Unit 12: Introduction To Health Insurance

Question 1

What are the 2 perils health insurance is designed to cover?

Answer 1

•accident
•sickness

Question 2

What is hospital/medical expense coverage?

Answer 2

•helps pay doctor & hospital bills
•includes coverage for diagnostic & treatment-related expenses such as lab tests, x-rays, & medical supplies
•often also covers the cost of prescription drugs

Question 3

What is disability income insurance?

Answer 3

•pays a stated amount of income to the insured when an accident or sickness leaves them unable to work for an extended period
•provides money to pay other bills
•often referred to as “income replacement” or “loss-of-time coverage”

Question 4

What is dental expense insurance?

Answer 4

•helps to pay dental bills
•coverage is generally provided for routine dental care

Question 5

What is long-term care (LTC) insurance?

Answer 5

•provides coverage for medical & non-medical care for individuals with,
-chronic illness
-cognitive impairment
-difficulty performing acts of daily living (ADLs)

Question 6

What are some federal health insurance programs?

Answer 6

•TRICARE
•veterans benefits
•Medicare
•Medicaid
•social security disability

Question 7

Who is TRICARE for?

Answer 7

Active duty & retired military personnel

Question 8

Who is veterans benefits for?

Answer 8

Discharged military service members

Question 9

Who is Medicare for?

Answer 9

Senior citizens & recipients of social security disability

Question 10

Who is Medicaid for?

Answer 10

Individuals & families who are or become poor

Question 11

Who is social security disability for?

Answer 11

Eligible individuals who become totally & permanently disabled

Question 12

What are comprehensive policies?

Answer 12

Offer broad coverage for health care services

Question 13

What are limited policies?

Answer 13

Provide benefits for only a particular type of loss

Question 14

How are limited plans characterized?

Answer 14

•limited perils—>cover losses that arise only from one peril or one type of peril, or which occur relative to a specific situation or location

•limited benefits—>amounts paid are typically much smaller & often restricted to stated amounts

•notice to proposed insured—>states require these policies to contain a prominent notice on their first page stating that the coverage provides only limited benefits

Question 15

What are accident-only policies?

Answer 15

•only cover accidents as a peril
•exclude any type of sickness or disease
•premiums are smaller
•may also pay a benefit if an accident results in dismemberment, disability, or death

Question 16

What are specified (dread) disease/critical illness policies?

Answer 16

•may cover a number of life-threatening diseases or serious conditions
•can include the need for organ or bone marrow transplants
•some contain a health screening benefit to help with early diagnosis
•benefits limited to those diseases specifically named in the policy

Question 17

What is hospital income (indemnity) insurance?

Answer 17

•pays a flat dollar amount as a daily benefit for each day that the insured is hospitalized as an inpatient
•payment made directly to the insured, NOT to the hospital
•not designed to reimburse the insured for the expenses of hospitalizations
—>designed to provide income that the insured can use in any way they want

Question 18

What is credit disability insurance?

Answer 18

•when retailers or lenders extend credit for a large purchase, they often require the consumer to have credit disability insurance to secure the loan
•if the consumer (debtor) becomes disabled, the policy’s benefit is paid to the creditor (lender) to pay off the loan
•a group policy with the trailer as master policyowner & debtors are the group members
•no individual underwriting is done, so no evidence or insurability is required
•amount of coverage under the policy cannot be more than the amount of indebtedness under the credit contract at any time, so the disability benefit may not exceed the monthly credit installment payment, or if the insurance coverage calls for a lump sum benefit, the amount of coverage will decrease over time as installment payments are made to n the debt
•consumers must be clearly notified that they’re buying credit insurance as part of the credit/purchase transaction; coverage cannot be included in the transaction without the consumer’s knowledge & agreement

Question 19

What is blanket coverage?

Answer 19

•group insurance
•group members identified as all persons engaged in a similar activity
Ex. Employees at a company picnic, passengers on an airplane, players or spectators at a sporting event, students while on school grounds
•members automatically covered when they’re part of the group & coverage automatically stops when the person is no longer part of the group
•group membership can change quickly, so individual members are not named & no application for insurance or certificate of coverage

Question 20

What is prescription drug coverage?

Answer 20

•can be included in or added to a medical expense plan, or issued as stand-alone coverage

•insureds are reimbursed for their prescription drug expenses using standard claim forms
OR
•insureds are given a prescription drug card to present to a participating pharmacy & they make a relatively small co-pay to the pharmacy firstly for each prescription refill

Question 21

What is a formulary?

Answer 21

A list of drugs the plan covers

Question 22

What is vision care coverage?

Answer 22

Covers,
•eye exams
•cost of lenses & frames
•cost of contact lenses
•other corrective items

Question 23

What is hearing insurance?

Answer 23

Provide coverage for hearing exams & some or all of the cost for hearing aids

Question 24

What are short-term medical expense plans?

Answer 24

•sold as a means of temporary health insurance coverage
Ex. A person may be in the waiting period for their group insurance & need temporary coverage

•length of coverage is typically 90 days, 6 months, or 12 months
•not renewable & must be qualified for
•insured may only apply for one additional policy, which can be refused by the insurer if claims were filed under the previous short-term policy
•offer short-term limited benefits at a low cost

Question 25

What are 10 types of limited benefit policies?

Answer 25

•accident only
•dread disease
•critical illness
•hospital indemnity
•credit disability
•blanket coverage
•prescription drugs
•vision
•hearing
•short-term medical expense plans

Question 26

Who does credit disability health insurance cover?

Answer 26

A debtor

Question 27

What is a need for medical care due to a cause other than an accident?

Answer 27

A sickness