NY Chapter 4- Medical Expense Insurance

Question 1

a health insurance policy that provides broad coverage and high benefits for hospitalization, surgery, and physician services.
- Characterized by deductibles and coinsurance cost sharing.

Answer 1

Major Medical Expense Policy

Question 2

basic hospital and surgical policy benefits are

Answer 2

lower than the actual expense insured

Question 3

a health insurance policy that provides “first dollar” benefits for specified (and limited) health care, such as hospitalization, surgery, or physician services.
- it provides benefits up front without having to satisfy a deductible.
- Characterized by limited benefit periods and relatively low coverage limits.

Answer 3

Basic Medical Expense Insurance

Question 4

Deductible

Answer 4

an amount of expense or loss to be paid by the insured before a health insurance policy starts paying benefits.

Question 5

Flat (initial) Deductible

Answer 5

a stated dollar amount that applies to a covered loss (e.g. $500).
- applied per occurrence, per insured individual.

Question 6

Corridor Deductible

Answer 6

comes in to play when a major medical policy is supplementing basic coverage that contains no deductible
- is not applied until the basic coverage has been exhausted.

Question 7

used when a major medical plan is supplementing basic coverages.

Answer 7

Integrated Deductible

Example- If the major medical has a $500 deductible and the insured has basic coverage of $500 or more, then, in the event of a claim, the amount paid by the basic coverage satisfies the major medical deductible. However, if the basic does not cover the entire deductible amount of the major plan, the insured is required to make up the difference.

Question 8

With a Per-Cause Deductible the insured

Answer 8

must satisfy a deductible for each accident or illness.

Question 9

With an All-Cause Deductible the insured

Answer 9

only has to meet the deductible amount once during the benefit period.

Question 10

allows an insured to defer current health charges to the following year’s deductible instead of the current year’s deductible.
- The major medical deductible period normally applies to expenses incurred during the last three months of the plan year.

Answer 10

Carryover Provision

Question 11

Coinsurance

Answer 11

the principle under which the company insures only part of the potential loss, the policy owners paying the other part.
- For instance, in a major medical policy, the company may agree to pay % of the insured expenses, with the insured to pay the other %.

Question 12

Stop-Loss

Answer 12

festured designed to limit the amount of expense the insured may be exposed to in a policy year
- after the insured has paid a specific amount towards his covered expense, the insurer will pay 100% of the remaining expenses for the remainder of the policy year, up to the maximum limit of the policy

Question 13

an illness or medical condition that existed before a policy’s effective date
- usually excluded from coverage, through the policy’s standard provisions or by waiver.

Answer 13

Preexisting conditions

Question 14

Health Savings Accounts (HSA)

Answer 14

tax-advantaged medical savings accounts available to taxpayers in the United States who are enrolled in a high-deductible health plan (HDHP).
- The funds contributed to an account are not subject to federal income tax at the time of deposit.

Question 15

Health Reimbursement Arrangements

Answer 15

are employer-funded and employer-established, tax-advantaged health benefit plans that reimburse employees for out-of-pocket medical expenses and individual health insurance premiums.
- Unused amounts may be carried forward for reimbursement in future years.
- Reimbursements may be tax-free if the employee paid for qualified medical expenses or a qualified medical plan.

Question 16

Medical Savings Accounts (MSA’s)

Answer 16

were created to help employees of small employers, as well as self- employed individuals, pay for their medical care expenses.
- MSA’s are tax-free accounts set up with financial institution such as banks and insurance companies.
- Qualified MSA’s are available for employers with no more than 50 employees.

Question 17

tax-advantaged accounts that can be set up through a cafeteria plan of an employer.
- allows an employee to set aside a portion of earnings to pay for qualified medical expenses (such as prescription medication) as established in the cafeteria plan.

Answer 17

Flexible Savings Accounts or Flexible Spending Accounts

Question 18

Hospital Indemnity Policies

Answer 18

forms of health insurance providing a stipulated daily, weekly, or monthly indemnity during hospital confinement
- payable on an unallocated basis without regard to actual hospital expense.

Question 19

restrict benefits to specified accidents or diseases, such as travel policies, dread disease policies, ticket policies, and so forth.

Answer 19

Limited Benefit Policies

Question 20

Limited Risk (Dread Disease) Policies

Answer 20

provide a variety of benefits for a specific disease such as cancer or heart disease.
- Benefits are usually paid as a scheduled, fixed-dollar amount for specified perils or medical procedures such as hospital confinement or chemotherapy

Question 21

an insurance product in which the insurer is contracted to typically make a lump sum cash payment if the policyholder is diagnosed with one of the specific illnesses on a predetermined list as part of an insurance policy.

Answer 21

Critical Illness Policies

Question 22

Hospital Expense Policies

Answer 22

covers hospital room and board, miscellaneous hospital expenses (such as lab and x- ray charges), medicines, use of operating room, and supplies.
- These expenses are covered while the insured is confined in a hospital.
- There is no deductible and the limits on room and board are set at a specified dollar amount per day up to a maximum number of days.

Question 23

cover expenses for occupancy of the room and bed, general nursing care, food and beverages, and personal hygiene items.
- These limits may not provide for the full amount of hospital room and board charges incurred by the insured.

Answer 23

Hospital room and board benefits

For example, if the hospital expense benefit was $200 per day and the hospital actually charged $400 per day, the insured would be responsible for the additional $200 per day.

Question 24

Surgical Expense Policies

Answer 24

• are commonly written in conjunction with hospital expense policies.
• These policies pay for the costs of surgeons’ services, whether the surgery is performed in or out of the hospital.
• Coverage includes surgeon’s fees, anesthesiologist, and the operating room.
• every surgical procedure is assigned a dollar amount by the insurer

Question 25

relative value approach

Answer 25

• similar to the surgical schedule method.
• The difference is that instead of a flat dollar amount being assigned to every surgical procedure, a specified set of units is assigned.
• The policy will carry a stated dollar-per-units amount (known as the conversion factor) to determine the benefit.

Question 26

usual, customary, and reasonable approach (UCR)

Answer 26

the surgical expense is compared to what is deemed reasonable and customary for the geographical part of the country where the surgery was performed.

Question 27

combines the features of basic expense coverage and major medical coverage, sold as one policy.
- Cover practically all medical expenses, hospital, physicians, surgical, nursing, drugs, laboratory tests, etc.

Answer 27

Comprehensive Major Medical