesn’t specify what it will cover)

Question 5

Stop Loss Provision

Answer 5

Limits the insured’s liability on a claim to a maximum amount stated in policy

Question 6

Family Deductible

Answer 6

Rather than a deductible per person, family deductible applies when the entire family expenses exceed a certain amount during the year.

Question 7

Health Maintenance Organization (HMO)

Answer 7

stresses preventative care by providing pre paid doctor and hospital care.
Prepaid health plans - paid by the monthly fee plus small co-payments

Question 8

HMO Models of operation

Answer 8

1. Group Practice Model (GPM) Group of physicians of varying specializations practicing in one facility.
2. Staff Model - Owned & operated by the HMO
3. Independent Practice Association Model (IPA) - Network of physicians who contract with the HMO to provide services to its members

Question 9

Point-of-service (POS)

Answer 9

HMO members can choose medical care from out-of-network doctors. Coverage for their services is at a reduced reimbursement rate.

Question 10

Preferred Provider Organization (PPO)

Answer 10

Health Insurance company response to the HMO.
Subscribers have a broader choice of doctors (like reimbursement plans) and copayments (like HMOs) instead of deductibles and coinsurance.

Question 11

Exclusive Provider Organization (EPO)

Answer 11

Exclusive preferred providers who are paid on a fee-for-service basis
Gatekeepers - Primary Care physician who refers to a specialist if needed

Question 12

Self-Funding plan

Answer 12

Employer may set aside funds to pay employees’ health claims.
They may hire an administrative service firm to manage this fund
They may buy a Major Medical plan to guarantee coverage for large claims

Question 13

Indemnity Plans

Answer 13

Reimbursement plans

Insured pays their bill & turns in receipt for reimbursement

Question 14

Dual Choice Plan

Answer 14

Federal HMO Act requires employers of 25+ employees must offer both HMO and Indemnity plans in areas that offer both.

Question 15

Types of Health Insurance Plans

Answer 15

Point of Service (POS) subscribers of some HMOs may elect to receive either in-network care of out-of-network care. services from out-of-network providers are not covered as much as in-network care.

Medical Savings Account (MSA) Small employers can provide high deductible health plans and provide, their employees can start an MSA to put pre-tax funds to cover health costs.

Flexible Spending Account (FSA) Any size employer allows employees to defer pretax earnings into an account to cover unreimbursed medical expenses (deductibles, copayments and coinsurance). Unused funds are either taxable income or used by admin for their costs.

Health Reimbursement Account - Employers set aside funds to reimburse specified medical expenses paid by employees. Employees cannot contribute to these accounts.

High Deductible Health Plans (HDHP) Prerequisite to establishing an HSA. Min deductible of $1,250

Health Savings Accounts (HSA) Replaced MSAs. A trust created for the purpose of paying qualified medical expenses with an HDHP. Contributions deductible from income. Employers can contribute to employee’s account from pre-tax salary. Contributions cannot exceed deductible amount. Differs from FSA in that money in HSA belongs to employee. Unused portion can stay in plan or rolled into investments.

Consumer Driven Health Plans (CDHP) Consumer pays routine claims from their account, encouraging them to control costs.

Employer self-funded health plan - Employer pays health claims to a certain level. Usually administrated by a 3rd Party Admin (TPA), purchase of a Stop Loss Contract from an Insurance Co

Question 16

Benefit Structures (2)

Answer 16

Scheduled Plan - List of most commonly performed major surgeries and the maximum amount payable for each. Minor surgeries not covered are paid on a “relative value” basis (% of the maximum that the insurer will pay)

Usual, customary and reasonable - A fair expense for a procedure for the area you are in.

Question 17

Coordination of Benefits (COB)

Answer 17

To prevent double recovery, when an insured is covered by more than one medical expense policy, one policy is considered to be primary and the other policy is considered to be excess (secondary). The insured can collect from both, but cannot collect in full from both.

Question 18

Take-over Benefits

Answer 18

Coinsurance stop-loss - Limits the insured’s out-of-pocket expenses for co-insurance (not applied to the deductible).

Question 19

Carry-over Deductible

Answer 19

Some major medical policies have the provision that medical expenses incurred in the last 3 months of the year not covered because of the deductible will be carried over to count towards the satisfaction of next year’s deductible.

Question 20

No Loss-No gain

Answer 20

Requires that when a medical expense policy is switched from one company to another, ongoing claims that were covered under the old policy must continue to be paid under the new policy (no pre-existing condition exclusion or probationary periods).

Question 21

First Dollar coverage

Answer 21

Basic hospital expense and Basic Surgical expense policies pay the first expenses without a deductible, but no more. The policy will pay the full amount of the claim, or the daily maximum limit, whichever is less.

Question 22

Extension of Benefits - Consolidated Omnibus Budget Reconciliation Act (COBRA)

Answer 22

Federal Law Applies to Group Medical Expense Policies - Guarantees the continuation of Group medical coverage if you quit a job or are laid off. However, you must cover the premium, not the employer.

COBRA participants are eligible for group coverage up to 18 months. Death of covered employee, surviving spouse & children can continue their COBRA coverage for up to 36 months.

Question 23

Cal-COBRA

Answer 23

Applies to employers employing from 2-19 employees and allows participants to continue their coverage for up to 36 months. Also includes group dental, vision and other specialized plans.

Question 24

Family and Medical Leave Act (FMLA)

California Family Rights Act (CFRA)

Answer 24

Federal law requiring employers to provide eligible employees with up to 12 weeks of unpaid family and medical leave per year and restore their old job back. Employers must also maintain group health coverage. Employee must have worked for 12 months previous to the leave.

Question 25

Medical Expense Insurance Eligibility/Rating factors

Answer 25

Gender - women take better care of themselves & pay more for medical care
Age
Occupation - risk factors
Industry - e.g. coal or shipping industry
Location/Zip Code
Carrier History - past claims experience with your type of risk
Medical History - (chronic or on-going conditions, catastrophic conditions, disability)